Don’t sleep on solar stocks, trader says. Why he sees value

Solar shares are wavering regardless of lofty expectations.

RBC Capital Markets initiated protection of Sunrun on Wednesday, ranking it outperform and giving it a value goal of $81 per share. Even so, shares of the solar panel maker closed 4% decrease at $54.21.

The Invesco Solar ETF (TAN) additionally took a success on Wednesday, falling 3% to $86.48. The widespread fund is now down about 29% from its excessive in January.

Katie Stockton, managing companion and technical analyst at Fairlead Strategies, has been watching the weak spot play out for a while.

“Solar stocks had been under pressure along with growth stocks,” she advised CNBC’s “Trading Nation” on Wednesday.

Stockton mentioned Fairlead had initially beneficial shorting Enphase Energy, TAN’s largest holding, however later mentioned to cowl the place as a short-lived correction in TAN appeared to stabilize.

“I think this is a nice staging ground for a potential relief rally,” Stockton mentioned. “The ETF had already been up nearly 500% of that Covid low from last year. Retracement like this is healthy, in our opinion, and something that can contribute to the long-term uptrend.”

Quint Tatro, chief funding officer of Joule Financial, mentioned to maintain a watch on the solar shares.

“Investors can’t fall asleep on these names down here,” he mentioned in the identical “Trading Nation” interview. “It’s easy to do with underperformance, but I think there’s some value to be found.” 

Tatro’s prime decide was First Solar.

“We view this company almost like a utility stock, like a solar utility play,” he mentioned, highlighting the corporate’s tangible e book value of $52 per share, comparatively low debt and notable earnings progress.

“We need momentum. That’s true for growth. That’s true for solar, but don’t fall asleep on these names,” he mentioned. “I think they’ll shine again.”

Disclosure: Joule Financial and Tatro personal shares of First Solar.


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