Humans have been using the power of the sun to advance life on Earth for thousands of years, but we have just started to harness the sun's immense potential to power our modern lives. Solar panels have gone from "tree hugging hippie crap" to a rapidly growing source of power that is falling in price just as fast - have you noticed?
Many of us have noticed this trend but viewed it as an investment nightmare, and rightfully so. Solar failures and prices have dominated headlines for many years and solar energy is the butt of many right wing jokes. The industry has relied heavily on subsidies, but it is now approaching a competitiveness in price that will change the game. The charts show an unrelenting disaster for the past few years and maybe that will continue, but I think we just hit a big turning point.
I am much more of a technical guy than a fundamental guy and will focus on the charts in a minute but some of the fundamentals for solar are worth nothing, although I will not do a fundamental dive into the companies I will show charts for.
Let's focus on the price of solar for a moment. Solar power is cheaper than coal in some countries. Wow was my first reaction when I recently learned that because I know how cheap coal is and figured that developing countries would keep choking their citizens with coal because it is just so damn cheap. Well, speaking of China, they are currently building the world's largest solar power plant. It will cover 25 square kilometers and will power one million households, year round. That will cut coal use by over 4 million tonnes per year. I am guessing this will not be the last considering the air quality in China.
But but..TRUMP!!! He wants to free up coal and bring all those blue collar jobs back to the forgotten man! Sure...but guess what, solar employs more than twice as many workers as coal. Two percent of US job growth last year was in the solar industry. Solar jobs have increased at least 20% per year for the past four and overall have tripled in the past six years. This is a real trend that is gaining steam as prices plummet and make solar a real choice for that same forgotten blue collar worker. Solar panels are not just for Silicon Valley idealists anymore, but all of us. The "payback period" for solar free of incentives or subsidies is now around ten years and the life of panels is more than twice that. The bottom line is...it makes sense...today.
I figured this would happen some day but have been surprised by the advancements in solar energy. I think even hard core advocates are a bit surprised by the successes in the past few years. This immense growth in the fundamental case for solar has been accompanied by a bloodbath in solar companies, many have gone bankrupt, some quite famously after getting government money. The companies that survived have been beaten to a pulp. The ETF that tracks these companies is trading at 18.53 as I write this - it once traded at 273. TAN lost about 40% last year too, even with the underlying fundamentals shifting in favor of solar so dramatically. So we are looking at a bombed out industry and some really cheap stocks. One of my favorites is Canadian Solar and it trades at a PE of 5.89 - yeah - that's what I said too.
Okay so enough of my convenient truth fundamentals for solar, time to look at some solar charts. First a few that help us put solar prices into context.
That is pretty significant technological disruption. Innovation is beautiful, no?
Okay, on to the price charts! First up is TAN which is the industry ETF product. As you can see below, that downtrend has been broken, and just today it became support as price exploded higher after testing it. When I consider this, the amount of beautiful charts of individual names and the changes in moving averages and RSI, needless to say - I bought this today.
First up for individual names is FSLR. The chart looks very similar eh? The tide may just be turning here folks. I am buying it.
Next up is the aforementioned CSIQ. I really love this chart. It broke the downtrend, hit the 200 day and retested the downtrend which became new support - exploded off of that and closed just above the 200 day. This company like the others and the ETF could be trapping me and I am ready for that, but for now I am buying and will look to keep adding if this trend breaks out.
Next up is SPWR and BOOM today! Check out that green expanded range candle throwing of the chains of the downtrend. We have a lot of green before the 200 day as well.
Next is TSL which is not so clear just yet. TSL is a really weird chart and is in a bit of a wedge. If price can clear the wedge and my horizontal line (been tested 4 times) this company too may be off to the races. This one bears more watching before I buy it.
Here we have CAFD and this stock too needs more watching. We have an interesting wedge forming here as well with the 50 day wanting to go higher here. Will be keeping an eye on it but not touching it yet.
Time to check out HASI and this one looks pretty sexy to me. It broke out of a nasty downtrend this week and like a couple others tested the trend line only to bounce higher and closed above its 50 day. Looks great to me.
Last up is SEDG which looks wonderful as well. Again the trend was broken that goes back to the summer time. Not only was it but it was a strong move.
To me these charts look great and so does the story behind them. I love to buy bombed out and hated things and solar fits that bill for me. I went long TAN today and a couple individual names and will look to add to the ones that already look good and keep a close eye on the ones that are setting up. One important thing to note here is that the 200 day moving average is sitting ominously above many of these charts and may smack down some early tries at a real breakout. Not to mention the supply levels above current price are naturally quite fierce considering the technical damage done in the murderous history of these stocks. So even if this goes well, it will be quite bumpy and require a barf bag I am sure.
These stocks performed well and showed a lot of follow-thru today and twitter follower @bZ1O91 shared a few other companies with me on twitter. Below are three charts from his list I also really like. I bought a lot more solar stocks today.
Shout out to my friend Courtney for the idea for this post