October 21, 2021: 3 Stocks to Play the Coming American Solar Boom
Brendan Coffey, CFTe, chief analyst of Sector Xpress Greentech Advisor, explains why solar has grown from most expensive to cheapest utility-level power in the past decade. He talks about the California rule to have solar on every new house built and expected federal support for it. He also discusses which stocks to play the trend; a solar company, an inverter company and an installer.
The webinar was recorded October 21, 2021.
You can find the slides here.
Chris Preston [00:00:05] Hello and welcome to today’s Cabot Wealth webinar, Three Stocks to Play the Coming American Solar Boom. I’m your host, Chris Preston, Chief Analyst of the Cabot Wealth Daily advisory and Vice President of Content here at Cabot Wealth Network. With me today is Brendan Coffey, Chief Analyst of our Sector Xpress Green Tech Advisor newsletter. Today, Brendan is here to talk about the recent resurgence in green tech stocks, what’s fueling it and why the sector as a whole looks like internet stocks about a decade ago, with similar return potential over the next decade. This is an interactive webinar, which means we’ll be fielding your questions after Brendan’s presentation concludes. So if you have a question, feel free to ask it at any time in the question box on your control panel and we will try and get as many of them as time allows once Brendan wraps things up. Just keep in mind that we cannot offer advice in regards to your own personal investing situation or portfolio.
Chris Preston [00:01:02] First, let me introduce Brendan. Brendan has been in the investment business for more than 25 years, including as an investment advisory editor, investor and writer for and about some of Wall Street’s most influential minds. He’s discussed investing strategy with the likes of Carl Icahn, Mark Cuban and Leon Cooperman, and collaborated with hedge fund managers and entrepreneurs on books and essays. He’s written about investments in markets for Forbes, Businessweek, Fortune, The Wall Street Journal and numerous other outlets. Brendan is a certified financial technician representing extended study and achievement in technical analysis of securities. He combines technical and fundamental analysis in pursuit of a long held passion for environmental and ESG stocks. In addition to ESG, he conducts proprietary research into billionaire owned stocks, SPACs, sports related equities and other sectors. And today, Brennan is going to tell you why you should be investing in ESG and green tech right now. So I’ll let him do just that. Brendan, take it away.
Brendan Coffey [00:02:06] Yeah. Thanks, Chris, and thank you all for joining me. So, yeah, we’re going to talk about ways to play the upcoming American solar boom. But as Chris alleded to first, I want to set the macro framework for for how I view things. And to do that, we’ve got to go back 20 years to when the internet died, the dot com bubble bursting and dot coms aren’t going to come back, said columnist Thomas Frank after the dot com bubble exploded. Of course they did, and they came back roaring back, but it took a lot of time. So I want to talk too much on this because we have a lot to get to. But as you know, the dotcom mania was tremendous enthusiasm over the potential for internet stocks, which has proven itself out over time. But but back then, in the late 90s and 2000 really got overextended and and it burst, as we see here. And the thing that I really want you to notice on this slide is our long lost decade for tech stocks. So depending on the exact day you bought, if you bought somewhere in 2001, the QQQ, you know that the Nasdaq Tech Index or or even great names like Microsoft and Amazon, you could have gone ten years and not made a return. That’s just how moribund the market was. But as you can see in the chart about 2012 tech broke out, but it broke out tremendously. As you can see on this sort of step back view longer term, you know, the chart with same breakout. You really want to be in tech the past 10 years and won’t dwell on the bullet points here. But but other than the fact that even while the stock market was ignoring tech stocks, venture capitalists, private equity entrepreneurs were still innovating in tech during that 10 year lost decade in the stock market.
Brendan Coffey [00:04:00] And so in solar and green tech, I believe it’s it’s 2012 all over again. We’re just breaking out probably less of fewer of, you know, of the solar stock bubble of of the mid 2000s. But just briefly, 2006, 2007, if you were a solar company, if you were a solar stock, if you’d you almost certainly doubled in value in the year 2007. I haven’t found the example of a solar stock that didn’t double in 2007, and that was driven by again, people just like with dot.coms, people getting very excited about the long term potential driving of valuations ahead of themselves. And in the case of green tech and solar, it’s driven a lot by record high oil prices and the whole idea of peak oil that the world is going to produce less and less of fossil fuels and had no choice but to go to renewables. That burst mainly because valuations got ahead of themselves as soon as 2008 started and was helped along by the financial crisis. And then they entered almost a lost decade, really lost 11 years. And I want to touch on all the other bullet points there. But but the the lesson being there was still innovation going on even when people didn’t want to be in solar stocks and, you know, advances in solar efficiency. Large, large utility scale projects that are really a proof of concept a million for PV installations done in three years. It took 40 years for the United States to get the first million solar installations done. And then the next three middle of last decade happened in three years. And then in 2019, solar hit 40 percent of the annual electric capacity added to the US grid. And this is really, really driven by the innovation during during the sort of lost market decade. And here is just to show to the point that that the smart money, the VCs, the longer term money around the smart money, the longer term money continued to focus on clean tech and to see the annual investments into renewable energy and energy efficiency really were pretty dramatic.
