What’s Behind The Surge In Solar ETFs?

Profit margins look to be roughly double original forecasts too, so this was obviously another point for the bulls to hang their hats on going forward. Investors in CSIQ definitely appreciated it as well, as the stock moved higher by over 12% on double the average volume.

Beyond earnings, investors should also note that SunPower made an acquisition of Greenbotics, which could help the company to better compete in sandy or generally dirt heavy areas. It could also suggest that we might finally start to see some M&A activity in the solar market, a situation which may help to boost share prices as well.

ETF Impact

The two ETFs in the market have big holdings in many of the aforementioned companies, and thus were big beneficiaries on the day. TAN was up nearly 8.4% on the session, on volume that was roughly four times normal, while KWT also saw a huge volume increase, and gains of about 5.9% on the day.

KWT actually gives its top weight to FSLR, while SCTY and SPWR also find their way into the top ten holdings. For TAN, FSLR again takes the top spot, while SCTY, CSIQ, and SPWR are all top five allocations (read 5 Clean Energy ETFs Leading the Sector’s Surge).

Due to this bigger allocation to some of the big winners on the day like Canadian Solar, TAN easily outperformed its counterpart on the session. Investors should also note though, that TAN is winning on a longer term look too, as it has outperformed its counterpart 129% to 93% year-to-date (before today’s gains).

Still, both are clearly crushing the market, and with today’s jump are outperforming the S&P 500 on a year-to-date basis even more. And with the trend towards higher guidance and earnings beats as of late, there is plenty of reason to believe that this surge in solar ETFs can continue in the near term.

This article is brought to you courtesy of Eric Dutram.

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