Solar stocks bloodbath

Solar stocks took a big hit.

On Friday, First Solar plunged 8.1%, Sunrun dropped 6.4%, Sunnova Energy International fell 5.0%, while SunPower was down 3.4%.

The Invesco Solar ETF (TAN) tumbled as much as 7% at one point on Friday before ending the session with a 2% loss.

And it’s not like solar companies were hot commodities to begin with. While the sector has rebounded after Friday’s sell-off, the four companies mentioned above are all down more than 20% year to date.

But not everyone is giving up on this investing theme.

“Manchin’s decision impairs the ability for the U.S. to achieve President Biden’s goal to reduce U.S. greenhouse gas emissions 50% to 52% below 2005 levels by 2030,” investment bank Cowen writes in a note to clients.

“Despite the disappointing news, the economic rationale for the shift toward renewable power is increasingly compelling and keeps us constructive on the group.”

If you are looking for contrarian ideas, these beaten-down solar stocks – alongside other renewable energy names – could be worth a look.

For those who don’t want to pick individual winners and losers, ETFs like TAN, the First Trust Global Wind Energy ETF (FAN), and the iShares Global Clean Energy ETF (ICLN) would provide a good starting point for further research.

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Time to revisit coal?

Climate advocates point out that Manchin has longtime ties to the coal industry.

Manchin helped found coal brokerage firm Enersystems, Inc. in 1988. And according to CNN, he had a between $1 million and $5 million stake in the company in 2021.

CNN further notes that financial disclosures show Manchin making over $536,000 from his share in Enersystems last year. To put that in perspective, his Senate salary was $174,000.

Public Citizen lobbyist Craig Holman told CNN that Manchin is a “walking conflict of interest.”

“And what makes it all the more troubling is that he’s the 50th Democratic senator, which gives him enormous sway over climate change policy.”

To be sure, coal is no longer making headlines in the investing world. In fact, the only coal-focused ETF — the VanEck Vectors Coal ETF (KOL) — stopped trading in December 2020.

But the industry is far from dead.

Alliance Resource Partners (ARLP), a diversified producer and marketer of steam coal to major U.S. utilities and industrial users, recently raised its cash distribution to investors by 40%. The stock is also up 58% year to date, in stark contrast to the broad market’s double-digit decline.

Another example is Peabody Energy (BTU), a coal producer headquartered in St. Louis. The company’s products are essential for electricity generation and steelmaking. Its shares are up 91% in 2022.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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