CNRG is the best-performing clean power ETF over its lifetime
Updated
I'm highly interested in energy right now, but in the long term I'm just really worried about the oil and gas industry. Thanks to Swanson's Law, the price of solar panels continues to fall. Battery technology is also rapidly getting better, and we seem to be witnessing the mainstreaming of electric cars. According to FactSet, the "Independent Power and Renewable Electricity Producers" segment grew its earnings by an astounding 138% last year, making it the fastest-growing segment of the market. That's why I decided it's time to get in. In planning my entry, I compared nine clean energy ETFs to see which one offers the best performance over time.
The second-best performer was QCLN, a passively managed FirstTrust Green Energy ETF. The reason this fund has done so well is its high exposure to Tesla, which comprises 10% of its holdings. That worries me, because Tesla's current valuation is extremely high at a forward P/E of over 70, and QCLN's forward P/E is accordingly also pretty high at over 24. It also has a pretty bad price-to-cash-flow ratio of about 13, which makes me worry about the financial health of the companies in the fund.
So I was glad to find an even better performing ETF that's at a more attractive valuation: CNRG. CNRG, an SPDR "enhanced strategy" fund, is only about a year and a quarter old, so there isn't a ton of history to go on. During that time, however, it has handily beaten QCLN. Also, the fund's valuation is better by pretty much every metric, with a P/E closer to 19 and a price-to-cash-flow of about 10. That's still high, but it's more defensible than the QCLN numbers. Both funds pay about 1.2% in dividends. CNRG's largest holding is micro-cap fuel cell maker FCEL, which has rallied since a huge earnings beat last quarter. Exposure to FCEL could make this fund a lot more volatile than QCLN.
Here's CNRG compared to QCLN:
And here's CNRG vs. the S&P 500:
The second-best performer was QCLN, a passively managed FirstTrust Green Energy ETF. The reason this fund has done so well is its high exposure to Tesla, which comprises 10% of its holdings. That worries me, because Tesla's current valuation is extremely high at a forward P/E of over 70, and QCLN's forward P/E is accordingly also pretty high at over 24. It also has a pretty bad price-to-cash-flow ratio of about 13, which makes me worry about the financial health of the companies in the fund.
So I was glad to find an even better performing ETF that's at a more attractive valuation: CNRG. CNRG, an SPDR "enhanced strategy" fund, is only about a year and a quarter old, so there isn't a ton of history to go on. During that time, however, it has handily beaten QCLN. Also, the fund's valuation is better by pretty much every metric, with a P/E closer to 19 and a price-to-cash-flow of about 10. That's still high, but it's more defensible than the QCLN numbers. Both funds pay about 1.2% in dividends. CNRG's largest holding is micro-cap fuel cell maker FCEL, which has rallied since a huge earnings beat last quarter. Exposure to FCEL could make this fund a lot more volatile than QCLN.
Here's CNRG compared to QCLN:
And here's CNRG vs. the S&P 500:
Note
This just keeps climbing, because everyone and their mother is declaring an intention to go carbon neutral this year. At 90 RSI it's hard to justify adding more shares, but I'm going to be buying just about any dip.
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