Yesterday’s Digest featured the first in a two-part series from legendary macro investor, Eric Fry. It began introducing readers to why solar energy’s time has finally come — and how that’s going to mean huge gains for investors who act now.
But for Eric’s subscribers, those gains are already here. In late October 2018, Eric recommended buying some call options on a solar-focused exchange-traded fund. By late January, that ETF had soared more than 30%. (Over the same time frame, the S&P 500 Index advanced just 3%.)
The way Eric played it, readers who followed his advice ended up making 203% on their entire position — in just a smidgeon over three months.
And in early October 2018, Eric suggested they get in on a certain solar stock’s call options. Since then, the stock has skyrocketed more than 75%. They’ve closed out the first third of that option trade for 168% gains … and the second third for gains of 282%. And they’re still sitting on 200%+ gains with the final third of that trade.
What’s behind these huge gains? Well, solar power is big … and getting much bigger. It’s an industry whose time has finally come.
Today, we pick back up with Eric’s second essay, explaining “why now?” In short, the industry is benefitting from two things — falling costs, and interest from the two most populated nations on Earth.
Here’s Eric with all the details.
The Globe’s Two Biggest Nations Could Cause SunPower (SPWR) Stock to Skyrocket
Two Factors Why Solar Is Becoming a $4 Trillion Opportunity
By Eric Fry, Editor, Fry’s Investment Report
As innovative and revolutionary as solar energy has been over the past 65 years or so, you never hear of a John F. Rockefeller or J. Paul Getty of solar.
Hardly anyone has made any real money with it.
In fact, many have lost plenty. Thousands of investors have been struck by the “Right … but Early” curse when it comes to solar.
Just think of all those poor mid-2010s investors in SunEdison Inc. They watched their shares soar 2,000% on hype and hope, only to plummet to nearly zero and get delisted from the New York Stock Exchange once the reality of falling prices and no profits kicked in.
But here’s the thing: Solar power is big … and getting much bigger.
At the end of 2018, the world’s installed capacity of solar-power generation totaled nearly half a billion megawatts — accounting for more than 7% of the globe’s power capacity.
But new capacity installations are on track to soar 25% this year, according to Bloomberg New Energy Finance, and to nearly double by 2021.
Many forecasts anticipate an equally spectacular growth trajectory. For example, according to the International Energy Agency’s (IEA) “Sustainable Development Scenario,” solar-power capacity will soar fivefold between now and 2025, accounting for a whopping 38% of global power generation.
Looking further out, the IEA anticipates a 13-fold increase in solar-power capacity by 2040, at which point this renewable source would be providingtwo-thirds of the world’s power needs.
That’s extremely bullish news for SunPower Corp. (SPWR) stock — and shares of other solar companies.
That San Jose, Calif.-based company designs, manufactures, and markets the industry’s most highly efficient solar systems. SunPower (SPWR) is the only major solar company that addresses all three end segments: power plant, commercial rooftop, and residential. And it’s a classic “turnaround story.”
During the last two years, the company has taken significant steps to sharpen its strategic focus and strengthen its balance sheet. Over that time frame, it has slashed its net debt by more than half, while also boosting its capacity to produce its industry-leading solar panels.
I expect SunPower (SPWR) stock — and the shares of many other solar companies — to continue making strong upward progress throughout 2019 and beyond.
Two primary factors are fueling this solar boom: falling costs … and interest from the two most populated nations on Earth.
Here’s more on that — and on how you can cash in …
When the Big Boys Move in, Trillions Follow
While in many parts of the world, solar power is still more expensive than conventional power-generation technologies, the gap is closing rapidly.
The cost of solar-power installations has been plummeting — in both the residential and utility-scale markets.
Further, the true cost comparison between solar power and other technologies involves more than just dollars and cents. Clearly, the toxic emissions that spew from coal-fired plants impose a cost on the planet that solar panels do not.
That’s why India and China — the two most populous, and polluted, countries on the planet — are ramping up their solar-power capacity.
Both of these countries have devoted themselves to solar power like teenagers to tattoos. Combined they account for 40% of the world’s solar capacity … and both have laid out ambitious plans to expand their solar footprints.
China, already the world’s largest source of solar power, is on track to double its capacity within the next three years. As we all know, due to its strong central government and its usually successful five-year economic plans, China will make this happen — if that’s what its top leaders want.
And they want it. China is keeps on rapidly urbanizing — and getting more polluted. According to Global Demographics, China’s urban population will increase from 834 million today to 989 million by 2028. That’s almost 1 billion people in China’s cities, representing 70% of its total population.
Meanwhile, India is undergoing similar urbanization and recently became the world’s third-largest generator of solar power and is eager to install much more
As home to 13 of the world’s 20 most polluted cities, India has ample motivation to deploy clean-power sources, no matter their direct costs. That’s why the country plans to install 100 gigawatts of solar power by 2022 — more than five times its current installed capacity.
The IEA anticipates global spending on solar power to total $4 trillion over the next two decades — or about $180 billion per year. For perspective, $180 billion is slightly less than the GDP of New Zealand and a tad more than the GDP of Hungary.
If investment of this magnitude were to occur, solar power would become the world’s primary electricity source by 2040. And SolarPower (SPWR) stock … other firms in the industry … and their investors will be the biggest winners.
But you don’t have to wait 20 years to profit on this trend. By then, it could be too late — long after this spectacular growth trend has slowed.
That’s why I’ve just released a special “all solar” edition of my brand-new newsletter — Fry’s Investment Report. In it, I share two recommendations — and a whole lot of research – to get investors in on this technology’s profit ground floor.
The burgeoning demand for solar power from China and India is not the only reason to expect global demand to soar over the next several years. When it comes to solar — and stocks like SolarPower (SPWR) — it’s no longer “Right … but Early.”
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