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Performance Update: Ten Speculations for 2008

This is the first of a short series of articles I plan, reviewing how my stock recommendations have been doing this year.  I started the year bringing you 10 Alternative Energy Stocks I thought were worth speculating on for 2008, and I'll start this review with those articles, and also give you updates on what's been happening (or not) with the stocks.  Click on the company name a link to the original article where I wrote about the stock.

Overall, a portfolio with equal dollar positions in these ten stocks is up 11.4% for the year, compared to the S&P 500 which is down 4.2% and the NASDAQ Clean Edge US Index, which is down approximately 14.3% (I took the number from CELS, the ETF which tracks the index, since I could not find up-to-date index values) since the start of the year.

#10  Cree, Inc. (NasdaqGS:CREE) Dec 27, 2007: $23.50; June 9, 2008: $25.85 (up 10%).

Cree shot up as high as $35 early in the year, on buy-out speculation.  There was also a quick bump when their transistors were used as part of a record breaking solar inverter. While a quick profit on a buy-out might be nice, the fundamentals and growing consumer interest in LEDs mean that I'm happy I didn't sell at the peak.  

#9:Lighting Science Group (LSGP.OB) Dec 27, 2007: $6.40 (split-adjusted), June 9, 2008: $5.90 (down 7.8%).

Another LED stock, Lighting Science saw a spectacular rise right after I recommended it, but was badly hurt by a patent infringement suit from Philips (NYSE: (PHG) in February.   I found this personally very annoying, since I'm long both companies.  I have no idea how the lawsuit will turn out, but I'm holding both stocks for now.

#8 Maxwell Technologies (NasdaqGM: MXWL) Dec 27, 2007: $8.10, June 9, 2008: $13.26 (up 64%)

Ultracapacitors have been much in the news this year as an enabling technology for hybrid vehicles.  Since that's one of the reasons I picked the company, I'm naturally very pleased.

#7 Electro Energy, Inc. (NasdaqCM:EEEI) Dec 30, 2007: $0.68, June 9, 2008: $.65 (down 4.4%)

Electro-Energy has been up and down since I wrote about it, but still has not caught the attention of the investors piling in to battery stocks.  I'm waiting patiently.

#6 Capstone Microturbine (NasdaqGM:CPST) Dec 30, 2007: $1.62, June 9, 2008: $3.41 (up 110%)

Although I recommended this one, I've been totally shocked at how quickly it has run up.  Mostly, this seems to be due to a large, high-profile sale into the hybrid bus market.  I've taken the opportunity to take some profits (see my selling rule of thumb #2), but I'm still long.

#5 FuelCell Energy Inc. (NasdaqGM:FCEL) Dec 30, 2007: $10.30, June 9, 2008: $8.66 (down 16%)

Although this one is down, I still like it for the same reasons.  The out of the money puts I wrote on it look likely to expire unexercised, and I just wrote some more today. 

#4 Composite Technology Corp. (OTC BB:CPTC) Dec 30, 2007: $1.37, June 9, 2008: $0.99 (down 28%)

Like Electro Energy, Composite Technology still has not caught the attention of investors.  I bought some more when I revisited the stock in March, and it's starting to look cheap again.

#3 Nevada Geothermal Power (OTCBB:NGLPF or Toronto:NGP.V) Dec 31, 2007: $1.29, June 9, 2008: $1.25 (down 3.1%)

Another one requiring patience.  I expect the big gains for this stock to come before their Pumpernickel project [Correction: it's the Blue Mountain Project which is scheduled to come online first... Pumpernickel is less advanced] begins to produce electricity (assuming there aren't any unforeseen hitches), similar to what happened with US Geothermal (AMEX: HTM) last year.

#2 Finavera Renewables (TSX:FVR or FNVRF.PK Dec 31, 2007: $0.3371, June 9, 2008: $0.19 (down 43%)

I sold my position at a loss when I heard their wave energy license was subject to rehearing in late January.  Since then, Finavera was issued a preliminary 3 year permit, but I've continued to stay away.  My hopes for this one had been based on an expectation of investor euphoria for wave energy, not fundamentals, and given the down-trending markets, I don't expect that sort of irrational exuberance again in 2008.

#1 SHORT First Solar (Nasdaq:FSLR) Dec 31, 2007: $267, June 9, 2008: $245 (8.3% profit)

Since I wrote the article, a reader challenged my math on the impact of Te prices on their bottom line.  Although I've made a profit on this one, I question my original analysis, but have not re-run the numbers.  The slight decline can be completely attributed to the declining overall market, and FSLR has outperformed the clean energy sector as a whole.  I am still short a June $300 call, but do not plan to write another when it expires in a week and a half.

DISCLOSURE: Tom Konrad and/or his clients have long positions in CREE, LSGP, MXWL, EEEI, CPST, FCEL, CPTC, NGLPF, PHG, HTM and a short position in FSLR.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.



was posted on AltEnergyStocks.com.


       

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Comments

I picked up Finavera (based partially on your recommendation) for $.15, so I am happy with the 33% gain I have seen. But I would be happier if they would announce something - ANYTHING - in regard to wind projects in Ireland and Canada. I was under the assumption the financing was in place, so what is the hold up?

Jeff:

This is Charles, who authored the initial post.

One piece of news came out today that affects the company. The BC government has finally announced a date for the clean power RFP, and the contracts aren't going to be announced for another year (http://www.bchydro.com/info/ipp/ipp48319.html). This is the bulk of Finavera's potential wind capacity in Canada, and I was under the impression that the contracts were going to be announced sooner. This is going to be an event to watch closely if you are still a shareholder, as if the company isn't awarded any contracts, it will negatively impact its medium-term (i.e. 2-4 years) prospects and require it to raise more money to make-up for the lost cashflow, which is supposed to pay for executing on wave energy.

It's unclear where things are at with the other wind farms (Alberta and Ireland) based on publicly available information. Generally, I've been a little annoyed with press releases from the company, which often focus on news coverage and not where things are at with execution. Like you, I would like to see some milestones being reached sooner rather than later.

I think financing has been relatively difficult for Finavera since they saw a large financing (C$20 million) cancelled in December in the wake of the credit crisis. They have raised some money since, but it's not been cheap money considering where the stock has been trading.

I too am getting a bit impatient, and am starting to think about paring back my position. I continue to think that wave energy is too far off in the future to justify any significant increase in the share price (especially considering current marker conditions, as discussed by Tom), and it's unclear how well (or not) wind is proceeding.


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