Buy Signal on Invesco Solar ETF (TAN-US)

05/11/2021

We had an Enter Long Strategic signal on November 1, 2021, triggered by our system on the Invesco Sloar ETF, TAN-US, the Solar ETF.

Our system also triggered an Enter Long Tactical signal on October 12, 2021 that imply a likely bullish acceleration. The TAN ETF is based on the MAC Global Solar Energy Index (Index) comprised of companies in the solar energy industry (physical methodology). The expense ratio is 0.69%, and the distribution yield is 0.11%. The return is -3.6% YTD and +434% since january 2019. The fund’s weighting scheme attempts to boost exposure to pure-play companies and therefore underweights the medium-play group. Index constituents are rebalanced quarterly.

The Invesco Solar ETF has a $ 4 Bn market cap, made of 54 holdings, with a weighted average market cap of $9 Bn. The fund’s selection universe begins with global solar energy companies of all caps including all solar technologies (crystalline and thin-film photovoltaic solar and solar thermal), the entire value chain (raw materials, installers, to financing), and related solar equipment (power inverters and encapsulates). The 10 first position represent 58% of the total weighing, with Solaredge, Enphase and First Solar weighing for c.33%. Geographically, the US is weighing for 54%, Asia for 30% and Europe for 16%.

The Solar theme is back on track, due to higher energy prices, the upcoming COP26 and rumors that the Biden infrastructure plan will include $500 Bn for Renewables energies/infrastructures. But strong corporate results and prospects from players including Enphase led the solar energy theme higher as companies are now more mature and in accelerating growth mode.

Short term catalyst : Accelerating growth, favorable political context.

This signal looks consistent with the bullish reversal in process for Tech Renewables, while Utilities Renewables are already back in major uptrend in the US.