The breakout in solar stocks is just the start of massive gains


Source: Shutterstock

Currently, solar stocks are staging a huge breakout. And our fundamental and technical analysis indicates that this is just the beginning of a huge 50% fusion!

Indeed, the fundamental setup for solar stocks is ideal right now. New solar installations reached a record 50% of all new power generation capacity additions last quarter. And just last night, the White House signed a bill that will pump nearly $400 billion into America’s energy sector. As a result, solar companies are expected to see record revenue and profit growth over the next 12 months.

Meanwhile, the technical picture is also heating up (no pun intended). Most solar stocks have broken out higher from both an ascending triangle and their multi-quarter downtrend dating back to early 2021. And they are forming a new uptrend, suggesting more than 50% in the next seven months only!

Net-net, the evidence strongly suggests that solar stocks – and, indeed, all cleantech stocks – will take off in the months to come.

The time to buy is now.

Here’s a closer look.

Robust and improved fundamentals

The solar industry got off to a slow start in 2022. But over the past few months things have started to heat up dramatically. Rising natural gas prices and the standardization of global supply chains have led to an acceleration in the development of solar projects.

For instance, SolarEdge (SEDG) is one of the largest solar companies in the United States. And it just released quarterly numbers that include a massive increase in shipment growth rates. They went from 26% in the first quarter to 53% in the second. Similarly, revenue growth reached 52% and is expected to accelerate further in the third quarter to 57%.

Its main counterpart, Phase (ENPH), recorded an equally robust acceleration in revenue growth. In the first quarter, revenues increased by 46%. In the second, they jumped 68%. In the next quarter, they should increase by 75%. This reacceleration in revenue growth follows several consecutive quarters of slowdown.

Solar revenues

We see an even greater acceleration among smaller and hypergrowth solar players. Indeed, tracker provider Network Technologies (ARRY) saw its revenue growth rate increase 5x quarter over quarter, from 22% in Q1 to 110% in Q2!

Overall, we are seeing a significant reacceleration of growth in the solar industry. That’s partly because amid soaring gas prices, people are looking for alternative, cheaper ways to power their businesses and homes.

And that’s before the biggest legal tailwind ever created for solar stocks is enacted!

Just last night, the White House signed the Cut Inflation Act of 2022 into law. It commits nearly $400 billion in federal energy spending — the largest climate bill in U.S. history.

The bill includes a 10-year extension of the 30% tax credit for solar projects, originally scheduled to expire next year.

The stage is set for solar stocks – already heating up – to get sizzling over the next 12 months. In fact, we believe they will be the best 12 months in solar industry history. Between sky-high gas prices, falling solar costs and a 10-year extension of the 30% ITC, we will see a “gold rush” for solar project development…

And a sharp rise in solar stock prices.

Technical data indicates a 50% breakout

We see signs that the big rally in solar stocks could accelerate by another 50% over the next few months.

Thanks to a flurry of solid profits, as well as the big climate bill, the Solar Portfolio ETF (TANNING) has popped up significantly over the past few weeks.

It broke out of a bullish ascending triangle pattern it had formed (the bold purple lines in the chart below). And it also convincingly broke above the resistance line of a multi-quarter downtrend (the bold red lines). It started at the top of the ETF in early 2021.

In other words, solar stocks appear to be breaking strongly out of a one-year trend. Moreover, they seem to be forming a promising new uptrend. If this persists, it implies that solar stocks may rise another 50% in early 2023.

E-commerce sales in the United States.  A chart showing revenue since 1999 shows upward growth in the billions.

That’s about as bullish of a technical picture as you’ll find in the markets these days.

And this is happening in an industry that is fundamentally driven by explosive revenue and profit growth over the next 12 months.

It doesn’t take a rocket scientist to connect these dots. The evidence strongly suggests that these stocks will soar through 2023.

The Last Word on Solar Stocks

There is no “sure thing” in the stock market. Investing is all about odds.

But the bulk of the evidence today strongly suggests that we are in the midst of a generational transition from bear market to bull market. Investors like you and me can make a fortune in the next year. How? By simply buying the right stocks that will soar during this once-in-a-decade transition.

There is a little “good actionsin this transition.

You have clean technology inventory, which we believe may soar in the coming months thanks to favorable legislation. You have artificial intelligence equities, which we believe will benefit from the current environment labor shortage accelerating demand for automation solutions. And you have space stocks, which we expect will skyrocket in 2023 as SpaceX and others start a new era of space exploration and commercialization.

In the space industry, there are one stock in particular that we absolutely love at present. In fact, we think it’s the best market stock to buy today. We’re not the only ones thinking this…this stock has more than doubled in just a few weeks.

Why? Because we’re less than a month away from a breakthrough catalyst that could increase that stock of space 10x in days.

Seriously. It’s the unmissable event of the year – and the unmissable action of the century!

As of the date of publication, Luke Lango had (neither directly nor indirectly) any position in the securities mentioned in this article.


Comments are closed.