Hey There Income Hunter,

Solar is heating up again and the probability is rising that Congress will throw money at it.

In May, the Department of Interior said last month it was on track to approve 48 wind, solar and geothermal energy projects. These projects will have the capacity to produce enough electricity to power over 9 million homes by the end of the 2025 budget cycle. 

So, the current energy crisis, plus zero-based carbon emission goals place solar as top priority, and the Russian invasion has only added to the urgency.

Investment in renewables could reach $2 trillion a year and the increase in spending last year was driven by solar as Asia laid out almost $370 billion on renewables. 

Europe has no choice since it is moving toward a ban of Russian energy imports 

So, who do you invest in because we know not all companies will survive?

Today, I’ll lay out who I think is the best solar play and why …

Top Solar Companies 

There are a number of companies competing in the solar space including First Solar (FSLR), Enphase Energy (ENPH), Sunrun (RUN), and SolarEdge Technologies (SEDG) in the US.  

You also have a number of companies in China including : Xinyl Solar Holdings (HK), GCL Technology Holdings (3800 HK) and JinkoSolar Holding ADR (JKS).

The top Chinese firm may well be Xinyl because it is focused on large-scale, total end-to-end solar farm projects. By using two-sided solar panels that stand upright they have increased power generation by 40% per square foot. 

The vertical panels are cheaper to maintain and they double capacity. This solution will be ideal in Europe, where solar has become a priority in the quest for energy independence.

Who to Bet On

China currently has the largest solar capacity in the world but trading Chinese companies has been difficult.

Well, the good news is investors can get access to the China and US companies via the Invesco Solar ETF (TAN).

Below is the data and top ten list of companies included in the TAN ETF …

        

TAN Charting Patterns

Notice the chart below showing a breakout above the downtrend line and above a cluster of 20-, 50- and 100-day moving averages. TAN still has the 200 DMA above, but I would rather buy here and on a test of the 50 DMA.

I would buy here and near the $69 level with a stop-loss on a close below 67.75, which is the low on the breakout day (May 16).

Bring It Home

Next week will be a critical week because we have Treasury bond supply (3-year, 10-year, 30-year), plus the big consumer price index (CPI) inflation number on Friday.

If the S&P 500 can hold above 4,100 I think that will signal that the market is in balance as we head into the Fed’s FOMC meeting on June-15.

We are always susceptible to an exogenous shock but aside from that it seems institutional investors are comfortable with their hedges at this point.

There are also rumblings of weaker economic numbers setting the Fed up for a slightly less hawkish stance, but that demands weaker numbers so we will play that number by number. 

Meanwhile, I hope you have a great weekend and as always … 

Live and Trade With Passion My Friend,

Griff