Goldman’s $150 BILLION Bet… on an Unlikely Candidate
The notorious Wall Street squid, Goldman Sachs, plans to increase their stake in one industry from $40 billion to $150 billion over the next 10 years…
With $110 billion in additional investing, something must be going on — and it’s time to follow the trail of money.
And while we never take anyone’s word or action at face value, when one of the world’s largest investment banks takes a huge stake in a single industry, it certainly causes heads to turn.
So the question is, where is all of that money going?
Goldman is betting BIG on renewable energy — in particular, I believe they’re looking directly at the solar industry. And today I want to give you an inside look…
At the moment, renewable resources such as solar and wind make up a mere fraction of the hydrocarbon dominated energy sector. But while oil and gas are staples of the world economy, eventually, the supply on Earth will be gone. Remember, there is a finite amount… Something must take its place.
And don’t forget, there’s a political war on hydrocarbons, too. With coming laws and regulations on conventional energy, renewables (namely, economic solar) will win.
It may take 10 or 20 years for solar to have a serious presence in the market, but to use a football term, all of the foundations are being built for a game-winning drive.
Those foundations are:
- Increasing efficiency of solar panels
- The finite supply of hydrocarbons
- The unlimited amount of energy provided by the sun
- Obama’s Clean Power Plan
- Government subsidies
- Interest rates.
Add all of these factors together and we see why there is such a positive trend in the solar market.
From a cost perspective, solar is making more and more sense. PV panels are cheaper to produce, cheaper to maintain and more efficient, and people have caught on.
It’s no wonder why installations have increased at such a rapid rate.
Just take a look at one solar market darling’s recent quarterly data.
When SolarCity’s share price recently took a hit, you would have expected some serious indicator that solar was cooling down fast.
The thing is the data show quite the opposite, and SolarCity’s share price has rebounded accordingly SolarCity’s installations are increasing quarter over quarter. Year over year, megawatts installed are up 86%, and customer base is up 77%.
The best part — this kind of growth is happening across the industry.
So with all this positive news, what happened with solar? Why did the market take a turn in the other direction several months ago?
Patience — we will get to that in a second.
A New Way to Look at Solar…
Before we take a closer look at solar shares on Wall Street, to give you a true idea of the power of the sun, check out the graphic below.
Do you see those little green dots? That is the surface area required to power every utility on Earth strictly with solar. That’s also assuming that panels are 20% efficient — a level that has recently been broken by a few companies.
So with 20% efficiency and that small of an area, you can see why solar has so much potential. That’s because more energy hits the Earth in an hour than the entire population uses in a YEAR.
That’s not a typo.
In one hour, the sun delivers 430 quintillion joules (units of energy) to the Earth’s surface, and people use 410 quintillion joules a year.
That’s A LOT of energy being delivered from the sun. The best part is that it will be here as long as the Earth exists. It’s unlimited clean energy.
A Blip in the Market — and an Opportunity…
So if solar is such a promising, economic industry, why have shares taken a tremendous pullback since April?
Well, over the past few years, solar companies have seen tremendous growth in revenue, income and assets.
However, in late April 2015, the market decided that solar was growing a bit too fast. We saw a sector-wide pullback that’s still underway today.
But I don’t think this pullback will last forever. It’s only a matter of time before we start seeing “big solar” companies turn a profit. And when that happens, watch out! The market could catch fire. In fact, we have already seen a serious rebound from a few companies!
Today I want to share another way to play the solar sector — but without having to deal with as much volatility.
You see, the problem is the solar market is volatile. REALLY volatile. A company can be down 12% one day and up 24% the next.
In order to cut down on volatility from certain companies, I recommend looking at shares of the Guggenheim Solar ETF (TAN: NYSE).
This ETF holds a basket of stocks related to solar. Fabrication products, semiconductor producers, module producers, solar power system sellers and more. It’s the solar sector, soup to nuts.
By holding this ETF, you have all of the upside of the solar market without worrying about the volatility from individual companies.
I believe we’re on the right track with solar — and Goldman’s latest announcement is a strong indication. Solar is a buy. Now’s the time to make a few long-term buy-and-hold moves — and the ETF above is a good way to diversify your solar holdings.
That’s all for now, have a great week.
Byron W. King
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