TAN ETF

I am upgrading TAN from a hold to a buy due to undervaluation, improving technical patterns, and a bullish RSI divergence relative to SPY. Despite bearish sentiment and a 60% drop since summer 2022, TAN's price-to-earnings ratio is now attractive at 14, with a PEG ratio of 0.7. TAN's concentrated portfolio, high standard deviation, and cyclical risks suggest taking a small stake; use limit orders around market open.

I maintain a hold rating on TAN due to its decent valuation but weak momentum and bearish seasonality. TAN outperformed from Election Day 2016 to 2020, but is down over 20% in 2024, with assets under management dropping significantly. The ETF has a 17.3x price-to-earnings ratio, with a high annual volatility and concentrated allocation, posing cyclical risks.

The solar energy sector has suffered a massive downturn and is hovering near a four-year low. However, companies that were able to reduce manufacturing capacity have been generally better off.

Solar stocks have rallied recently, but the rally is more than just a "dead cat" bounce. Data center demand, a crackdown on Chinese solar, and interest rate cuts all bode well for solar stocks in 2024.

Investors can take advantage of the growth in the photovoltaic industry with Invesco Solar ETF, which offers potential benefits without excessive risks. TAN is projected to do well as demand for new photovoltaic installations rises and interest rates may decrease. However, the ETF is exposed to risks such as political influences, tariffs on Chinese and Taiwanese firms, market volatility, and competition.

While energy stocks have been strong performers, renewable energy stocks such as the Invesco Solar ETF have not experienced similar success. TAN has significantly lagged behind the S&P 500 in the last six months and is currently at a critical support level. With a price-to-earnings ratio of less than 16, the sector, which is sensitive to interest rates, is at risk of hitting lows not seen since July 2020.

Here is what I posted on X on Tuesday: Here is a thought from my Outlook 2024– Environment – Solar stocks did not have a good 2023. For 2024, we are watching First Solar ($FSLR), and the ETF Invesco Solar Energy (TAN).

TAN: 2024 Could Be Volatile

2023 has been tough for the solar industry, but this has not stopped impressive growth despite the challenges. Stocks are down, but business actually looks bright. The Invesco Solar ETF is a US-focused view of the solar industry and this impacts the cautious view about solar in 2023, notwithstanding recent plans to dramatically expand renewable investment. With a successful COP28, and climate emergencies everywhere, the solar industry is likely to do well in the near future.