Brendan Coffey [00:06:20] So one of the things that all that research and investment paid off for is solar. So this is a chart taken from an annual report done by the brokerage Lazard Frères. And I’ve simplified it, I’ve stripped out a number of energy sources that aren’t relevant to us here to make it more readable. And here you can see in 2009 the top the Green Line solar energy was the most expensive electricity source on a utility scale in the United States. So this is a chart of the levelized cost of energy for energy generation on the utility scale, solar was by far, as you can see, the most expensive at $349 a megawatt hour. So, you know, fast forward ahead 11 years all the way to the lower right hand corner. We see the green arrow and solar is now the cheapest - the cheapest at $39 a megawatt hour, just ahead of wind at 40. And then it’s even just above that is natural natural gas combined cycle. So full time running, efficient natural gas power plant is about fifty nine dollars a megawatt hour, and that’s still 50 percent more than solar is right now. And that’s why it’s cheaper to build a renewable energy plant from scratch than to than to build simply build a new fossil fuel plant or even overhaul a lot of fossil fuel plants. And then just elsewhere on that graph, you see coal really hasn’t changed in price, but has become less and less competitive. And then the yellow line, just to explain, is a natural gas peaker, which is just a natural gas power plant that’s built by a utility but used only intermittently in peak power periods.
Brendan Coffey [00:08:13] But let’s look at solar stocks right now is you can see this is a monthly chart of the Invesco Solar ETF, TAN, which is a good ETF representative of American listed stocks, American companies, as well as foreign companies that are listed in the U.S. And it’s a nice proxy for the state of the solar industry, and you can see it breaking out there on the right hand side last year with green tech. It had a great back half of two thousand twenty. And then we came into this year. You see it, you see it step back and sort of we really saw a lot of weakness generally in all growth stocks, regardless of sector into May this year. And then solar found some footing in the - it’s only just recently broken back over the 200 day moving average, which is the purple line here. And that’s a long term indicator I always like to see. Always want to see a stock or sector above the 200 day, which is sentiment that’s in its favor. And one more thing here about the step back we’ve seen this year in 2021. It’s actually while hasn’t been terribly pleasant to to be an investor through. It’s actually very normal to have this, this type of a step back in the early stages of a big, bull move. I don’t want to sort of dove into technical analysis jargon, but for those who care it’s a Gann Retracement. So essentially it was a 50 percent step back retaking of of the 100 percent move that we saw last year. And that’s incredibly orderly, orderly and as a technical analyst, actually, I really like to see that. I think we’re starting the new leg up.
Brendan Coffey [00:09:57] But there are there are immediate, immediate uncertainties. That have that have been affecting market action, whether it’s tariffs on Chinese panels and actually not just panels, but raw materials that go into making solar equipment, partly for anti-dumping reasons and partly for concerns that Uighurs, the minority in western China, are being used as slave labor in some of this production. So that’s weighing a little bit on costs. And then right now we’re weighing on the market a little bit is is the possibility of tariffs on Malaysia, Thailand and Vietnam because of the belief that Chinese manufacturers are routing their goods through those countries and either just relabeling them or doing very minor finish work and then sending them on to the U.S. to avoid the tariffs. So there’s the possibility of additional tariffs going up, which would raise costs for some American installers. You know, I think there’s a lot of things some companies are going to be winners here, some are going to be losers on the U.S. side. A decision on that should come before year end, and the decision has been kicked down the road a few times already.
