Wall Street has already declared a winner this week when it comes to the U.S. elections. But when it comes to solar stocks and today’s charged political environment, the vote has been less decisive, and even derisive at times. Let’s look at three players whose price charts and options strategies make them solar stocks to buy — without getting burned.
The President won’t concede. That’s the latest breaking news as Biden narrowly gains the lead in Pennsylvania and Georgia. But after four years, was anyone expecting anything less? Likely not, and by and large, investors haven’t blinked.
The S&P 500 rallied more than 6.50% this week, and as much as 9% since last Friday’s corrective low. And market leaders from Apple (NASDAQ:AAPL) to Zoom Video (NASDAQ:ZM) have rallied strongly on the prospects of an ineffective White House that will be challenged to dismantle Trump’s more popular market policies. Call it the Biden Gridlock Tour if you will.
Despite the popcorn-worthy political theater for the Oval Office, the fact is Congress will be decidedly split between red and blue politicians in the House and Senate. As much as and beyond favorable corporate tax breaks, loosened environmental standards will also remain as a legacy of the Trump administration. At the same time, any glimmer of hope for a Green New Deal has been doused. Net, net that’s bad for solar stocks, right? Maybe not.
So, what’s a solar stock investor to do? The suggestion is to look at the world around us and our many greener neighbors. Also, recognize our own country’s many individual states, businesses and families that continue to champion alternative energy practices despite the Federal government. Then consider the following three well-positioned solar stocks to buy with risk-adjusted strategies to profit from this secular trend with greater authority.
Solar Stocks to Buy: First Solar (FSLR)
Source: Charts by TradingView
The first of our solar stocks to buy is First Solar. The Western hemisphere’s largest PV module manufacturer knocked it out the ballpark with solid Q3 results last week, and reinforced the report with bullish guidance visibility into 2021.
Investors responded by sending shares up more than 13%. And if the FSLR price chart has any say in matters, the future looks even greener for today’s investors.
Technically, this solar stock’s earnings reaction has solidified a recent monthly chart move above key pattern congestion formed over the past six years. The interpretation is that third time’s the charm for bullish FSLR investors, with sizzling gains in 2021 on deck after two corrective base breakout failures in 2016 and 2018.
Favored Solar Stock Exposure: Long FSLR March $100/$120 bull call spread.
Sunrun (RUN)
Source: Charts by TradingView
The next stock of our solar stocks to buy is Sunrun. RUN stock was an early overachiever relative to its peers this summer. And conditions look great for that run to continue into the next year and beyond.
An announced buyout of Vivant Solar, which will make Sunrun the market’s largest solar installer, coupled with optimism the company will improve its financial position via investment in virtual power plants, sent shares skyrocketing by more than 175% from July through September. And as recently expressed here at InvestorPlace, the best may be yet to come.
Technically, a sizable correction appears to have completed. Shares are currently bottoming in an oversold, higher volume engulfing weekly candlestick formation that’s been helped along by this week’s earnings topper. Full weekly pattern and stochastics confirmation will have to wait until next week, but in our view, RUN’s bullishly developing intentions look good for buying into right now.
Favored Solar Stock Exposure: Long RUN February $65/$75 bull call spread.
Enphase Energy (ENPH)
Source: Charts by TradingView
The last of our solar stocks to buy is Enphase Energy. Shares of the large-cap solar inverter manufacturer have been on fire, with gains of nearly 375% since January and 570% over the past 12 months. A recent spotty earnings report plus today’s Biden Gridlock Tour could have easily and effectively capped an end to the friendly price trend, but it hasn’t. Not only should that be respected, right now it’s price action worth buying into.
Technically, the weekly price chart reveals ENPH has broken out of a slightly short cup-shaped base to all-time highs in Thursday’s session. With this solar stock still less than 5% from a picture-perfect buy decision, and given today’s heated market environment, a vertical spread is a great way to deploy capital more strategically.
Favored Solar Stock Exposure: Long ENPH January $125/$140 bull call spread.
On the date of publication, Chris Tyler does not hold, directly or indirectly, any positions in securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
