3 Renewable Energy Stocks to Sell in July Before They Fall and Collapse

Despite many governments and activists around the world claiming that renewable energy is the future, several companies that had invested in the industry began to have problems. This culminated in selling several renewable energy stocks to avoid losses in their portfolio.

Moreover, given the relative newness of the renewable energy industry, many companies do not have adequate capital and assets to fall back on in times of trouble.

The three stocks in question, classified as exchange-traded funds, aren’t necessarily doomed. But their performance over the past few years has made it unlikely they’ll deliver significant gains.

This could be the result of broader global energy trends that are moving toward cheaper fossil fuels as economic problems worsen. Or it could be due to the generally costly investment required to establish renewable energy sources.

In any case, the renewable energy industry as a whole has struggled over the past five years to deliver meaningful returns to investors.

Global X Wind Energy ETF (WNDY)

Another clean energy ETF, Global ETF X Wind Energy (NASDAQ:WNDY) has also delivered big losses to investors over the past five years. These losses have translated into a 24% drop in value over the past 12 months. This drop is likely due to the high costs associated with developing wind farms.

Although turbines come in a variety of shapes and sizes, they typically have high costs per megawatt of electricity generated. That’s why many of the companies in the ETF struggle to turn a profit early on in their power generation efforts.

Even more worrying is the macroeconomic trend of inflation, which has caused production and manufacturing costs to skyrocket due to rising input costs. As a result, many producers are unlikely to purchase energy from clean sources of generation, such as wind, due to its uncompetitive price compared to natural gas.

Invesco Solar ETF (TAN)

This Invesco Solar ETF (NYSE:TAN) once held the promise of capitalizing on the new momentum toward renewable energy through the development of solar infrastructure. While this trend has gained many high-profile advocates, the state of the current global economy and the burgeoning trade war with China have limited the industry’s growth.

This reality is evident in the performance of the Invesco Solar ETF, as its investors suffered a loss of 44% over the past 12 months.

TAN also gives investors insight into the overall adoption and integration trends of the solar energy sector. Viewed this way, the solar energy industry has fallen short of expectations.

This is in contrast to the attention that new nuclear energy projects are receiving. As such, the Invesco Solar ETF could be one of the renewable energy stocks to sell, as solar power may remain a small source of energy for the foreseeable future in the United States.

iShares Global Clean Energy ETF (ICLN)

Since the first offering in 2008, it has fallen 73%. iShares Global Clean Energy ETF (NASDAQ:ICLN) offered by BlackRock disappointed with its results. The ETF is traded as a combination of 101 different shares spread across the renewable energy industry.

Its three most important ingredients are: First Solar (NASDAQ:FSLR) at the level of 8.78%, Enphase Energy (NASDAQ:ENPH) at 8.69% and Vestas Wind Systems (OTCMKTS:VWDRY) at 5.57%.

Given that these three companies are primarily wind and solar companies, the fact that they account for over 20% of the fund’s holdings shows why the fund has performed so poorly. As discussed in previous sections, both of these sectors are struggling to become mainstream, affordable sources of energy.

This limits their potential to generate profits for shareholders and makes other oil and gas-based investments more lucrative. As such, investors should avoid the ICLN ETF until these industries find a foothold or become more valuable.

As of the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own and subject to InvestorPlace.com Publication Guidelines.

On the date of publication of this article, the editor in charge did not hold (directly or indirectly) any interests in the securities referred to in this article.