May 8, 2025
If you’re of a certain age you remember the record store. Whether vinyl, cassette or compact disc, all of recorded music was physically laid out by genre. At the risk of dating myself, I was all about the music scene and the record store as a teen in the 1990’s. A most memorable day of my music store experience was the first time I noticed the “Alternative Music” section in my local record store. This was obviously a marketing exercise, but it also was a tipping point for alternative music. I lost count how many members of the black nail polish set were heard to complain over ensuing months that their preferred artists were now “too mainstream!”, but it was a reminder that what is new eventually becomes so absorbed and assimilated that it becomes entrenched as the new mainstream.
Given the recent collapse in Crude prices, we may be getting to that point with alternative energy. Solar, wind and nuclear fuel sources have been around for a while. Stocks like FSLR, VWS, ENPH and SEDG have gone through big speculative phases and collapses. Electric vehicles are continuing to gain share vs. ICE powered vehicles. Alternative energy stocks are now trading at multiples that align with the Value style. On an equal-weighted basis the Invesco Solar ETF (TAN) trades at a 32% discount to the S&P 500 index at a current multiple of 16.9x NTM earnings.
Further, while Uranium ETFs saw performance inflect positively in April along with the broad market, Solar stocks haven’t benefitted (chart below). We think this is the latest sign that the speculative bid into these areas has dried up.
Solar: Long-term Underperformance
We don’t want to beat a dead horse, but the chart of the TAN ETF is striking. The ETF has retraced most of its gains from 2018-2020. Structural support comes in around the $18 level, though shares are deeply oversold at the present price near $30. We don’t think the fund is going to execute an about face tomorrow, but shares are likely approaching an accumulation opportunity and we should be paying attention for signs of selling exhaustion and potential trend change.
Uranium: Getting a bid at Long-term Support
Uranium miners have retraced gains over the course of 2024, but they have shown signs of a bullish pivot in 2025. The bounce comes at a long-term support level near $30 for the Sprott Uranium Miners ETF (URNM, chart below). In contrast to Solar, which now trades at a valuation discount to the S&P 500, the URNM ETF is valued at 15.4x the level of the S&P 500. This is still a very speculative space with a number of small and microcap entrants.
Boss Energy (chart below) is an example of the juicy little names that inhabit the Uranium/Nuclear space. The stock has recently pivoted higher, developing a 12-month bullish reversal.
Conclusion:
As the trade war ripples create new leadership dynamics within equities, keep an eye on the spectrum of thematic concepts for bullish reversals and momentum surges. Wind and Solar Energy have begun trading like legacy Energy stocks while previous innovation themes like AI, cloud computing, and SaaS are aging as innovation themes. We are at a point where new concepts have the opportunity to emerge.
Data sourced from FactSet Research Systems Inc.
