The Bloomberg Global Solar Energy Index has beaten the NYSE Arca Oil & Gas Index by 22.2% in 2015.
Despite solar naysayers bearish outlook on solar, growth in the solar sector exceeded expectations, despite investors irrational fears that low oil prices would hinder the growth of the solar market. Even the uncertain fate of the federal solar investment tax credit (ITC) was not enough to dampen the spirits of solar supporters.
According to Money Morning, And according to Money Morning Global Energy Strategist Dr. Kent Moors, 2016 will be an even better year for solar energy stocks.
“There’s now a confluence of technology and economy that assures these new energy sources will continue to be adopted and improved upon – at ever-increasing rates,” Moors said earlier this month. “This year we’ll see alternatives take an outsize position in the sector.”
Moors bases his optimistic predictions not on solar’s impressive 2015 performance, or the renewal of the ITC. He looks to the massive expansion of solar in the Eastern hemisphere as a reason to be bullish on solar in 2016. The solar markets in China and Japan are on track to grow 17.3% and 10.4% by the end of the year, respectively. That’s because the average price of a solar panel has fallen by more than 60% since 2011 due to their increasingly efficient production.
“Solar power is currently booming all over the world,” Moors explained earlier this month. “Last year, China led the charge into clean energy funding, and it will build on its $83 billion investment there in 2016.”
Reality Check
Neither the optimism about solar’s future, nor solar beating other energy stocks in 2015 means it was a good year overall. It just means that fossil fuels had a worse year than solar. In fact, solar stocks took a real roller coaster ride in 2015. The stock of SunEdison, the self-proclaimed “largest global renewable energy development company,” fell from a high of $31.50 in July to a low of $2.86 on Nov. 19—a loss of 91 percent. Last week, SunEdison’s stock closed at $6.51, up 127 percent in a month. The Guggenheim Solar ETF which had dropped significantly in the last year, jumped 30 percent from Nov. 19 to mid-December. Indications are that, at long last, energy investors may be ready to de-couple solar from the price of crude.
According to the NASDAQ’s Zack’s Blog: “Thanks to the oil price collapse and global slowdown concerns, the renewable energy space has performed appallingly this year. But positive trends have started building up in the space lately, especially after the historic Paris climate deal and the U.S. tax credit extension. This has started pushing the stocks and the ETFs higher, reflecting strong momentum and bullish sentiments going into the New Year.”
Strong indicators lead Zack’s to recommend that investors take a look at Guggenheim Solar ETF ( TAN ), PowerShares WilderHill Clean Energy Portfolio Fund ( PBW ), Market Vectors Global Alternative Energy ETF ( GEX ),) and First Trust NASDAQ Clean Edge Green Energy Index Fund ( QCLN ).
Meanwhile, Seeking Alpha, a market blog with solid coverage of solar market, reports Canadian Solar as a company to watch in 2016. “Canadian Solar (NASDAQ:CSIQ) is one of the companies that’s poised to leverage the boom in solar overlooked by investors. It’s growing very quickly, with an increasing presence in China, India, the US and other promising regions for solar energy. It already has a dominant market position and is growing faster than many of its competitors. Despite this, CSIQ is valued quite cheaply and could provide great upside potential.”
With Asian markets expanding, recent strong moves at the Paris Climate Conference and the U.S. government’s extension of the ITC, the stage is set for renewed gains for solar stocks in 2016.
