Investco Solar – Chantal Marx’s stock pick

Chantal Marx, head of investments research at FNB Wealth and Investments, said the Investco Solar ETF offers value as it gives investors exposure to the promising solar energy industry.

The Investco Solar ETF is based on the MAC Global Solar Energy Index, which is comprised of companies in the solar energy industry.

Its largest investments include First Solar, SolarEdge Technologies, Enphase, Xinyi Solar, and GCL Technology.

Solar PV is a secular growth market as the world transitions to a greener future.

Due to technology enhancements, increased competition, and favourable financing options, a residential solar system’s price has decreased significantly over the years.

In certain countries, customers have also been compensated with incentives such as net metering – credits solar system owners get for the electricity they add to the grid.

In addition, the US’s solar Investment Tax Credits (ITCs) provided a 26% tax credit for systems installed between 2020 and 2022 and a 22% credit for systems installed in 2023.

Possible government support from Biden’s Build Back Better (BBB) Act will further drive solar installations.

The Green Energy Tax Incentive in the BBB Act would extend renewable energy ITCs for projects that begin construction before 2026. From there, it will be phased down over two years.

In other countries, generation constraints have further upped the appeal of self-generation, and by extension, solar energy, as a solution for residential and commercial power users alike.

“The ETF ran up hard in the wake of the Russian invasion of Ukraine, but the price has since steadied at lower levels,” Marx said.

The companies within this ETF are highly exposed to the US residential solar PV market, which still has substantial room for growth.

“We view the industry as a good long-term investment, and this ETF is a good way to invest in this sector.”

Investment analysts Peet Serfontein and Hashmeel Suka echoed Marx’s views, saying the ETF offers good long-term value.

“The ETF is just below its 200-day simple moving average of between $21 and $22. Continued price action above the 200-day average will indicate a long-term bullish trend,” they said.

They suggest a medium at-risk allocation for this trade, with an upside target of $24 and a stop-loss at $19.