The overlooked Guggenheim Solar ETF (TAN - Free Report) was the best-performing ETF of October. This solar ETF gained 10% and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.
The gains were driven by encouraging industry fundamentals including rising demand for solar power, huge levels of panel installations, global warming issues, new and advanced technologies, and efficient alternative energy application. Additionally, the major shift toward clean energy by various counties like China, India and Japan is fueling growth (read: Best-Performing ETF Areas of October).
The report from the International Energy Agency (IEA) also caused a spike in solar stocks. Per the agency, solar power expedited and outpaced the growth in coal industry for the first time last year. This suggests the beginning of a new era for solar power. The agency expects that solar photovoltaic (PV) capacity growth will be higher than any other renewable technology through 2022.
If these weren’t enough, a strong earnings report from First Solar (FSLR - Free Report) set the cornerstone for the industry and led to the rally.
Investors should note that the surge came despite fears of a possible tariff on imports of solar panel that would dramatically increase the cost of solar panels in the United States and in turn hurt the industry.
Let’s take a closer look at the fundamentals of TAN.
TAN in Focus
This ETF offers exposure to the global solar industry by tracking the MAC Global Solar Energy Index. It is home to 27 stocks with large concentration on the top firms. American firms dominate the fund’s portfolio at nearly 43.7%, followed by Hong Kong (27.6%) and China (9.8%). The product has amassed $410.2 million in its asset base and trades in a solid volume of more than 236,000 shares a day. It charges investors 71 bps in fees per year.
Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars. Below we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of TAN
First Solar: The stock surged about 28.1% in October. It carries a Zacks Rank #2 (Buy) and has a VGM Style Score of B. Though First Solar has a dismal Industry Rank in the bottom 36%, it saw solid earnings estimate revision of 43 cents for this year, in a month. The stock occupies the second spot in the fund’s basket with 10.1% share (read: ETFs to Gain on First Solar Q3 Earnings Beat).
DAQO New Energy Corp. (DQ - Free Report) : This stock takes the fifteenth position in the fund’s basket with 2.9% allocation. It delivered incredible returns of 31.5% last month and belongs to a solid industry having a Zacks Rank in the top 36%. The stock saw no earnings estimates revision for this year, in the last 30 days. The stock has a Zacks Rank #3 and a VGM Style Score of A.
Atlantica Yield plc : This stock witnessed positive earnings estimate revision of 14 cents for this year last month. It has a Zacks Rank #3 and a VGM Style Score of C. Atlantica Yield gained 14.1% last month and falls in an industry having a ugly Zacks Rank in the bottom 36%. The stock occupies the seventh position in the fund’s portfolio, making up for 4.7% share.
SolarEdge Technologies Inc. (SEDG - Free Report) : It currently has a Zacks Rank #3 and a VGM Style Score of C. The stock added 13.2% in October but witnessed no earnings estimate revision in the past month. It belongs to a similar industry that of First Solar. SolarEdge is the fifth firm and accounts for 6.4% share in TAN (see: all the Alternative Energy ETFs here).
JinkoSolar Holding Company Limited (JKS - Free Report) : This stock takes the tenth spot in the fund’s basket with 4.2% of assets. It was up 7.7% last month and saw no earnings estimate revision for this year in the past 30 days. JinkoSolar currently has a Zacks Rank #5 (Strong Sell) and a VGM Style Score of D. Further, it belongs to a similar industry that of First Solar.
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