Why Playing Solar Via ETFs Is 'Safer' Than Single Names
Barber Lackey Financial Group Founding Partner and CIO G. Thomas Lackey said on #PreMarket Prep that solar ETFs, like the Guggenheim Solar ETF (NYSE: TAN), is a "safer bet" than playing individual names, like SolarCity Corp (NASDAQ: SCTY).
Lackey said that he has been in solar since the breakdown failed, which happened in early June. On the Guggenheim Solar ETF, shares have rebounded $2 from a low at $40 in early June.
Year-to-date, the Guggenheim ETF has also drastically outperformed SolarCity, gaining 25 percent compared to SolarCity's 8 percent return. Not only has the ETF outperformed, but it also doesn't require investors to get the company right. Since solar is a "nascent" industry where companies are struggling to turn profits and dependent on government support, picking the right winners and losers is particularly challenging. "Playing the whole field is just a safer bet," Lackey said.
Though Lackey believes ETFs are safer, he did mention that he thinks the SolarCity chart is constructive, with the "potential for reversal and an acceleration" of the price higher. The stock, which he said based for three or four days, found support at $55, similar to support found in mid-April.
He also pointed to RSI – a technical momentum indicator – as evidence that sentiment for the stock had turned. Lackey said that a break above resistance near $59 would confirm this move – potentially pushing the stock to near $70.
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