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It’s an interesting day in the stock market on Wednesday. With the Federal Reserve’s interest rate decision just announced, stocks are rallying after the event. This goes for a whole range of stocks, including solar stocks.
Many names in this group are doing well, including First Solar (NASDAQ:FSLR), sunrun (NASDAQ:CLASSES), Solaredge Technologies (NASDAQ:SEDG) and Canadian Solar (NASDAQ:CSIQ). All of these names are up at least 4% at the time of writing. However, there is one clear leader du jour: Enphase Energy (NASDAQ:ENPH).
Enphase leads solar stocks higher after the company reported better-than-expected earnings. Yesterday after the close, the company beat earnings estimates and beat revenue expectations. Sales are up more than 67% year-over-year, while third-quarter forecasts are well above estimates.
Management expects third-quarter sales of $590 million to $630 million versus expectations of about $550 million. All of these sightings act as a catalyst to drive up solar stocks.
What else can drive up solar stocks?
The Invesco Solar ETF (NYSEARC:TANNING) is also on the rise, up more than 5% on the day. Investors may note that the exchange-traded fund (ETF) TAN did not hit new lows in June or July, unlike major indices. This bodes well for these stocks, especially as they continue to climb for the second week in a row.
Earnings are certainly a big bullish catalyst, especially if other companies can follow suit. However, Washington could also benefit this group.
One of the Department of Housing and Urban Development’s initiatives is to provide “people living in government subsidized housing with access to solar power.” According to a White House fact sheet, this could provide “up to 4.5 million families with access to solar power.”
It’s clear that President Joe Biden’s administration wants to go green, and solar is part of those plans. The administration also wants to push a pilot program, covering five states and Washington, D.C.
Covering Colorado, Illinois, New Jersey, New Mexico, New York and DC, the Department of Energy “estimated that participants in the five original pilot states and the District of Columbia alone would save more a billion dollars on their energy bills a year”.
Will that be enough to drive up solar stocks? Maybe not in the short term, but it can act as a catalyst in the medium to long term. And if industry earnings look like Enphase, that may be enough short-term catalyst for the bulls.
As of the date of publication, Bret Kenwell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.