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Solar companies are starting to release first quarter results next week, and Wall Street analysts say the sector’s recent decline allows investors to get in cheaply.
“The bar is low (for a change); expect beats in [residential]”Goldman Sachs said in a research note, adding that” the significant underperformance in solar stocks in recent months has created an attractive buying opportunity for the group. “
“We believe we are at a unique time when there are great buying opportunities,” said Morgan Stanley in a message to customers.
The top picks from the companies include Sunnova and Enphase.
The Invesco Solar ETF, which tracks the sector, rose 234% in 2020 as investors turned to renewable energy stocks.
However, the exchange-traded fund has fallen by around 17% since the beginning of the year.
Experts point to several factors fueling the retreat, including fears about what rising interest rates could mean for the industry’s cost of capital, broad market rotation out of growth and into value, and concerns about stretched valuations.