Brendan Coffey [00:11:11] And then another, as you see here, is it going to be the infrastructure bill is going to be a long term spending bill. And what I want to say about that is sort of preface that by saying, I don’t think solar or green tech need federal supports. I think the proof of that is that the prior four years before the new administration came in, you had a federal government that was, I guess, to put it generously indifferent at best to renewable energy. And yet during that time, we saw tremendous double digit growth in all forms of renewable energy, including solar. Right, you saw solar become 40 percent of annual U.S. capacity additions in 2019, a level that that’s continuing and as well as just increasing demand overall for renewables. So, for instance, last year, U.S. energy demand dropped because of the pandemic, but renewable energy demand increased in the teens. The number escapes me right now. So even as overall energy demand dropped, renewable energy demand increased. That’s what’s installed by utilities and things like that. So that’s a sign of a really healthy industry. That said, when the when the idea of government support and money and investment is floated, investors got excited and you could see the action in February. Everyone got, everyone got ahead of themselves. And so now with the delay in these bills and the possibility they might not happen at all, you see a lot of hesitancy by market participants to to place their bets, which is which is understandable.
Brendan Coffey [00:12:49] And then lastly, the status of future tax credits solar, solar, get solar installations, get federal tax credits that are now due to expire in 2024. And again, anything that that helps cut prices for end users, when it goes away, it’s going to hurt demand a little bit. Not a death knell by any means at all, but but will affect demand a little bit. So that’s a near-term uncertainty.
Brendan Coffey [00:13:20] But all that said, I mean, the long term picture for solar is really bright. So this is a table of American residential installations and really what’s important here is that year over year growth on the right hand side. You can see this year estimated to be about a 45 percent growth over 2020. Next year, we’re looking at 50 percent and then maybe 60 percent in 2023. And then you do get that step back in 2024 from the anticipated expiration of tax credits, but that it continues on and in fact, by by the end of the decade, solar is expected to - Annual solar installations are predicted to to be greater than other electrical capacity installations of all types of fuel. So it’s it’ll be greater than wind plus geothermal plus hydro plus fossil fuel additions. So expectations are huge for for solar to be added to the grid. And that’s just to that point.
Brendan Coffey [00:14:25] There’s a new law in California law that was passed a few years ago, but goes into effect this year that requires new single family and multi-family homes, up to three stories to have either rooftop solar or rooftop solar and battery storage system. The difference being, if you don’t have battery storage, you need to have greater wattage, greater energy capacity on your roof. And you know the bar chart here, it’s it’s not apples to apples but the top line is California housing president permits for the prior 12 months through August. And then the bottom is the number of solar installations across the country over that period. You have to net out the homes in California that are going to get that were going to get solar anyway. But rough estimates of the California law, at least at least, expands the market by 25 percent a year, really, probably more but it’s a conservative estimate.
Brendan Coffey [00:15:24] And the pie chart here is is just an illustration of the potential there is. The orange wedges are all the homes in the US with solar. It’s a single digit number and the blue is are all the housing units that don’t have solar yet and 10 of them. And if you think, well, the country is not as sunny as California, that’s true. But but Germany, which has long had a big, a big regulatory push, federal support push into getting residential solar has been wildly successful with it. They they have about the same amount of daylight and cloud cover that a lot of the northern U.S. has. So they’re already proof that that can happen quite effectively.
Brendan Coffey [00:16:11] This I’ll just touch on briefly. This is just that the very large money sovereign wealth funds, very large institutional investors, endowments, pensions, they’re really embracing green tech, solar, ESG. And the ones I pick out here are sort of self-serving. But but they illustrate so BlackRock, for a long time really till last year, was very dismissive of ESG investing, environmental, social and governance, which includes solar and green tech. But now they’ve really embraced it. They’re telling clients it’s a 10 trillion dollar opportunity. And here Saudi Arabia, they’re investing in renewables, solar as well to the tune of $20 billion. And that’s just notable because there’s no place in the world where it’s cheaper and easier to pull oil out of the ground in Saudi Arabia. And if they’re if they’re embracing it, then you know, you know, the trend is certainly for real.
Brendan Coffey [00:17:07] So let’s move on to our stocks. The first one here as a company, I really like it’s a solar equipment stock, Enphase Energy out of California. They make microinverters. A microinverter is is is the device that changes the direct current, the raw electricity from the sun that the panel generates to AC, which is can be used in our homes and businesses. And the photos here are just to show you how big they are on the top when they’re in the white background. There’s an empty solar inverter, a small enough piece of equipment with a very simple plug, plug in attachment and in the lower when it’s hard to see, but you sort of see where they’re set on the solar, on the roof, in the solar system. Enphase is very fast growing. As you can see, they’re going to get in the ballpark of doubling revenue this year. And and, you know, so it’s already growing market and they’re expanding their other business lines, which we’ll discuss in a minute.
