So it goes: oil and gas prices have fallen off, which means that interest in alternative energy has declined in kind. Solar ETFs are down significantly for the year, but will it always be so?
Last week, SunPower (SPWRA) gained 22% on decent first-quarter profits, which helped propel Claymore/MAC Global Solar (TAN) 8% higher, reports Don Dion of the Street. SPWRA was able to do this even though it only accounts for 3.6% of TAN’s net assets.
Today, SunTech Power (STP), which is 5.1% of TAN’s holdings, will announce earnings and may also be capable of affecting TAN’s short-term fortunes more than its share.
Over the past four quarters, STP has been able to beat analysts’ earnings estimates by an average of 100%. If history repeats itself, both STP and TAN may be in for a good run, assuming the broader market doesn’t sell-off dramatically.
One point of caution on solar funds: eurozone companies compose 30% of TAN. Considering the economic issues in that region, it seems unlikely that the cost structure of solar energy will improve any time soon. Market Vectors Solar Energy ETF (KWT) has slightly exposure to the eurozone – Germany is 20%, while Norway, United Kingdom and Spain all account for smaller portions – but it’s still there.
- Market Vectors Solar Energy ETF (KWT)
Sumin Kim contributed to this article.