Solar Sucks. But a Sharp Rebound is Set to Pay You Double-Digit Gains...

The sun has set on solar stocks.

Just as the so-called climate change summit wraps up in Paris, it looks like solar companies are about to enter a new dark age. Not even the feel-good Save the Earth vibes can drum up buyers for these maligned stocks.

Remember former highflier SunEdison (NYSE:SUNE)?

This stock traded for more than $30 a share as recently as late July. Now you can pick it up for three bucks a pop. That’s a 90% drop in less than five months. Take a look for yourself:

Sun Spots

If all this is enough to make you want to swear off solar for good, I understand.

As the bears thrashed the markets in late August, I warned you that owning “story stocks” like solar companies would crush your returns…

“When it comes to the stock market, there’s no shortage of compelling stories out there. We have the speculative biotechs with new and exciting drugs nearing potential approval. Then there are the innovative solar companies (some of my personal favorites, by the way) that are looking to change how we get our energy.”

I wrote that the day after the Dow puked up 530 points. And like clockwork, these stocks dropped like stones. When the clouds rolled in, these stocks were punished as folks made a run for the exits.

At the time, the Guggenheim Solar ETF was down a cool 17% year-to-date after having been up a red-hot 45% in the spring.

Now the Guggenheim Solar ETF is down 21% on the year and no one (and I mean no one) gives a hoot about these stocks anymore. All you’ll hear about the rest of 2015 is how many Kindle Fires Amazon has managed to sell for the holidays…

It’s tough to find a reliable sector to trade when the major averages are in such flux—as they’ve been since the August swoon pushed us into correction mode. Yet despite its recent woes, there might be a sliver of sunshine peeking through the clouds on these discarded solar stocks…

I’m not telling you to spend your mortgage payment on shares of SunEdison. But the solar sector as a whole is starting to look bottomy.

Just look at how the Guggenheim Solar ETF could be starting to perk up here:

Guggenheim Solar ETF

After a painful six-month blackout, the power might be coming back on for this solar ETF. Note the higher low forming just above $26. That gives aggressive traders a clean shot at playing a potential run here (along with an easy out if the trade gets hairy).

Solar might not be on traders’ minds this week. But it’s certainly offering you a shot at double-digit gains with a short-term snapback trade…

Sincerely,

Greg Guenthner
for The Daily Reckoning

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