Brendan Coffey [00:18:09] This is just to explain kind of the sort of core the basic advantage of Enphase. So on the right is a simple illustration of of sort traditional string inverter set up with the solar with solar panel. The string inverter, it’s one piece of equipment that converts the raw energy connected to all the solar panels in a daisy chain. The benefit to a string inverter is that it’s upfront cheaper than a microinverter. The downside is that if the string inverter fails, you lose your energy from all your panels. Another downside is that the string inverter is only going to convert at the rate of the least performing panel that it’s connected to. So which means that there’s one panel that’s covered by leaves or just as a defect that produces only 90 percent of its power potential, while the other panels around doing 100 percent, the whole system will only produce 90 percent. Now, a microinverter is a series of is, are smaller that power groups of panels. It’s not one to one like this illustration shows, but one microinverter would service about six solar panels, and the benefits are that compartmentalization, where if one microinverter fails, the whole system doesn’t fail, you just lose that one panel or group of panels.
Brendan Coffey [00:19:41] So and right now, Enphase, the chart looks really good. As you can see here, this is a daily chart. Participate in that great back half of 2020 run up, have a good start to the year and then fellows starting in February with the wholesale step back that we saw in solar and green tech and tech stocks in general, down to where everything bottomed in mid-May. But what was good for Enphase is it rebounded much faster than solar and other other growth stocks, really pretty quickly, as you could see it recaptured the purple line, which is the 200 day moving average, and the green line, which is the 40 day moving average and just pushed above it just recently. And you know, one thing I’ll note here is you see that the green line is about to cross over the purple line, so which is known as a golden cross in technical analysis. And that’s when the slower moving, moving average, usually 50 day, I prefer the 40 day, it’s a little more indicative, a little quicker crosses over the 200 day. And that’s just a great indication that sentiment is really improved and you tend to see really good follow through on a golden cross. And it’s opposite is a death cross, which you’ve probably heard because it’s dramatic sounding. That’s when the 50 day moving average crosses down then goes under the 200 day, which you saw here a couple of spots, but didn’t really affect Enphase.
Brendan Coffey [00:21:13] So sort of let’s focus here on what are the advantages for Enphase, as the graphic here shows on the right, the American derived revenue for Enphase and its main competitor, SolarEdge. SolarEdge and Enphase control about 80 percent of the U.S. microinverter market. They’re the two dominant players. I like SolarEdge too but I prefer Enphase for valuations and for its market position. SolarEdge is usually discussed as the largest microinverter company in the U.S., but that’s not true. So what I did is I went back and just took a snapshot of American revenue for the June quarter, going back the past four years, and you can see the orange line is better. SolarEdge is bigger because it has more international business. So I like I like that exposure, if you believe American solar is going to take off and you want to be with the companies that are really well positioned market wise, which Enphase is one.
Brendan Coffey [00:22:13] Another thing which I haven’t discussed yet or I touched on briefly, is the expansion out of microinverters into other business lines. So microinverters have been essentially a one time sale. If you’re if you’re a resident residence and you’re putting in a solar system, you’re only going to buy your microinverters once. Enphase is moving into a home battery storage, which a lot of other companies are too, as well as energy management software. So this is this would be things like predictive analytics. When might when might you need to do maintenance on on your solar system, when doing the calculations as to optimize energy usage and when when you add feed energy back into the utility grid where that’s possible and things of that sort, it sort of opens up A.I. and machine learning in the long run. Those are those are. The company believes it can go back to all its microinverter customers and sell them new products based on those things. So these are people who already know Enphase, like it and had spent on average $2000 to to, on their microinverters. The company thinks that they have the potential to sell another 6000, so 8000 total to existing customers to these expanding home offerings. And so that’s great growth potential besides even the expanding market. And the company is going into bigger microinverter systems for small commercial solar panels. So you like one building rooftop type thing which widens the potential market. And lastly, a great thing for shareholders. The last we know is the company still still has an authorized $500 million share buyback, which they’ve said that they they like to use to support prices when they dip. As I said, I really like Enphase for buying now. But there are some cautions. It’s still pretty expensive. It’s fifty seven times this year’s the next 12 months sales. You know that that’s not unusual for growth stock, but it’s still not cheap. Semiconductor tightness, which every industry is facing, has been restraining sales. If Enphase had more semiconductors, last quarter, they would have sold more and the that tax credit expiration that we discussed earlier.
