Renewable energy stocks are rare winners amid the selloff
Renewable energy equities are luring cash, a rare risk asset to outperform amid a flight to safety like bonds and the U.S. dollar.
Renewable stocks have been a "green ‘silver-lining’ to the volatility, as governments refocus on energy supply and $100 oil (CL1:COM) (CO1:COM) (NYSEARCA:USO) drives substitution," eToro strategist Ben Laidler wrote Wednesday. "This is needed to reverse the prior sector weakness. Valuations are high (c29x P/E ratio), sales forecasts flat, and earnings pressured, even if long-term positive case is clear."
"SolarEdge (NASDAQ:SEDG) was the best S&P 500 (SPX) (NYSEARCA:SPY) performer last month (+34%)," Laidler noted. "Whilst global clean energy ETF (NASDAQ:ICLN) is +11% the past month."
EToro smart portfolio @RenewableEnergy is up 9%, while the auto-heavy First Trust Nasdaq Clean Energy Green Energy Index ETF (NASDAQ:QCLN) is up 4%, he added.
"All beat the -3% S&P 500 price fall."
Russia's invasion of Ukraine prompts three catalysts for the sector.
- "Focus on fuel security risks, and diversification needs, especially in Europe."
- Faster carbon transition plans from governments, "such as Germany’s 2 new LNG plants."
- "$100+ oil incentivises renewables substitution and makes them more cost competitive."
See how peers of SolarEdge have performed in the last month.