Tom Konrad CFA
Clean energy stocks and the market in general rebounded strongly in
August. My broad market benchmark of small cap stocks,
IWM, rose 4.5%, returning to positive territory up 1.7% for
the year. My clean energy benchmark PBW also jumped back into the
black with an 11.1% gain for the month and 10.8% for the year to
date. The less volatile defensive stocks in my 10
Clean Energy Stocks for 2014 model portfolio
For the year to date, the model portfolio is up 6.2%.
(Note that the monthly numbers are for August 5th to September 4th,
and the YTD numbers are from December 26th to September 4th. I
use numbers as of when I have time to write, rather than strict
month-end in order to make these updates up to date as possible.)
Individual Stock Notes
(Current prices as of August 5th, 2014. The "High
Target" and "Low Target" represent my December predictions of
the ranges within which these stocks would end the year, barring
1. Hannon Armstrong
Sustainable Infrastructure (NYSE:HASI).
12/26/2013 Price: $13.85.
Low Target: $13. High Target: $16. Annualized
Current Price: $14.31. YTD
Total US$ Return: 6.5%
As expected, Sustainable Infrastructure REIT Hannon Armstrong's
second quarter report was generally positive, beating analysts'
estimates by a penny. Earnings in Q3 should be significantly
higher as recent large investments were only producing income for
part of the second quarter. The stock has recovered from the
lows which had me adding to my position at the start of last
month, as discussed in the last update.
2. PFB Corporation
12/26/2013 Price: C$4.85. Low
Target: C$4. High Target: C$6.
Annualized Dividend: C$0.24.
Current Price: C$4.50. YTD Total C$ Return:
-3.5%. YTD Total US$ Return:
Green building company PFB has recovered a little from recent lows.
The company's largest
shareholder continues to purchase
its stock on the public
market. PFB paid its normal C$0.06 quarterly dividend.
Infrastructure Corp (TSX:CSE.
12/26/2013 Price: C$4.44.
Low Target: C$3. High Target: C$5.
Annualized Dividend: C$0.30.
Current Price: C$4.38. YTD
Total C$ Return: 31.8%. YTD Total US$
Independent power producer Capstone Infrastructure held steady
throughout the month, without significant news. Analysts at
Scotia Bank raise their price target slightly from C$4 to C$4.50,
but did not change their "market perform" rating on the stock.
4. Primary Energy
Recycling Corp (TSX:PRI,
12/26/2013 Price: C$4.93. Low
Target: C$4. High Target: C$7.
Annualized Dividend: US$0.28.
Current Price: C$6.00. YTD Total C$
Return: 24.4% . YTD Total US$ Return:
Waste heat recovery firm Primary Energy announced a regular
quarterly dividend of 7¢ US to holders of record on August 15th.
but there was no other significant news. The gain shown here
was mostly a big jump at the close today (Aug 5th.) It might just
be a blip (the stock is thinly traded), or there may be trading
based on rumors of some real news about to be announced.
Update: The jump seems to be due to the immanent acquisition of
Primary Energy by Fortistar.
The Wall Street Journal reported
that a deal was "near" shortly after the close.
[formerly ACCEL], OTC:ACGPF).
12/26/2013 Price: €13.59. Annual
Dividend €0.55 Low Target: €11.5.
High Target: €18.
Current Price: €13.75. YTD
Total € Return: 5.2%
. YTD Total US$ Return: -0.8%
Bicycle manufacturer and distributor Accell Group fell 4% during
the month, mostly due to a 3% decline in the value of the
Euro. On the business side, the company bought Spanish bike
parts and accessories Comet. I think this acquisition is
good for Accell's business since it strengthens the company's
distribution network in Southern Europe.
The press release was also encouraging in that "Comet’s annual
normalised operating result as a percentage of profit is slightly
higher than the historical average (6%) of Accell Group... The
acquisition will make an immediate contribution to Accell Group’s
earnings per share." In other words, the acquisition should
be good for per share earnings, even before any synergies are
6. New Flyer Industries
12/26/2013 Price: C$10.57. Low
Target: C$8. High Target: C$16.
Annualized Dividend: C$0.585.
Current Price: C$13.68. YTD Total C$
Return: 33.1% . YTD Total US$ Return:
Leading transit bus manufacturer New Flyer announced second
quarter results on August 5th. Deliveries, revenues, and earnings
were all up strongly over the same quarter last year.
Investors and analysts liked what they heard, with the stock
advancing over 7% for the month. Canaccord Genuity raised
their price target and upgraded the stock to "Buy" from "Hold",
and CIBC raised their price target as well.
7. Ameresco, Inc.
12/26/2013 Price: $9.64. Low
Target: $8. High Target: $16. No Dividend.
Current Price: $8.12 YTD Total US$
The stock of energy performance contracting firm Ameresco
continues its recovery from previous lows after the much less
negative comments from management I discussed last month.
The company also bought UK energy service provider Energyexcel
LLP, which fits its long term strategy of small acquisitions which
broaden its geographic reach or skill set. Insiders continue
to buy the stock on the open market.
