The Invesco Solar ETF (NYSEARCA: TAN), the largest exchange traded fund dedicated to solar equities, is higher by nearly 30% year-to-date, making it one of 2019’s best-performing non-leveraged ETFs. TAN could deliver more upside if analysts’ expectations on some of the fund’s marquee holdings are proven accurate.

TAN, which is nearly 12 years old, follows the MAC Global Solar Energy Index. That index “is comprised of companies in the solar energy industry. The index is computed using the net return, which withholds applicable taxes for non-resident investors,” according to Invesco. The ETF is up 40% from its Dec. 26 lows.

“Demand for solar power could grow by double digits in 2019 and 2020, as supportive policies in Europe, the U.S., and Asian countries help spur more growth,” said Goldman Sachs analyst Brian Lee, according to Barron’s.

What’s Next for Solar ETF Tan

Investors should note the average market value of TAN’s holdings is $1.41 billion, meaning this is essentially a small-cap fund. About two-thirds of TAN’s components are classified as small-cap stocks. Higher oil prices are also contributing to TAN’s rally.

Lee, the Goldman Sachs analyst, is bullish on solar stocks including First Solar Inc. (NASDAQ: FSLR) and Canadian Solar (NASDAQ: CSIQ). First Solar is TAN’s largest component at a weight of 9.79% while Canadian Solar is a top 10 holding in the ETF at a weight of 4.88%.

First Solar “could rise 19%, to $64, as utility-scale solar grows at a 40% compound annual growth rate through 2020, Lee writes. First Solar was down 0.5% on Thursday to $54.46,” according to Barron’s. “Canadian Solar does about a quarter of its business in China, and has exposure to U.S. projects, which Lee thinks could help lift the stock to $26.”

Less than 8% of TAN’s holdings are large caps and over 43% of the fund’s holdings are classified as growth stocks.

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