Only 0.014% of solar energy reaching Earth is converted into usable energy. This leaves a lot of room for improvement and companies are rushing to meet the challenge.
Let’s look at the solar energy stocks of five of these companies from a graphical perspective. The leaderboards require subjective judgment, but we present them in what we consider to be descending order, from strongest to weakest.
Charts are not accompanied by commentary on company history, products, or prospects. Instead, we look at how these solar energy stocks have risen or fallen in the past and what that suggests for the future.
Daqo New Energy (DQ)
This solar energy stock company has had a general upward trend for most of its existence as a publicly traded entity, except for its first two years.
He formed an exceptionally clean cup with handle pattern from 2014 to 2019, and his break from that pattern produced a remarkable 500% increase in a short time. The sheer magnitude of the bullish pattern made the rise sharp, powerful, and nearly unbroken.
Over the past year, however, the stock has lost most of its gains. If it continues to erode, it could create a new attractive buy point if the stock finds stability on the trendline.
This is the same line that served as resistance for so many years and now serves as support. The chart for this stock is by far the healthiest of the bunch, despite its severe recent drop.
Like Daqo, the JinkoSolar chart saw a strong breakout from a long-term resistance line. However, a few things make this escape less impressive.
First, the trendline was descending, indicating a stock that was slowly losing strength instead of gaining it. Second, there was only a short-lived escape.
Despite the instability, the stock at least held above the trendline, affirming its role shift from resistance to support.
It has been consolidating for many months in a relatively narrow range, and the single trendline on this chart can be seen as a very important test of JinkoSolar’s long-term viability as a long position.
Canadian Solar (CSIQ)
This stock has a striking history, trading in a wild range for over a decade and a half. The stock price was no different in 2022 than it was in 2008, even though it had gone through its own private series of bull and bear markets for years.
Despite this momentum, it exhibited a rather clean symmetric triangle pattern from 2015 to 2020, which provided the opportunity for a warm bullish breakout.
The stock has tripled in a few months. But like JinkoSolar, it lost almost all of the breakout value thereafter.
As with JinkoSolar, its disposition towards its supposed support line is important. If it stays above this line, this stock could move away from this long-term triangle again.
Here is an interesting situation. This stock would probably be at the top of the list had it not been for a recent failed upside breakout.
From 2015 to 2018, Enphase created a clean base model (tinted green in the right chart) and then embarked on a gargantuan multi-year percentage price gain. It stalled for about a year, but appeared to be forming another step in what had already been a dramatic build-up.
The stock hit lifetime highs from this smaller model. But within weeks, it not only fell back below the breakout level, it also slipped completely below the pattern and began a serious descent of more than 50%.
While this stock may be consistent over the long term, it is clear that the uptrend it experienced from 2017 to 2021 was short-circuited, and its failed bullish breakout surprised and disappointed first-time buyers of the stock.
Solar Power (SPWR)
Sunpower completes the list. It landed at the bottom for two reasons. First, it has been a losing stock throughout its price history. Although 2005-2006 was good for the title, it spent almost two decades meandering around a wide price range, still well below its 2007 level.
It had three higher pushes, each followed by a sharp price drop. Long-term holders of this stock are nothing but disappointed, and recent price action suggests a fresh move into the single digits.
Should it hit the kinds of lows seen in 2011 and 2019, it might be worth considering a buy.
A long cold lonely winter
It seems inevitable that the solar industry will become a bigger part of life. Technology is improving, the sun is going nowhere, and oil prices are skyrocketing.
But from an investment perspective, it’s not a golden opportunity to get into these stocks.
Still, the long-term history of these stocks provides insight into what would be an attractive buy price at levels with better risk/reward ratios than traders see.
Tim Knight has been using technical analysis to trade the markets for 30 years. He is the host of Trading Charts with Tim Knight on the tastytrade network and offers free access to his charting platform at slopecharts.com. @slopeofhope