Grading 4 Solar Stocks Poised to Light Up Markets

One hundred years from now, what will be the world’s chief source of energy?

Will it be fossil fuels, which have dominated the landscape since the Industrial Revolution? Or will it be nuclear power, now that incidents like Three Mile Island and Chernobyl are fading into the past? What about wind power, a natural resource with endless, unlimited supply?

Some smart people are betting that solar energy will be the dominant energy source in the future. Last year, Tesla TSLA CEO Elon Musk stated that “...a relatively small corner of Texas or New Mexico can easily serve all U.S. electricity.”

On Tuesday, most major stock indexes finished in the red, as tech stocks took a break from their breathtaking run. Solar stocks didn’t get the memo, and formed a green island in the sea of red. Let's go to the charts to shine a light on this sector.  

1. Invesco Solar ETF (TAN)

To get a broad view of the solar sector, let’s look first at the Invesco Solar ETF TAN. On Monday, TAN closed at its year-to-date high. The ETF has been trending higher since early April. 

GRADE: B

2. First Solar (FSLR)

Since First Solar FSLR is one of the top holdings in the Invesco Solar ETF, it should come as no surprise that the two charts are very similar. First Solar shares have gained nearly 30% over the past six months. 

GRADE: B+

3. SolarEdge Technology (SEDG)

Like First Solar, SolarEdge SEDG is climbing within a bull channel (green dotted lines). This stock closed at a 52-week high on Tuesday. 

However, the attack angle of the trend is less pronounced, and the volume increase is less dramatic, compared to First Solar. Although the stock has just reached a one-year high SolarEdge isn’t leading the charge in this rally. Instead, it’s along for the ride.

GRADE: B-

4. Sunrun Inc (RUN)

Like First Solar, Sunrun Inc. RUN also reached its highest price for the year this week. Last month, Sunrun crushed second quarter earnings and revenue estimates. This week, the stock is climbing on very heavy volume (black arrow). Sunrun shares have gained nearly 80% over the past six months.

With a market capitalization of just $3.57 billion, Sunrun’s is relatively small compared to First Solar, which boasts a market cap of over $22 billion. This feature creates both a higher risk, and a higher potential reward, for Sunrun shareholders, as smaller companies are often more volatile than their larger peers. 

GRADE: A

At the time of publication, Ponsi was long TSLA, RUN and FSLR.