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Solar ETF Rallies Over 50% in a Month


Solar exchange traded funds are burning up as industry growth outshines expectations that a string of negative factors would weigh on solar stocks.

The Guggenheim Solar ETF (TAN) surged 55.5% between the April 5 low and Wednesday high. Meanwhile the Market Vectors Solar Energy ETF (NYSEArca: KWT) jumped 36.4%.

“The glare from the red hot TAN (Guggenheim Solar ETF) can be ignored no more,” Chris Hempstead, Director of ETF Execution Services at WallachBeth Capital, said in a note. “This product is up 50% since early April. This sector has been on a tear with names like FSLR and SPWR leading the way. Trading volume during this most recent run is up almost 35% compared to the YTD average volume.”

TAN includes a 18.7% allocation in FSLR and SPWR is 6.5%. KWT has 13.6% in FSLR and SPWR is 4.7%.

First Solar and SunPower have both been giving out better-than-expected guidance for the rest of the year, reports Donna Hwell for Investor’s Business Daily. SunPower guided a revenue of $2.5 billion to $2.6 billion with EPS of 60-80 cents, compared to analysts expectations of $2.54 billion in revenue and an EPS of 64.

SunPower also expects to double its 2012 installed customer base by 2015.

Solar stocks also received a nice boost after U.S. senators reintroduced the Master Limited Partnership Parity Act, which would allow investors in renewable energy projects to access the tax advantage available to fossil fuel-based energy projects. Analyst said the bill could reduce the cost of capital by up to 50%.[Solar, Clean Energy ETFs Rally on MLP Parity Act]

While subsidies still play a major factor in the solar industry, the falling cost of solar power is driving the current boom, according to the Motely Fool. First Solar has signed a deal to sell power to El Paso Electric for less than half of what it would cost to build a new coal plant, and SunPower has a contract to supply power to Kings County, California that’s about two-thirds the cost of retail electricity.

Guggenheim Solar ETF

For more information on the solar sector, visit our solar category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.