Brendan Coffey [00:24:41] So on to our next stock. This is another business I really like. It’s not the explosive growth story, that a lot of solar stocks promise so not an Enphase, but it’s much more predictable. It’s Ameresco out of Framingham, Massachusetts, and they’re an engineering firm, essentially. So they will they will design, plan and install renewable energy projects of all types and energy efficiency projects of all types. Solar, geothermal, a lot of ways to energy, as well as energy efficiency for municipalities, state and local governments and corporations, So a typical project here in the photo is Parris Island, where the Marines to train. And that’s just a solar panels in the parking lot. The U.S. government and U.S. military are really important customers for Ameresco and I wouldn’t underestimate the potential of the U.S. military as a customer. That’s because the military has long been concerned about the effects of climate change on the robustness of its bases, which which basically means domestically they’re looking to get bases independent of the local electrical grid, or at least have a system that can run the base independently of renewable energy.
Brendan Coffey [00:26:10] Here’s the chart. Good, not as good as as Enphase’s, but but still looking quite bullish. You could see here in March 20, March 2021, there was a big a big drop off. So that was the company announced selling an additional three and a half million shares and which is dilutive. So of course, it would affect share prices. But when you release bearish news in a bearish market, it really kind of sparked an out of proportion drop here, which is what you see in March. What’s interesting, though, is even with that steep drop, it didn’t really violate that long term moving average of 200 day moving average. You really saw support come in where you would have expected it to. So it shows really good long term sentiment and you can see it’s it’s improving now. The smaller the smaller chart here is a monthly chart and and that’s just to show that that it’s really been fairly predictable. Yeah, it’s had some range bound trading, but really, since it’s recaptured its uptrend, it’s really got along nicely.
Brendan Coffey [00:27:21] So what are some of its positives? Even though it’s not as fast growing as Enphase or other of stocks, it’s still a 12 percent compounded annual growth rate since 2016. As I said, or I didn’t, it’s a three part business, which I started to say earlier, but I didn’t follow through on, so it’ll plan, design and build a renewable energy installation for our customers. It’ll also operate and maintain them under contract if a customer wants. It’s almost all almost all plants that they installed, and then they’ll also actually own the renewable energy asset. The solar field plant. And that’s usually that’s that’s always on the request of the commissioning customer. So for whatever reason, the municipality or corporation there that they don’t want to own the asset, they’ll they’ll they’ll have Ameresco pay it and have a long term contract to use it. So. So essentially, the operations and maintenance and the energy asset ownership really produce a lot of very predictable base income for the company based revenue for the company out the next decade. And it does have a lot of solar solar exposure as you see here. Most of its projects are solar. And then I’ll just note that the fourth business is R&D, primarily for the U.S. government looking into things like microgrids for the U.S. military, designing those. And I think I do like about Ameresco is it’s not just solar. They do some very interesting large projects in geothermal and waste energy, as well as energy efficiency, which could be everything built, things like changing light bulbs for for a mid-size city from regular bulbs to LED. And then lastly, they’re not a huge company, but they’re in a wonderful, I think, a wonderful market position and that they’re they’re big enough to to handle the projects that the mom and pop type outfit couldn’t be able to, but small enough to handle projects that a big conglomerate like a GE that would be inclined to to install a solar utility scale solar field wouldn’t want so like, for instance, Ameresco, they installed the rooftop solar system at the middle school in the city I live in. Really a good, good project, but too small for a lot of other companies.
Brendan Coffey [00:29:51] And the third stock here, I’m really a momentum analyst, I really want to see good stocks and get into them and and profit as they do better. So I’m not so much a value analyst beat down stock person. But I do. I do, I do. I did want to mention this one as a potential, as a potential play. It’s Array Technologies out of New Mexico and they make solar trackers. So trackers are, as you see here in the photo, they move solar panels to track the sun through the sky to maximize the exposure for generating electricity. It’s you can see it here in the photo. It’s the it’s the it’s the piece we’re focused on. As you can see, the A-R-R cut out of the metal and the motor and then a pull going all the way back, which moves each row. So you have tend to have one motor that moves many rows, which is something different that Array does as compared to competitors, competitors tend to like to have a lot more motors, a motor, a row type thing, which increases costs. So in addition to the tracker, well to just so on a utility scale solar field. They had been done where you would pick the best spot to place them best angle and direction to maximize their sun exposure. But their fixed tracker just moves them and that the extra efficiencies you get from that lower the cost of energy, as you see here, more than 20 percent compared to a fixed utility fixed solar panel.
