After soaring in 2020, clean energy stocks saw a sharp correction about a week after 2021. We can see this in the exchange traded fund iShares S&P Global Clean Energy Index Fund (ICLN), which gained 137% in 2020 but has lost 18% to date.
No wonder clean energy stocks needed a correction. This was an area of the market where speculative fervor reigned as investors expected the global transition to renewable energy to accelerate. When an increase in clean energy initiatives did not immediately translate into profits at the same level as the price increases, day traders and speculators set out to exit.
Speculations aside, there was another major factor that caused clean energy stocks to skyrocket in 2020: falling oil and gas prices. Investors got angry with oil and gas stocks as downward price pressures put even more pressure on this already underperforming sector. Many began to see oil and gas as the way of the past and clean energy as the future, not only in terms of energy use but also in terms of capital gains. In 2021, oil and gas prices began to rise again as people began to travel more despite the pandemic, leading to a shift in investment funds from clean energy back to oil and gas.
However, despite the recent correction, long-term growth drivers for clean energy remain. Countries and businesses around the world are renewing their efforts to move more towards clean energy as climate change increases the frequency and severity of natural disasters such as forest fires, blizzards and hurricanes.
Top fund managers appear to be getting optimistic again on solar energy stocks. According to GuruFocus data, some of the leading solar power stocks saw a sharp surge in guru buying in the second quarter after selling off with Sunrun Inc. in the first quarter (RUN, Finance), First Solar Inc. (FSLR, Finance) and SolarEdge Technologies Inc. (SEDG, Finance) at the top. With favorable long-term growth drivers and renewed guru confidence, could these stocks be prepared for a rebound?
Based in San Francisco, Sunrun (RUN, Financial) is a private solar module and battery storage company. It provides homeowners in 22 states through rental and purchase contracts with solar panels, batteries, installation, education, and other solar power equipment and services.
As the leading provider of solar systems and residential services in the United States, Sunrun is committed to expanding the country's access to solar energy and should benefit from the increasing demand for renewable energy sources. The company reported new records for installations for the second quarter of 2021 and noted strong demand for solar systems for residential buildings as well as virtual power plants and integration with electric vehicles.
In the second quarter, eight gurus bought Sunrun's shares while two gurus sold the shares. Including investors adding to their positions
Steven Cohen (Trades, portfolio) and
Jeremy Grantham (Trading, portfolio).
At the end of the quarter, the largest guru shareholders were Sunrun
Philippe Laffon (Trades, portfolio) with 8.30% of the outstanding shares,
Chase Coleman (Trades, Portfolio) with 3.43% and
Andreas Halvorsen (Trades, portfolio) with 2.17%.
On September 8th, Sunrun's shares were trading at $ 44.86 with a market capitalization of $ 9.26 billion. The company has a GuruFocus financial strength rating of 2 out of 10 and a profitability rating of 3 out of 10. The Piotroski F-Score of 2 out of 9 and Altman Z-Score of 0.63 indicate that the company is likely to need to raise additional liquidity, to avoid bankruptcy. Revenue continues to grow at a steady pace, although profits have trended down over the years as the company focuses on business expansion rather than profitability.
First sun (FSLR, Financial) is an Arizona-based semiconductor company that manufactures utility-scale solar panels and photovoltaic power plants. It also provides support services for its systems, including maintenance, construction, financing and recycling of used panels.
Due to increasing competition in the project development business, First Solar has withdrawn from this sector in order to focus on expanding the more profitable business of manufacturing solar modules. This marks a strategic shift in the company that could be beneficial to its long-term growth, as focusing on one area of expertise can often improve a company's operational efficiency and reputation in the industry.
In the second quarter, five gurus bought shares in First Solar while three gurus sold the shares. Including investors adding to their positions
Ken Fisher (Trades, portfolio) and
Louis Moore Bacon (Trading, portfolio).
Pioneer Investments is First Solar's largest guru shareholder with 0.80% of the outstanding shares, followed by
Steven Cohen (Trades, portfolio) with 0.18% and
Jeremy Grantham (Trades, portfolio) with 0.05%.
On September 8th, First Solar's shares were trading at $ 95.43 with a market capitalization of $ 10.15 billion. GuruFocus rates the company's financial strength with 8 out of 10 points and profitability with 5 out of 10 points. The interest coverage ratio of 22.14 and the Altman Z-Score of 5.8 indicate a fortress-like balance sheet. The top line hasn't shown much uptrend in the past few years, but the bottom line has stayed mostly in the green, which is a positive sign.
SolarEdge Technologies (SEDG, Financial) is a photovoltaic company based in Israel. The company produces power optimizers, solar inverters and monitoring systems that aim to increase the energy yield of solar power systems.
This company has been the number one component supplier to private solar installers for the past ten years. It has also expanded to commercial solar and energy storage, which further supports the growth of its business. Increasing competition has slowed growth as more and more companies emerge in the solar energy sector, which SolarEdge is countering by diversifying into electric mobility solutions in Europe.
During the quarter, six gurus bought SolarEdge stock while one guru sold the stock. Including investors adding to their positions
Catherine Wood (Trades, portfolio) while
Ray Dalio (Trades, Portfolio) was one of the new buyers.
At the end of the quarter, Pioneer Investments was the largest guru shareholder in SolarEdge with 0.89% of the outstanding shares, followed by Grantham with 0.37% and Cohen with 0.10%.
On September 8, SolarEdge shares were trading around $ 276 for a market cap of $ 14.46 billion. GuruFocus rates the company with a financial strength of 6 out of 10 and a profitability rating of 6 out of 10. The cash-debt ratio of 1.01 and the Altman Z-score of 7.99 indicate that the company is financially stable. Both sales and profits have grown steadily over the years, and the company has not posted a net loss since the second quarter of the 2014 calendar.