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.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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