Brendan Coffey [00:31:32] But its chart’s - the charts not so, not so great, but it hasn’t been public long. So an IPO about a year ago at 20 bucks a share, and it was a company I liked at the time we were going out, we were going to enter into it. But but it ran away from us right to start and for valuation reasons, we just didn’t go into it. There were also better, better opportunities at the time, but as you can see, it went to an all time high of 55. And then, as with everything else mentioned, a few times fell back with the with the broad solar and green tech weakness of this year. The problem is is, as you can see, that big gap down that was doing quarterly earnings report where that were management revealed that really got whalloped by steel prices and had some supply issues. And that was so you had a huge volume gap down here - I don’t show volume, but steel prices. And that’s always they always takes a lot for shares to recover from. The good news for Array is it really did hold on in the teens when it fell, it didn’t plunge further, which often is the case. They’ve been making their way back. They regained their 40 day moving average and they’re looking good. So as I said, I’m not a value type investor analyst. The way I would play this is you see the orange bar. That’s the level they have to reach to close the chart cap. Chart gaps in technical analysis and reality, generally a lot of resistance, you know a lot of selling headwinds until that gap is closed. And in this case, I think by the time Array shares are ready to close that gap, they’re going to also be bumping up against the 200 day moving average, which is the the purple line, that’s going to be a point of big resistance. So I would wait until you see shares break through both those levels convincingly. However, you define that for yourself because then it’ll have a much easier road to regaining, all those, all the points on the shares that that the market believed that it deserved earlier.
Brendan Coffey [00:33:46] And so why possible rebound for Array? Well, I believe that the steel price spike is temporary. We’re already seeing prices fall. In Array’s case management, at least was smart and they secured steel supply at fixed price from from a Korean conglomerate POSCO for the rest of the year. So that list will keep nasty surprises coming from earnings and also improves some of the basic valuation metrics. The price of sales is lower. And similarly to to to Enphase, you know, I like Array because it’s the largest U.S. tracker in solar. If you believe the US is going to do continue to embrace solar and really take off you want, you want the companies that are market leaders. Array is the number two solar tracker in the world overall to Nextracker, which is a division of Flex ticker FLEX. But it’s also a good company. But but it gets a little lost in Flex’s business and as I said earlier, Array they have fewer parts than other competitors less maintenance. They offer optional add on software that can improve system performance by about another five percent by adjusting for cloudy days and rough terrain. And then lastly, as I said earlier, solar demand is the second. Solar is the second being added to U.S. at a tremendous rate, and it will be the the best, the most added energy source soon. And in addition to that, tracker demand is outpacing overall solar demand. And that’s because utility level solar projects, which tend to use trackers, are outpacing overall solid demand. So, yeah, we’re through the stocks, and I’ll hand it back to you, Chris.
Chris Preston [00:35:41] Yeah, thanks, Brendan. Yeah, I’ll give you a minute to catch your breath, have a drink of water. Thanks for that. And we’re going to get to your questions in just a second. The meantime, just a bit of housekeeping, if you like what you’ve heard from Brendan so far today and are interested in signing up for his Sector Xpress Greentech Advisor newsletter, you can visit the website on your screen for a charter subscription. This CabotWealth.com/webinarspecial and what you get in return is immediate access to the Sector Express Greentech Advisor portfolio, so you can see current recommendations and also you get twice twice monthly issues with our latest featured stocks, specific recommendations and updates on all assets in the portfolio, including buy, hold and sell recommendations, weekly updates and alerts featuring the latest news and opinions, and our current investment recommendations and general market conditions. Plus two free premium reports. The three companies to buy today to profit from the decline of oil and profiting from the end of coal with three integrated green energy stocks. Again, you can sign up for Greentech Advisor by visiting the address on your screen. CabotWealth.com/webinarspecial.
Chris Preston [00:37:00] OK, let’s get to your questions. First one is from Craig, who’s been waiting patiently. His isn’t stock specific, more just solar industry specific. Brendan, he just asked, what is the life expectancy of solar panels?
