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The Week In Cleantech - Orion, Great Lakes, Solazyme, Gevo, Lime, Quanta, and MasTec:May 5, 2012

Jeff Siegel and Tom Konrad

April 30: Orion Energy Systems (OESX) Triples Stock Buyback

TK:
  • Sometimes microcap stocks fall just because no one is paying attention.  The directors of Orion Energy Systems (AMEX:OESX) clearly think their company is one such.

    Orion is an energy management company with a focus on high efficiency lighting systems and alternative energy system integration in commercial buildings.  The company is profitable, with a trailing Price/Earnings ratio of 18, a Price/Sales ratio of 0.5, and sold at less than half of book value ($4.05) when the market closed on Friday at $1.93.

    The energy management industry has seen increasing competition and eroding margins recently, which accounts for Orion’s recent drop in earnings, and in turn partly accounts for the company’s rock bottom share price.

    But company insiders clearly feel the sell-of has gone too far.  In February, two directors  were buying Orion stock in the $2.60 to $2.70 price range.

    Now, with no net debt, and net cash of $11M ($0.48/share), the board has tripled their previously announced share buyback program to $7.5M.  With analysts expecting continued profits in a range of 3 to 5 cents a share in 2012, and 7 to 16 cents in 2013, and long term growth of 35% per year, the company looks very cheap (relative to book value) for a growth stock.

    A cheap green stock with substantial growth potential in an industry which is economic without subsidies?

    Sounds like a good deal to me.

May 1: Great Lakes Dredge & Dock Scraping Bottom

TK: gldd dredgeI follow Great Lakes Dredge and Dock (NASD:GLDD) because it’s involved in many industries which will gain from Peak Oil and Global Warming:

  • Beach nourishment and levy building will gain from more flooding and sea level rise
  • Harbor and dock work will gain as more freight shifts to more fuel-efficient water based transport.
  • Offshore wind power requires extensive marine construction.

Today, the company reported first quarter income of 2 cents, compared to analysts’ expectations of 10 cents.  That should cause the stock (which has been rising strongly since I bought it last year) to sell off sharply over the next few days.

I sold some at the open today, but plan to buy back in to probably a bigger position after the market digests the bad news.  I like this one long term, and the miss was largely-attributable to one-off factors.  In addition, GLDD’s backlog built up significantly this quarter, which is good for the long term outlook.

That said, the stock is not exactly cheap compared to expected earnings of $0.47 cents for 2012, especially since those are likely to be revised down to $0.39 given the $0.08 earnings miss.  Trailing twelve month earnings are $0.26.  At $7.35, that’s a P/E of 19 for 2012, and a trailing P/E of 26, with long term growth expected at about 10%.

UPDATE: GLDD traded up to $7.52 intra-day before heading down around 2pm and closing at $6.91.  I took the opportunity to unload the balance of my holdings at $7.40.

Also: Assurant launches insurance for solar project developers.

May 2: Solazyme (NASDAQ:SZYM) Pops on Deal with Dow

JS:

Solazyme, Inc. (NASDAQ:SZYM) announced this morning that it and the Dow Chemical Company (NYSE:DOW) have entered into an offtake agreement that allows Dow to purchase all of Solazyme's non-vegetable microbe-based oils for use in dielectric fluid applications. The length of this deal runs through 2015.

Solazyme and Dow have also entered into a multi-year extension of a current joint development deal that allows Dow to provide additional development work on Solazyme's tailored algal oils. Solazyme is up about 5% in premarket.

As I've mentioned in the past, I'm not really a fan of biofuels – both as an investment and as a serious contributor to our energy and climate problems. It's definitely one tool in the shed, but it's not going to give us the most bang for our buck. That being said, Solazyme is one of the few biofuel players that I believe will still be around three years from now. It's partnership with Chevron and its ability to generate a few bucks in the food and cosmetics space gives it a little more flexibility than most of its competitors.

Last month, Solazyme hit my initial price target of $16. At which time, most who held out for that target, took their winnings and moved on. Right now, the stock is trading around $11.35. Although today's announcement could offer some support, I'm hesitant about re-visiting this one at these levels.

TK:

May 3: Has the Gevo (GEVO) hour come?

TK:

  • Gevo (GEVO) reports 1Q Earnings, transitions ethanol plants to isobutanol.  More here.
  • Lime Energy (LIME) strategy validated by utility contract win.  More here.

May 4: 2012 looks to be the Year of the Strong Grid

TK: Quanta Services (PWR), MasTec (MTZ) beat expectations this week.  Other Strong Grid stocks may benefit.

Disclosures:

  • TK - Long MXWL, LIME, MTZ, OESX.
  • JS - No positions.

Jeff Siegel is Editor of Energy and Capital, where his notes were first published.
Tom Konrad Ph.D. CFA is Editor of AltEnergyStocks.com, and a blogger on Forbes.com, where his notes were first published.



was posted on AltEnergyStocks.com.


       

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