Solar exchange traded funds are burning up as industry growth outshines expectations that a string of negative factors would weigh on solar stocks.
The Guggenheim Solar ETF (NYSEArca: TAN) surged 55.5% between the April 5 low and Wednesday high. Meanwhile the Market Vectors Solar Energy ETF (NYSEArca: KWT) jumped 36.4%.
“The glare from the red hot TAN (Guggenheim Solar ETF) can be ignored no more,” Chris Hempstead, Director of ETF Execution Services at WallachBeth Capital, said in a note. “This product is up 50% since early April. This sector has been on a tear with names like FSLR and SPWR leading the way. Trading volume during this most recent run is up almost 35% compared to the YTD average volume.”
TAN includes a 18.7% allocation in FSLR and SPWR is 6.5%. KWT has 13.6% in FSLR and SPWR is 4.7%.
First Solar and SunPower have both been giving out better-than-expected guidance for the rest of the year, reports Donna Hwell for Investor’s Business Daily. SunPower guided a revenue of $2.5 billion to $2.6 billion with EPS of 60-80 cents, compared to analysts expectations of $2.54 billion in revenue and an EPS of 64.
SunPower also expects to double its 2012 installed customer base by 2015.
Solar stocks also received a nice boost after U.S. senators reintroduced the Master Limited Partnership Parity Act, which would allow investors in renewable energy projects to access the tax advantage available to fossil fuel-based energy projects. Analyst said the bill could reduce the cost of capital by up to 50%.[Solar, Clean Energy ETFs Rally on MLP Parity Act]
While subsidies still play a major factor in the solar industry, the falling cost of solar power is driving the current boom, according to the Motely Fool. First Solar has signed a deal to sell power to El Paso Electric for less than half of what it would cost to build a new coal plant, and SunPower has a contract to supply power to Kings County, California that’s about two-thirds the cost of retail electricity.
Guggenheim Solar ETF
For more information on the solar sector, visit our solar category.
Max Chen contributed to this article.