Brendan Coffey [00:37:16] The life expectancy of solar panels. Well, I can, they vary on conditions. I’m not an expert in that, but certainly you’re looking 10 years, 20 years.
Chris Preston [00:37:32] Yeah, OK, so see more specific questions. You didn’t discuss solar panel companies. Are there any you think are worth looking at that come to mind?
Brendan Coffey [00:37:48] Yeah. Yeah, that was the tough choice not to include any. But mainly it’s because of because of the uncertainty over or over tariffs and infrastructure. But but I do. I do like some. I quite like I quite like First Solar, which is a panel maker, U.S. panel maker they manufacture in Ohio and elsewhere. You know, that’s that’s probably a name people know if you if you look at solar before there were long been a leader also suffered tremendously in that in that sort of lost green tech decade that we talked about earlier. But I think I think the stock’s in a good shape. I’m mulling debating now when to enter. It’s something I I think I want to hold for the long term. It’s a question now, you know, sort of caught in the expectation game, mainly that that Wall Street is more more skeptical than I am on its ability to continue to grow the business and wide margins. I think I think they’ve I think they they’ll do better with earnings and results than others expect. That’s a company I like. I also like SunPower and Sunrun, which are the two biggest solar panel installers in the country in the U.S., they’re also again just a strong market position. A lot of market share and just doing a lot of different things to to expand their expand their business models. One thing with each is neither. Neither SunPower nor Sunrun make their own panels. Sunrun gets theirs from a Chinese company, and SunPower gets theirs from Maxeon Technology, which was a company that was split off from it earlier this year and First Solar got rid of its installation business a few years ago. Those are three I quite like.
Chris Preston [00:39:44] OK, so getting into more specific stocks slash ETFs, Shondra asks, What is your take on CTEC, which is the Global X CleanTech ETF and Plug Power, PLUG?
Brendan Coffey [00:40:00] Huh. I like Plug Power. We’ve done well with it at times. Right now, fuel - addressing Plug Power first, fuel cell companies overall have been have been doing great in the market. So the question is went to buy them. I do like them. I think I think, you know Plug Power and other fuel cell companies really have a bright future ahead of them, given that they’re all connected - it’s connected to solar, connected to hydrogen as well, which is the because they’ll be the opposite. A key part of the hydrogen infrastructure we’re going to see and they could connect so solar too as a sort of co-located energy storage for renewable energy. That’s something that’s coming down the line. CTEC is is what you said. Let me take a look at it. I don’t. I don’t know it offhand. You know it. I don’t know the components individually. But but just taking a look at it, it’s behaving as as every other, every other fund in clean green tech is right now. It’s it’s really had a mixed past six months, but it’s improving. I apologize. I don’t know the specific components of it, so I couldn’t comment on that. But but it’s acting. It’s acting like green tech is. It’s it’s it’s it’s had. It’s been essentially rangebound the past few months, but certainly looking good right now.
Chris Preston [00:41:39] And a question Demal, if I’m pronouncing that close to right? Yes. What are the top five silver plays you recommend today? Obviously, your recommended three earlier. So I guess what other two you like, maybe that the solar panel companies you just mentioned and how long should you wait on some of these stocks?
Brendan Coffey [00:42:05] You wait to buy? I assume, as opposed to hold?
Chris Preston [00:42:09] How long to wait for. I don’t know what that means, when to buy or hold them.
Brendan Coffey [00:42:17] Yeah. Well, if it’s about entering, I don’t think anything is running away from you right now. I think so. You know, Enphase is one I like. Ameresco is one I like. I wouldn’t put Array in my top five because of the chart. For solar for sure. And Sunrun before fifth would be open for debate. Well, maybe SunPower. Yeah, let’s let’s call it that. When to enter, you know, as I said, it’s really just in the past week that the sector has sort of broken back into what I read as a bullish as a bullish stance. It’s now, now now could be the time to enter. You know, there are risks to that, especially especially with solar installers. I think just depending on if an infrastructure bill happens or not. But but, you know, I think it could if you’re if you’re buying the whole rather buying and trade buying to trade. You know, I think I think there are good, decent buys now in the long term if you’re buying to trade. You know, Enphase is good, Amersco, I think is has some, some possibility. You know, I think it’s going to hit resistance up in the 70s. You have to see how it will do with that. Any others, many you just want them above the 200 day moving average convincingly. And then and then I think they’re easier, easier roads ahead.
