Solar stocks could shine again in 2022


It’s fair to say that renewable energy stocks are among the biggest disappointments of 2021. At the industry level, solar stocks are sadly part of this conversation.

the Invesco Solar ETF (TAN), the original and dominant solar exchange-traded fund, has been struggling with a loss so far this year, but investors should be careful not to sell low with TAN. This could turn a temporary loss into a permanent error, especially if the industry rebounds in 2022, as some analysts believe.

“Sentiment around the sustainability sector continues to be positive in the medium to long term despite short-term pressure on equities, with investors looking at the age-old change that is occurring not only in energy technologies and mobility, but at the intersection of those two markets, ”Cowen analysts said in a note to clients last week.

Indeed, TAN and its components have faced a series of hurdles this year, including soaring commodity prices, supply chain issues and disappointments on the federal spending front. However, the long-term outlook for TAN member companies remains compelling to some market observers.

“We believe the opportunities for macroeconomic growth are attractive in the medium to long term as the global transition to cleaner energy and technologies accelerates,” said Riley.

Much of the short-term strain TAN is under is attributable to President Biden’s failed Build Back Better legislation, which included a massive amount of spending on renewables.

“The bill provided over $ 500 billion for green projects, making it the largest climate investment initiative in US history. The provisions included tax credit extensions for renewable energy sources, an autonomous energy storage credit and funding for nuclear and green hydrogen ”, Pippa Stevens reports for CNBC.

Some analysts argue investors were in too much of a hurry to ditch solar stocks when it became clear that Build Back Better is on hold until next year. While the current environment is not optimistic for renewable energy stocks, this could improve quickly, especially with weak hands leaving. This could pave the way for better things for TAN in 2022.

“Despite these headwinds, Wall Street analysts are still seeing the rise. Morgan Stanley said investors should focus on the main long-term drivers of the industry. The company highlighted growing customer and investor interest in clean energy, barriers to entry for new companies looking to break into the space, as well as grid instability and rising costs of l ‘electricity pushing consumers to distributed generation,’ according to CNBC.

For more news, information and strategies visit the ETF Education channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon and may not come to fruition. The information on this site should not be used or interpreted as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.


Comments are closed.