Among other effects, the “Big Beautiful Bill,” which was signed into law on July 4th, was expected to be detrimental to clean energy as it eliminated tax subsidies for things like electric vehicles and renewable energy projects. While the media has been pessimistic about the prospects of clean energy firms, their performance has been just the opposite, at least over the short-term.
Among other effects, the “Big Beautiful Bill,” which was signed into law on July 4th, was expected to be detrimental to clean energy as it eliminated tax subsidies for things like electric vehicles and renewable energy projects, which has been a conspicuous source of tension between President Trump and his former advisor Tesla CEO Elon Musk. As CEO of both SolarCity and Tesla, Musk stood to lose on multiple fronts, so it’s no wonder he wasn’t too happy about the tax policy change. While the media has been pessimistic about the prospects of clean energy firms, their performance has been just the opposite, at least over the short-term.
Image Source: Politico
Over the last 30 days, the Invesco Wilderhill Clean Energy ETF (PBW), the Invesco Solar ETF (TAN), and the First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN) are each up more than 15%, led by PBW which is up just 30% over that period. Short-term performance isn’t everything, of course, as even long-term laggards occasionally have sharp rallies. But each of the aforementioned funds also now have favorable technical pictures. TAN leads the pack with a 4.93 fund score, followed by PBW and QCLN with have fund scores of 4.64 and 4.00, respectively.
There are a variety of stocks that make up the clean energy ETFs, but the strongest performers are primarily solar stocks. Solaredge Technologies (SEDG) is up more than 80% over the last 30 days and 114% year-to-date, the stock has a 5 for 5 technical attribute rating and has completed three consecutive buy signals on its default chart. Sunrun Inc (RUN) another purveyor of solar equipment and renewably sourced energy is up more than 70% over the last month. RUN has a 4 for 5 technical attribute rating and sits one box away from returning to a positive trend, which would elevate it to a 5 for 5’er. Among non-solar stocks, MP Materials Corp. (MP), which is a rare-earth materials company, is among the top performers. MP has gained more than 67% over the last month and 292% year-to-date. MP is a 5 for 5’er and ranks first out of 14 names in the metals non ferrous sector matrix. There are far too many clean energy stocks for us to review them all individually, but if you’d like to find other names, you can use the “Holdings” function from the chart of any of the ETFs discussed above.
We can’t say why many clean energy stocks have made eye-popping gains over the last month, defying expectations that the “Big Beautiful Bill” would be calamitous for the industry. Perhaps the market had become overly pessimistic ahead of the bill’s passing or perhaps investors think that the increased demand for energy from AI means that renewables will remain part of the energy mix over the next several years. What we can say is that the expectations have been wrong, at least over the short term, and we are seeing relative strength in clean energy. Situations like this are one of the reasons why we prefer to listen to what the market tell us IS happening versus what stories that tell us what ought to happen.
