Solar stocks led by First Solar, Sunrunand SolarEdge surged Thursday, the day after the Federal Reserve indicated interest rate cuts are coming next year. FSLR stock jumped back above its 5o-day line with a roughly 9% gain for the panel manufacturer.
Residential solar company Sunrun soared 20.6% to 18.02 on the stock market today. Inverter manufacturer SolarEdge's SEDG stock climbed 16.2% to 96.02. Solar tracker manufacturer Nextracker rose 7.5% to 46.41. Fellow solar-tracker company Array Technologies added 5.2% at 19.43.
The solar market has struggled this year as high-interest rates have made renewable energy projects more challenging to finance. There is hope a shift in rate policy can help solar companies seize on otherwise positive trends, such as government subsidies for clean energy projects.
"If rates fall in 2024, as our economists and strategists are predicting, we could see a meaningful improvement in clean energy valuations," Morgan Stanley analyst Andrew Percoco wrote in a Dec. 8 client note.
Higher interest rates had "fueled a concern that renewable energy projects, which use a high degree of debt leverage, were suddenly uneconomic," the Morgan Stanley note added.
The 24 stocks tracked in the MarketSmith Energy-Solar group are up 8.6% today. Solar stocks got a similar boost on a cooler-than-expected inflation report last month. Still, the industry group has lost a cumulative 32% this year. Further, it is the worst performer among the 197 groups tracked by MarketSmith.
FSLR Stock: Up 7% This Year
FSLR stock, meanwhile, rode Thursday's gains to jump back above its 50-day and 21-day moving averages. Shares are up roughly 9% at 158.91 in recent action. With early Thursday's jump, shares for First Solar have gained about 7% this year, making it a rare solar stock to post gains thus far in 2023.
The Tempe, Ariz.-based manufacturer of solar panels was upgraded by Morgan Stanley in that same Dec. 8 note. A 20% sell-off for FSLR prior to that note had created "an attractive risk-reward skew for the stock," Percoco wrote. The company has sold out its manufacturing capacity through 2026, the report added.
FSLR stock ranks fifth overall in the Energy-Solar group, according to IBD Stock Checkup. The top rated stock in the Energy-Solar group is Nextracker, which went public earlier this year. The company makes trackers that move solar panels with the sun to optimize power production.
