Tom Konrad CFA
Buying opportunities return to clean energy.
Two years ago I had a problem. In the universe of clean energy stocks I watch, I could not find any that I thought were good values. So I wrote an article saying “We’re near the peak.”
If you had been comparing that call to the performance of the broad stock market since then, you would have to conclude that I was ludicrously wrong. The S&P 500 is up 40% since then.
If on the other hand, you’d been watching clean energy stocks, you would have found that the overall trend has been flat to down. The PowerShares Clean Energy (PBW) ETF has basically been flat since then, while solar (TAN) and wind (FAN) ETFs are each down about 20%.
I mention all this because I notice something new, that hasn’t happened for almost two years: I’m again finding clean energy stocks that I think are bargains. I think the sector and the market as a whole still have a lot of room to fall, but I’m encouraged to finally have companies to write about that I think are worth buying again.
Here are ten I’ve been buying, in no particular order.
1. New Flyer Industries (NFI-UN.TO) a bus manufacturer. See article: Questions About Dividend Spook New Flyer Investors. Why I’m Buying.
2. CVTech Group (CVT.TO) a transmission and efficient vehicle company. See article: The Best Peak Oil Investments Meet the Strong Grid.
3-5. Comverge (COMV), EnerNOC (ENOC), which are demand response companies, and Ram Power Corp. (RPG.TO), a geothermal developer. See article: Ten Clean Energy Stocks for 2011: Buying Opportunities.
6. Alterra Power Corp. (MGMXF.PK) is a geothermal and hydropower developer, see: The Magma/Plutonic Merger.
7. Axion Power International (AXPW.OB) is a developer and manufacturer of PbC batteries: An Elephant Hunter Explains Market Dynamics
8. Nevada Geothermal Power (NGLPF.OB), another geothermal pick. See: Blue Mountain Disappoints; Nevada Geothermal Power Looks Like a Takeover Target
9. Ambient Corp. (ABTG.OB) a smart grid stock. See article: A Profitable Smart Grid Penny Stock Aims for a NASDAQ Listing
10. Rockwool International A/S B (RKWBF.PK) an international insulation company. No article yet, but it’s mentioned here: Canadian Insulation Companies Likely to Benefit from Next Budget.
Ten Clean Energy Stocks for 2010
Four of these stocks (Comverge, EnerNOC, Ram Power, and Nevada Geothermal) were part of my annual New Year’s list of ten clean energy stocks I liked. At the time, I only owned the two Geothermal stocks, because I was having trouble finding anything I thought was a good value. That original list has been doing horribly so far this year, in large part because of the dismal performance of these four stocks and that of American Superconductor (AMSC). I’ve been following AMSC’s very real problems closely, discussing the refusal of their main customer Sinovel (601558.SS) to accept shipments, the likely reasons behind that refusal, and attempting to value the AMSC under the assumption that Sinovel will resume accepting shipments, but not at their former pace and without future growth.
Ram Power and Nevada Geothermal also had real problems at their geothermal projects, but I feel that the market has vastly overreacted to both, making the pair bargains by almost any measure, and also potential takeover targets in my estimation. If I were picking my ten stocks today, it would be the list above, with the three Geothermal companies underweighted relative to the rest to avoid putting too much money into one tiny sector.
All in all, it feels good not to be sitting on the sidelines anymore. Blood is on the streets for a lot of decent renewable energy and energy efficiency stocks, and experienced market hands know that it is often the best time to buy.
But keep some cash on the sidelines. Right now, I expect the market will get worse before it gets better. If I’m right, and you’ll want to have cash available to take advantage of other opportunities that arise down the road.
DISCLOSURE: Long NFI-UN, CVT, COMV, ENOC, RPG, MGMXF, AXPW, NGLPF, ABTG, RKWBF.
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 inve
stment 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 guaranteed.