Shares of renewable-energy stocks had a great start to the week, with a few popping double digits in trading on Monday. Enphase Energy (ENPH -2.10%) was up as much as 8.3%, Bloom Energy (BE -3.67%) rose up to 11.1%, and SolarEdge (SEDG -3.54%) increased 8.7% late in the day. Shares of the three stocks were up 6.1%, 11.4%, and 8.6% respectively at the market's close.
To put these moves into perspective, the S&P 500 and Dow Jones Industrial Average were up 1.6% and 1.5% respectively and the Nasdaq was up 1.9% today. The fact that oil is up 0.8% is a bit of a boost for renewable energy stocks as well.
The big news today is that Congress and the White House are set to resume stimulus talks once again. The talks collapsed when the Senate and White House balked at a $3 trillion-plus stimulus package from the House of Representatives and early indications are that the current round of negotiations will be near that number. Reporting from multiple news outlets puts the package House Democrats will advance at about $2.4 trillion. If there's anywhere near that amount of money going into the system it'll be a boost for markets.
Renewable-energy stocks not only usually exaggerate the market's moves because they're more volatile in general, accounting for some of the move today, they have a lot to gain from a stimulus package led by the House of Representatives. We don't know the details of the negotiations yet, but House Democrats are friendly to renewable energy, so funds to boost investment in the industry could be included as part of the deal.
Two incentives to keep an eye on will be an increase in the investment tax credit for residential solar, which would boost demand for Enphase and SolarEdge. For Bloom Energy, the alternative-fuels market is just starting to gain traction, but if Congress pushes any incentive it could help the hydrogen and fuel cell business.
The months-long recovery for renewable energy stocks continues today and a stimulus could be another positive for the industry. Investors were a bit surprised that revenue and earnings for renewable energy companies haven't been too negatively impacted because of COVID-19. In fact, a lot of manufacturers are reporting strong results and even year-over-year revenue growth.
While the market can move wildly on days like today, investors shouldn't read into the moves too much. While a stimulus could be good for markets in the short term, it's not likely to impact the long-term viability of renewable energy. Instead, investors should watch the revenue growth and margins for renewable-energy companies. On that front, 2020 has been a better year than expected, and when the economy returns to a more normal pace there could be years of growth ahead.