8. Power REIT (NYSE:PW).
12/26/2013 Price: $8.42. Low
Target: $7. High Target: $20. Dividend currently
Current Price: $9.15 YTD Total US$ Return: 8.7%
Solar and rail real estate investment trust Power REIT filed its
second quarter report, which remains dominated by the legal costs of
its civil case against the lessees of its railway property, Norfolk
Southern (NYSE:NSC) and Wheeling & Lake Erie Railway. A
from July and the most recent litigation
offer some hope that the end of the litigation is in
sight. The parties are now working on their motions for
summary judgement, on which the court will likely rule in early
2015. The summary judgement might bring resolution, but, if
not, the case is expected to go to trial in February next
year. Any resolution, even one in favor of the lessees, is
likely to be good news for Power REIT's shareholders.
9. MiX Telematics
12/26/2013 Price: $12.17. Low
Target: $8. High Target: $25.
Current Price: $9.41. YTD Total ZAR Return: -19.9%.
YTD Total US$ Return: -22.7%
Global provider of software as a service fleet and mobile asset
management, MiX Telematics reported second quarter results. As
has been the case in recent quarters, the company has been making
rapid progress selling its bundled, software-as-a-service (SaaS)
offering. When SaaS sales replace equipment sales, as they did
this quarter, it reduces short term earnings, but increases long
term revenue streams, so this earnings report was moderately good
news, despite the fact that quarterly earnings missed analysts'
10. Alterra Power Corp.
12/26/2013 Price: C$0.28. Low Target:
C$0.20. High Target: C$0.60. No Dividend.
Current Price: C$0.32 YTD Total C$
Return: 12.5% . YTD Total US$ Return:
Renewable energy developer and operator Alterra Power closed on a
C$110 million loan
from AMP Capital to finance construction at its Jimmie Creek
run-of-river hydro and Shannon Wind projects.
Two Speculative Clean Energy Penny Stocks for 2014
Ram Power Corp (TSX:RPG,
12/26/2013 Price: C$0.08. Low Target:
C$0.00. High Target: C$0.22. No Dividend.
Current Price: C$0.02 YTD Total C$ Return: -75%
. YTD Total US$ Return: -75.5%
Terminal US$ Return -57% (when I said to sell on June 3rd.)
Geothermal power developer Ram Power's stock remains in the dumps
at $0.02. The decision to take our losses in June continues
to look like a good one.
Finavera Wind Energy
12/26/2013 Price: C$0.075. Low Target:
C$0.00. High Target: C$0.22. No Dividend.
Current Price: C$0.14 YTD Total C$
Return: 86.7% . YTD Total US$ Return:
Wind project developer Finavera got a nice lift when it gave some
details of its long-promised plan for its business going
forward. It signed
an agreement, pending shareholder approval, to purchase San
Diego, CA based solar installation marketer Solar Alliance of
America (SAoA) for C$4 million in cash and C$2 million in
stock. The stock portion of the deal will be priced at the
higher of C$0.21 or the 20 day weighted average price of Finavera
stock following closing of the deal.
Shareholders have been promised a vote to either go ahead with this
deal or to wind up the company and distribute what I estimate to be
approximately 12 to 14 Canadian cents per share after paying off and
renegotiation of its liabilities and receiving the final payment for
its Cloosh wind farm from SSE.
Long time readers will know that solar is the one clean energy
sector that I stay away from, mainly because it gets so much
attention from other investors and analysts. That's one reason
I find this deal impossible to value, the other being that we have
no information on SAoA's profitability, only its revenues.
Finavera CEO Jason Bak has told me he hopes to release more
information about the deal before the Annual Meeting on September
15th, but that date is rapidly approaching.
Although I find the deal impossible to value, I find it encouraging
that the stock portion of the deal was priced at C$0.21 or above,
and I know that other investors are both much more knowledgeable and
enthusiastic about solar installation than I am. Hence, I
expect the deal will increase Finavera's stock price over
time. Barring any surprises ahead of the annual meeting, I
will probably vote for the deal, but then look to exit the stock as
Finavera begins to present itself to investors as a residential
solar pure play, and the stock appreciates accordingly.
The only big news this month was in speculative pick Finavera, and I
still feel as if I do not have enough information its plans to
purchase Solar Alliance of America. That said, I expect the
move into residential solar will be good for the stock price, and
its nice to see gains in Finavera easily covering the losses
incurred in the first half in my other speculative pick, Ram Power.
The main portfolio continues to perform as designed, advancing
modestly but with much less volatility than most clean energy
Disclosure: Long HASI, PFB, CSE, ACC, NFI, PRI, AMRC, MIXT,
PW, AXY, FVR.
DISCLAIMER: Past performance is
not a guarantee or a reliable indicator of future results.
This article contains the current opinions of the author and
such opinions are subject to change without notice. This
article has been distributed for informational purposes only.
Forecasts, estimates, and certain information contained herein
should not be considered as investment advice or a
recommendation of any particular security, strategy or
investment product. Information contained herein has been
obtained from sources believed to be reliable, but not