Time To Buy Solar ETFs? [Guggenheim Solar ETF, First Solar, Inc., SolarCity Corp]

Solar City nevertheless provided a weak guidance for the ongoing second quarter. The company projects adjusted loss per share of 90 cents to $1.00, much wider than the Zacks Consensus Estimate of a loss of 66 cents. In addition, the solar maker expects to install 105–110 MW of new solar panels in the second quarter and 500–550 MW for the full year, up from previous expectation of 475–525 MW.

The shares of SCTY rose as much as 9% in the after-hours trading. However, the stock was down about 10.5% over the past five days (read: The Momentum Stock Crash Puts These ETFs in Focus).

Solar ETFs in Focus

Guggenheim Solar ETF (NYSEARCA:TAN)

This ETF follows the MAC Global Solar Energy Index, holding 30 stocks in the basket. Of these firms, FSLR takes the top spot with 9.73% allocation while SCTY occupies the eight position with 4.97% share. American firms dominate the fund’s portfolio with nearly 42%, followed by China (25.26%) and Hong Kong (16.13%).

The product has amassed $451 million in its asset base and trades in solid volumes of more than 595,000 shares a day. It charges investors 70 bps in fees per year. The fund lost about 3% yesterday and 5% in the past five trading sessions. The ETF has a Zacks ETF Rank of 3 or ‘Hold’ rating with High risk outlook.

Market Vectors Solar Energy ETF (NYSEARCA:KWT)

This fund manages a $28 million asset base and provides global exposure to a small basket of 34 solar stocks by tracking the Market Vectors Global Solar Energy Index. First Solar is the top holding of the fund making up for 10.06% of assets while SolarCity is the tenth firm accounting for 3.73% share in the basket (see: all the Alternative Energy ETFs here).

In terms of country exposure, U.S. takes more than one-third of the portfolio, closely followed by China (34.0%) and Taiwan (15.7%). The product has an expense ratio of 0.66% and sees paltry volume of under 10,000 shares a day. The ETF tumbled 4.5% yesterday in momentum sell-off despite FSLR earnings beat and lost 3.9% over the past five trading days.

Bottom Line

Given investors’ desire to move away from high beta and growth stocks, the solar industry could face some more trouble ahead in the coming days. However, long-term trends seem bright given the favorable green energy fundamentals and growing popularity of the clean energy source.

Further, the solar sector had a solid industry rank in the top 42% at the time of writing as per the Zacks Industry Rank, suggesting strong growth outlook for these firms.

Given the solid long-term outlook but somewhat bearish near-term sentiments, investors may want to consider staying on the sidelines for the time being. However, risk tolerant long-term investors may want to consider this recent slump as a buying opportunity, should they have the patience for extreme volatility.

This article is brought to you courtesy of Sweta Killa.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *