ALPS Clean Energy ETF ACES topped the list of the best-performing U.S. equity ETFs in Q3, gaining about 11%. The rally was driven by the Inflation Reduction Act, which focuses on making the climate greener.
Although most of the stocks in ACES’s portfolio have delivered strong returns this quarter, a few have gained more than 80%. These include Altus Power AMPS, First Solar FSLR, Stem Inc. STEM, Montauk Renewables Inc. MNTK and Infrastructure and Energy Alternatives IEA.
The Inflation Reduction Act will infuse billions into incentivizing clean energy technology development and deployment in the United States. This, in turn, will benefit the solar panel makers, fuel cell manufacturers and energy storage companies (read: Inflation Reduction Act: Clean Energy & EV ETFs Winners).
The climate spending bill was signed by President Joe Biden on Aug 16 and represents the largest climate investment in U.S. history. It allocates about $370 billion in funding for clean energy production and addressing climate risk over the next 10 years. The bill also offers 30% tax credit for the construction or refurbishment of renewable energy facilities, credits on clean energy generation (paid per kilowatt-hour) and special production-based credits for solar and wind power equipment manufacturers. Additionally, it extends tax credits through 2024 for producing electricity from renewable resources such as wind and for investment in energy properties such as solar.
The Inflation Reduction Act will strengthen energy independence, reduce dependence on Chinese imports, and reinvigorate the industrial sector. It's also designed to create American jobs and accelerate the transition to renewable energy.
Let’s take a closer look at the fundamentals of ACES.
ACES in Focus
ALPS Clean Energy ETF offers exposure to a diverse set of U.S. and Canadian companies involved in the clean energy sector, including renewables and clean technology. It seeks to track the CIBC Atlas Clean Energy Index and holds 46 stocks in its basket. From an industrial look, electric vehicles and solar take the largest share at 29.1% and 25.7%, respectively, closely followed by an 18.1% share in wind.
ALPS Clean Energy ETF has amassed $726.2 million in its asset base and charges 55 bps in fees per year from investors. It trades in an average daily volume of 62,000 shares.
Below, we have highlighted the above-mentioned five stocks in the ETF with their respective positions in the fund’s basket:
Best-Performing Stocks of ACES
Altus Power is creating a clean electrification ecosystem, serving its commercial, public sector and community solar customers with locally-sited solar generation, energy storage and EV-charging stations. The company has an estimated earnings growth rate of more than 1000% for this year. The stock makes up for 0.4% share in the ACES basket and has soared 125.5% over the past three months.
Altus Power carries a Zacks Rank #2 (Buy).
First Solar is a leading global provider of comprehensive PV solar energy solutions and specializes in designing, manufacturing and selling solar electric power modules, using a proprietary thin-film semiconductor technology. It saw positive earnings estimate revision of 15 cents over the past month (read: 5 Defensive ETFs to Play as Recession Fears Grow).
First Solar skyrocketed about 100% in the past three months and makes up for a 5.6% share in the ACES basket. The stock has a Zacks Rank #3 (Hold).
Stem is an artificial intelligence-driven clean energy storage systems. The company's advanced energy storage solutions with Athena, an artificial intelligence -powered analytics platform, enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation and grid power. The stock has rallied 84.7% in the third quarter and makes up for 1.7% of the ACES portfolio.
Stem has estimated earnings growth of 27.7% for this year. It has a Zacks Rank #3.
Montauk Renewables is a fully integrated renewable energy company. It specializes in the management, recovery and conversion of biogas into renewable energy. The stock is up 82.8% in Q3 and has an estimated earnings growth rate of more than 4000% for this year.
Montauk Renewables carries a Zacks Rank #2 and accounts for a 0.95% allocation in the ACES basket (read: 5 ETFs Hitting 52-Week High Amid Market Turmoil).
Infrastructure and Energy Alternatives is a leading infrastructure construction company with specialized energy and heavy civil expertise. The stock has jumped 72.5% over the past three months and accounts for a 0.35% share in the ETF.
Infrastructure and Energy Alternatives has an estimated earnings growth rate of 134.9% for this year. It has a Zacks Rank #2.
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First Solar, Inc. (FSLR) : Free Stock Analysis Report
Stem, Inc. (STEM) : Free Stock Analysis Report
ALPS Clean Energy ETF (ACES): ETF Research Reports
Infrastructure and Energy Alternatives, Inc. (IEA) : Free Stock Analysis Report
Montauk Renewables, Inc. (MNTK) : Free Stock Analysis Report
Altus Power, Inc. (AMPS) : Free Stock Analysis Report
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