As the Invesco Solar ETF (TAN) lights up, solar energy leader Daqo New Energy (DQ) warms up a new buy point. Fellow solar stock Sunrun (RUN) was featured as the IBD Stock Of The Day on Tuesday, and the TAN ETF earned that honor on Wednesday. Meanwhile, DQ stock is testing its 50-day moving average as it shines a spotlight on a potential breakout.
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With the highest-possible 99 Composite Rating, Daqo New Energy earns a spot on IBD Sector Leaders, our most stringent stock screen. Enphase Energy (ENPH), which also sports a 99 rating, shares a spot on that list, confirming strength in the solar sector.
The solar energy industry group ranks No. 1 among the 197 groups IBD tracks. Other highly rated solar stocks include Canadian Solar (CSIQ) and Jinko Solar (JKS).
SolarEdge Technologies (SEDG), while going through a volatile period, shot back up to a 95 Composite Rating. On Wednesday, SEDG stock blasted back above its 200- and 50-day moving averages in huge volume. SolarEdge continues to hold the bulk of those gains.
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Daqo New Energy Makes Warren Buffett Stock Screen
Based in China, Daqo New Energy is one of the leading and lowest-cost manufacturers of high-purity polysilicon for the global solar photovoltaic (PV) industry. Founded in 2008, the company currently has a rated annual polysilicon production capacity of 70,000 metric tons.
DQ stock made the latest screen of Warren Buffett stocks, which is based on criteria in sync with the Oracle of Omaha’s focus on sustainable earnings growth.
Daqo New Energy has powered average annual EPS growth of 249% over the last three years. Over three quarters, the company has produced average earnings growth of 258%. Analysts forecast a 181% EPS increase for the current quarter.
Revenue has also been strong. Sales growth has averaged 129% annually over the last three years.
DQ Stock Back In Spotlight
Like a California heat wave, solar stocks have been boiling with demand recently. But that comes on the heels of a meltdown in many solar names earlier this year and in 2021.
DQ stock is no exception. After hitting a new high in February 2021, Daqo New Energy sold off sharply. It found a bottom in March and began to climb. Since then, the stock’s 10-week moving average as soared, overtaking its 40-week line.
After jumping back above its 50-day line Wednesday, DQ stock has fallen back below that benchmark. On Friday, Daqo neared that line but hit resistance and pulled back, still ending with more than a 2% gain.
In other solar stock action, the TAN ETF popped over 6% Wednesday in volume 148% above average. It held those gains as the week ended. Enphase Energy jumped more than 8% in heavy and rising trade. ENPH stock held those gains Thursday. It retreated Friday but came off its lows as volume rose in the final hour.
Like Daqo New Energy, JKS stock has run into resistance at its 50-day line.
SolarEdge continues to recharge the buy zone it fell below last month. SEDG stock soared nearly 12% Wednesday. It ended up over 17% for the week.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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Source: https://www.investors.com/research/ibd-stock-analysis/dq-stock-daqo-new-energy-leads-solar-industry-shines-light-on-new-buy-point/?src=A00220&yptr=yahoo