Solar ETFs: Brighter Days or Burning Out?

February 6th at 7:00am by Tom Lydon

Solar shares and exchange traded funds counter-rallied last month on news of Germany’s healthy growth and improved sentiment for the beaten-down sector. The country is the world’s largest market of solar energy related products, but the sector may need more momentum for related ETFs to recapture their 200 day-moving-averages.

Last year was a flameout for the Guggenheim Solar ETF (NYSEArca: TAN), which lost 64%. The January rally in solar ETFs may be attributed to bargain hunters buying low and short sellers buying back shares, reports Trang Ho for Investors Business Daily. [Solar Energy ETFs Jump 12%]

Another ETF in this category is Market Vectors Solar Energy (NYSEArca: KWT).

German network Bundesnetzagentur announced recently that the country’s solar installations hit a record of 7.5 gigawatts, which is up from the 7.4GW seen in 2010. Solar power currently accounts for about 3% of the country’s total power. [ETF Performance Report: A January Rally]

Solar stocks are also poised to benefit from China’s plan to double its use of solar power, mostly with the use of solar panels.

According to data from Bloomberg New Energy Finance, the solar sector led the entire alternative energy. Although the solar ETF got crushed, investments in solar energy rose 36% in 2011, to $136.6 billion, reports MarketWire. [Alternative Energy ETFs Trounced in 2011]

In order to overcome the lows seen in 2011, the sector will have to work through the supply glut that has played a part in driving some companies into bankruptcy.

Guggenheim Solar ETF


Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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