Is Shoals Technologies Stock a Good Solar Stock to Own?

Broadly talking, tech shares are risky. That has been doubly true with photo voltaic shares, which are inclined to rise and fall in tandem moderately than primarily based on particular person firm efficiency. There’s some justification to lumping photo voltaic corporations collectively on this means, as a result of they’re usually topic to most of the identical dangers whereas additionally reaping most of the identical advantages by means of subsidies. Certainly, we’re speculated to be dwelling within the golden age of inexperienced expertise with initiatives just like the U.S. Inflation Reduction Act (IRA) and European Inexperienced Deal providing billions of {dollars} in tax credit, loans, and grants. As a substitute, photo voltaic shares are down almost 30% in 2023 primarily based on the year-to-date efficiency of the Invesco Photo voltaic ETF (TAN), a pure-play photo voltaic fund.

Why are photo voltaic shares lagging? A few of it’s attributable to particular person performances. The three prime holdings in TAN – Enphase Power (ENPH), First Photo voltaic (FSLR), and SolarEdge (SEDG) – account for roughly 30% of the fund’s holding. Massive swings in any of those shares will definitely drag down the remainder. In truth, each Enphase and SolarEdge are down greater than 50% this 12 months, following their final quarterly earnings experiences in August. Analysts apparently didn’t like a number of the underlying metrics round income and earnings for each corporations.