3 Stocks to Watch After California Solar Panel Mandate

Tesla could also be benefiting, as it just filed a patent for its solar roof technology

by Josh Selway

Published on May 10, 2018 at 1:47 PM

Most new homes in California will now be required to have solar panels, and Wednesday's decision is continuing to provide a boost to a number of solar energy stocks today. For example, the Guggenheim Solar ETF (TAN) is trading up 4.3% at $26.08, on pace for its highest close since mid-January. As for specific stocks to watch, SolarEdge Technologies Inc (NASDAQ:SEDG), SunPower Corporation (NASDAQ:SPWR), and Tesla Inc (NASDAQ:TSLA) have all made notable moves to the upside -- though SPWR stock is now consolidating some recent gains. We'll take a closer look at shares of SEDG, SPWR, and TSLA below.

SolarEdge Tops Forecasts, Buys Israeli Company

SEDG stock has jumped 15.8% to $64.43, earlier hitting an all-time high of $64.65, after the company announced better-than-expected first-quarter results and lifted its second-quarter outlook. It also said it's buying Israel-based Uninterrupted Power Supply (UPS) specialist Gamatronic Electronic Industries for roughly $11.5 million. According to SolarEdge CEO and Chairman Guy Sella, "This acquisition is our first step in expanding our business to new fields outside the solar arena."

The equity was a big winner even before today, more than tripling year-over-year. In fact, this will be the fifth straight quarter SEDG has made a double-digit move to the upside the day after earnings.

Despite the outperformance, short interest accounts for 12% of the total float -- or 5.6 times the stock's average daily volume. This would suggest the security could keep rallying, should these bears begin to cover their losing positions. It's also worth mentioning Canaccord Genuity, Oppenheimer, and UBS all raised their price targets today, though JMP Securities downgraded the equity to "market perform" from "market outperform."

Weekly Call Traders Take Aim at SPWR

After trading up 1% earlier in the session, SPWR shares have swung 0.6% lower to trade at $8.98 -- paring their week-to-date gain to 10.9%. The stock has recently enjoyed support from the 40-day moving average, and data from Schaeffer's Senior Quantitative Analyst Rocky White shows it has tended to outperform after pullbacks to this trendline. Specifically, SunPower has averaged a five-day gain of 8.1% after its last two meet-ups with the 40-day, and was higher both times one week later. 

Options traders may be betting on more upside in the near-term. Call volume is well ahead of the expected pace today, more than doubling put volume. Weekly options are especially popular, with calls from the weekly 5/11 series accounting for the five most popular contracts today.

Tesla Stock Ticks Higher on News Dump

Tesla is trading up 0.5% at $308.47, as it tries to move past the pesky $307-$308 range. The electric carmaker actually filed a patent for its solar roof tiles two days ago, and today posted a video that seems to tease a new vehicle. Plus, Panasonic's CEO just suggested the company could work with Tesla to make batteries in China one day, and the U.S. National Highway Traffic Safety Administration (NHTSA) said it was conducting a review of a fatal Tesla vehicle crash that occurred in Florida earlier this week. Still, TSLA shares remain slightly lower on a year-to-date basis.

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