Enphase Energy Stock has been on fire the past year, rising over 280%, which is good news for the Invesco Solar ETF (TAN) since it’s the fund’s top holding at 11% of its assets.
Enphase’s rise was further strengthened as the market effects of the pandemic began to wane.
“The global spread of coronavirus initially saw a drop in demand for solar modules and systems, as upgrading to solar energy wasn’t a priority for people anymore,” the data and analytics company Trefis Team said via a Forbes article. “However, things have picked up since, and people are consciously shifting to cheaper, more environmentally-friendly sources of energy.”
“This has driven up demand for Enphase’s products, which is evident from their Q1 2o21 earnings, where revenue came in at $302 million, up from $206 million in Q1 2020, a 50% jump,” the article said. “Despite expenses rising at a faster rate, operating income came in higher at $61 million, up strongly from $45 million for the same period last year.”
ETF Exposure to the Solar Industry
The TAN ETF encapsulates all the best the solar industry has to offer. As the prices for solar energy products start to fall, the items are beginning to reach a larger subset of consumers.
“Additionally, with more and more people preferring solar systems for their energy needs, we believe demand for the company’s products will continue growing, and that revenues stand to benefit strongly in the medium to long term,” the Forbes article said further.
Per the fund description, TAN seeks to track the investment results of the MAC Global Solar Energy Index, which is designed to provide exposure to companies listed on exchanges in developed markets that derive a significant amount of their revenues from the following business segments of the solar industry: solar power equipment producers including ancillary or enabling products. TAN will invest at least 90% of its total assets in the securities, American depositary receipts (ADRs), and global depositary receipts (GDRs) that comprise the Index.
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