A Perfect Storm for Solar Stocks and Clean Energy

It wasn't too long ago that oil prices were at $35 a barrel and energy bears were betting on it hitting $20. But as I have pointed out time and again, oil, much like the rest of this market, does not trade rationally. Inventory, supply, demand - all these are a thing of the past. Today, markets don't care about these mundane concepts. They trade on speculation and at the mercy of hedgies and traders. Since that low point of around $35, oil has recovered to $60, up 70%.

The rise in oil prices and consequently prices at the pump, has resulted in energy taking over some of the headlines from financials. President Obama announced the first ever federally mandated fuel efficiency standards for the US, specially at a time when Washington has some clout over the American auto-makers. This of course, is in addition to the subsidies and tax breaks that the federal government is offering for clean energy initiatives which will benefit and spur growth in clean coal, fuel cell and solar power industries. These three factors have created the perfect storm for solar and clean energy stocks.

While I like Trina Solar (TSL) and own it for my portfolio, there are way too many names in this space to single out just a handful. And when the tide rises, the entire sector will benefit. So I recommend doing your research and getting into some of these names. Alternatively owning Powershares WilderHill Clean Energy ETF (PBW) is a less risky way to play this sector.

Comments

[31October:]

re:
"President Obama announced the first ever federally mandated fuel efficiency standards for the US..."

The Corporate Average Fuel Economy (CAFE) act has been running since the 70's.
It's part of the reason Detroit makes the product decisions it does.

May 21 09:52 PM

[La Marque:]

The author makes good points. The US government and others are just going to pick the politically correct energy industries. I am long MV alternative energy ETF (GEX) as another diversified play.

May 22 09:34 AM

[Michael McD...:]

TSL & PBW are in my wallet.

May 27 12:41 PM

[quick:]

I'm in the same boat as La Marque, I own GEX in my IRA. Long term all of these alternative energy names should beat the market soundly.

May 27 03:37 PM