Chris Preston [00:43:56] OK, question from Jeff, Jeff asks which semiconductor companies are best leveraged to solar?
Brendan Coffey [00:44:06] Best leveraged to solar. That that’s a that’s a a tough one, mainly because I don’t dive into into that depth of fundamental research. Every hedge fund out there can out research me. I try to go technical analysis and go by the charts. That’s that’s what I’m better at than than a lot of a lot of people. So I don’t think I could give a honest, accurate answer to that. Sorry.
Chris Preston [00:44:39] OK, speaking of technical analysis, what do you think of ChargePoint, CHPT? I know that’s one that your colleague, our colleague Mike Cintolo, has mentioned a bunch.
Brendan Coffey [00:44:52] Yeah. And I was just looking at the chart. But hold on while I draw it up here and it’s actually just wrote a little bit about it in our latest issue because we’ve recommended a competitor that I think is a much better, a novel idea and better price. You know, ChargePoint has has, you know, has the size, right? They have the most EV charges in the U.S. You know, so you can’t, you can’t, you know, that’s hard to argue with. You know, I have yet to. The problem with EV charging companies is really a little bit of valuation, a little bit how to pick winners, and there they’re just others. There are others I like better. I don’t I don’t dislike ChargePoint. We haven’t. We haven’t. I haven’t recommended it lately. Probably because you see that that chart is hasn’t been hasn’t been great. It’s been a it’s been a bad 2021 for it. It looks like it looks like it hit a bottom, but that’s that’s my take on EV chargers. It’s it’s an issue I’m still thinking through. And as I said, I have a lot of valuation problems with a lot of the companies. So I’m looking for all the green tech portfolio for the newsletter is into charging stocks right now, but one of them is not ChargePoint.
Chris Preston [00:46:20] OK, we’ll do one or two more. Let’s see. Are there any technology developments you’re watching?
Brendan Coffey [00:46:32] Yeah, are a lot of a lot of exciting things. So, you know, one thing that that really caught my eye and that I’m waiting to be able to to buy into is sort of tandem technology in panels, which is this the idea of having two different types of technologies in a cell to capture different spectrums of sunlight? One company doing this is CubicPV. They’re not public, though. But they’re - they have backers for solar invested in it, as well as the The Hunt family. If you if you if you know, the Hunts from from wildcatting in Texas, as well as the the brothers trying to corner the silver market many years ago, they’ve invested in this too. And essentially what that allows is is you have these two technologies together on one panel that that take the theoretical efficiency of a solar panel from from the mid to high 20s and well into the 30s. That’s one thing I’m very excited about, and I think I think probably, you know, we’ll see come to market in the next few years. You know, longer term, always, always, always reading about new and exciting things. At MIT, they’re researching metal organic frameworks, which are these sort of micro lattices that that they believe they can change to conduct electricity and that they would make solar panels perhaps even better at converting sunlight. So those are two that come to mind.
Chris Preston [00:48:06] All right. Last question, you talked to a fair amount about U.S. Solar companies, are there any non-U.S. companies in solar that you like?
Brendan Coffey [00:48:20] Yeah, yeah. You know, Jinko Solar. Jinko Solar, a Chinese company, really, probably the price leader in panels. Its stock continues to continue to look well. It’s sort of a. Over the past, say, over the past two years of - I do do a weekly run through, a scan, of the two hundred and seventy five stocks I follow in green tech. Jinko Solar has probably appeared among my top among my top picks just for my weekly scans. The most of any. But you know, China is, I don’t consider Chinese stocks a buy and hold. There are things you need to trade because they get whipsawed so much by central government proclamations and and and some of the trade tensions between the countries. But Jinko Solar is just continually performed better than I expected. So there’s one.
Chris Preston [00:49:31] OK, well, thanks, Brendan, and thanks everyone for joining us today and for all the all the good questions. We’ll be back next month with a webinar from our Tyler Laundon, who’s Chief Analyst of our Cabot Small-Cap Confidential and Cabot Early Opportunities Advisories, where Tyler will be talking about the next big technology revolutions and how to profit from them. So, speaking of technology, that’ll be at 2:00 p.m. Eastern on Thursday, November 18th, so come back to that. That’s free. Just like today, that does it for us, for Brendan Coffee and the entire Cabot Wealth Network team. I’m Chris Preston and we’ll see you next time.
Brendan Coffey [00:50:11] All right, thanks for joining us.
Chris Preston [00:50:14] Thank you.