Ten Clean Energy Stocks for 2013: April Update

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Tom Konrad CFA

April Showers While the sun was shining on most clean energy stocks in April, my ten clean energy picks for 2013 (introduced here) got relative showers.  The Powershares Wilderhill Clean Energy Index (PBW) was up a sunny 14.1% for April to 19.6% for the year, rising quickly past my picks, which inched up a relatively meager 0.7% to 7.5% for the year so far.  Meanwhile, the broad universe of small stocks gained 2.6% for a year to date gain of 15.1%, as measured by my benchmark the iShares Russell 2000 Index (IWM).

The low volatility of my relatively value-oriented picks is so far looking less attractive than it has in previous years, now that my clean energy benchmark is on track for what looks like excellent performance.  Nevertheless, I remain optimistic that the clouds will pass for many of these stocks which have so far failed to catch investor attention.

The chart and table show individual stock performance for my ten picks plus the six alternative picks I presented in a second article.  Note that the fourth stock in the list is now Ameresco (NASD:AMRC), which I substituted for Maxwell Technologies (NASD:MXWL) last month.  The return shown is that for Maxwell for Q1 and Ameresco for the last month.  Unmixed returns for these two stocks are shown in the ‘Six more’ section.

 10 for 13 Total return thru May 2

Significant Events

Below, I highlight significant events I feel affected performance of the stocks in these two lists. 

April USD Return
TSX:WFI Waterfurnace Renewable Energy -1.1%
NASD:LIME Lime Energy 0%
TSX:PFB PFB Corporation -10.8%
NASD:AMRC Ameresco, Inc. -0.6%
Amsterdam:ACCEL Accell Group 9.8%
NASD:ZOLT Zoltek Companies, Inc. 6.6%
NASD:KNDI Kandi Technologies 6.2%
TSX-V:FVR Finavera Wind Energy -15.0%
TSX:AXY Alterra Power 8.9%
NYSE:WM Waste Management 7.0%
Alternative picks
TSX:NFI New Flyer Industries -5.2%
NYSE:LXU LSB Industries -0.6%
NASD:MXWL Maxwell Technologies 13.4%
NYSE:PW Power REIT -0.8%
NYSE:HTM US Geothermal -13.2%
TSX:RPG Ram Power Group -9.3%

Ameresco, Inc. (NASD:AMRC)

Turnkey energy efficiency and renewable energy solution provider and performance contractor Ameresco spent its first month in the main portfolio going nowhere, but I see two developments behind the scenes which bode well for its long-term prospects.  First, there seems to be some bipartisan support in Congress for action on energy efficiency, which is Ameresco’s bread and butter. 

Second, in the course of its IPO, Hannon Armstrong Sustainable Infrastructure (HASI) revealed that it had received a private letter ruling from the IRS which allows HASI to treat the securitized performance contracts it specializes in as mortgages on real estate assets.  This means performance contracts can be held within the in tax-advantaged REIT structure, and, over the next couple years, should open up a new source of low cost capital to be deployed by performance contractors such as Ameresco.

Accell Group (Amsterdam:ACCEL)

Bicycle manufacturer and distributor Accell Group held its annual general meeting (AGM) where shareholders approved its €0.75 (5.6%) annual dividend.  The Stock went ex-dividend on April 29th, but still ended up 4.2% for the month.  Although the annual report was published in March, the stock seemed to be responding to positive comments in the AGM presentation (Google translation).

Accell grew sales by 20% from acquisitions and 3% organically in 2012, despite a tough bike market, led by strong electric bike and North American sales but hurt by slow sales in its Dutch home market, where the company will conduct a reorganization to cut costs. 

The company announced it had arranged for up to €300 million in credit from six banks, whi
ch the company intends to use to pursue further acquisitions on top of expected sales and profit growth.  Accell is well placed as an experienced consolidator in a fragmented industry given its access to capital when many smaller brands and distributors are having difficulty raising financing.

Zoltek Companies (NASD:ZOLT)

Carbon fiber manufacturer Zoltek continued to appreciate.  I took the opportunity to reduce my exposure to this stock because the promise of further gains have to be set against the risk that the company’s board is using its review of strategic options (discussed in the last update) as a pretext, and is not serious about considering the proposals put forward by turn-around specialist Quinparo group and its allies, or any other outside offers. 

Kandi Technologies (NASD:KNDI)

Chinese EV and off road vehicle manufacturer rallied on announced progress in its joint venture with leading Chinese Auto manufacturer Geely, as well as a series of positive articles from its supporters on Seeking Alpha.  Although the company is exceedingly cheap by any conventional valuation, its shares have long been held back articles alleging improprieties in the way it went public in the US through a reverse merger and misreporting of its US EV sales from 2009 to 2011. I had intended to boost the stock myself by tackling these allegations head-on in an article last month, but instead found myself troubled by the misreported sales.

Kandi’s supporters will say that all this is ancient history, and the result of inadvertent errors which have since been corrected..  The problem with history, ancient or otherwise, is that if we don’t learn from it, we’re doomed to repeat it.  Much of Kandi’s recent progress is corroborated by third party sources, and I’m confident that Kandi will benefit from Beijing’s push for rapid growth in EV sales if any automaker does.  However, the history of exaggeration by the company has undermined my confidence in Kandi’s financial reporting.  The all-important numbers in Kandi’s financial reports remain impossible to corroborate.  Did Kandi really sell almost 4,000 EVs in 2012, as the company claims and I relayed in the last update?  I find it impossible to be sure.

Given these doubts, I took advantage of the recent rally to greatly reduce my exposure to the stock.

I still plan to write that article, after interviewing both Kandi’s supporters and detractors.  Perhaps one side or the other will help me make up my mind.

Finavera Wind Energy (TSX-V:FVR, OTC:FNVRF)

Wind developer Finavera finalized its long-awaited agreement with Pattern Energy holdings.  The revised deal is smaller than the companies had originally envisioned in December, but still contains the most important aspects which should solve Finavera’s liquidity problems.  I interviewed Finavera’s CEO and covered the finalized deal in detail here.

Alterra Power (TSX:AXY, OTC:MGMXF)

Diversified renewable energy developer Alterra power seems to have bottomed, with the turn-around likely triggered by a purchase of 15 million shares of stock by well respected mining magnate Ross Beaty.  Beaty, who is Alterra’s founder and chairman, says the stock should be worth C$0.90, not the C$0.32 it is currently trading for.  He intended his purchase to demonstrate that conviction, and hinted that the might buy the whole company and take it private if the stock stays at its current levels.

At the end of the month, Alterra announced a partnership with Greenbriar Capital to (TSXV:GRB) develop 100 MW of solar in Puerto Rico.  This fits well with Alterra’s strategy of diversifying into solar and wind from its base of geothermal and run-of-river hydropower assets, so I would not have considered it even worth mentioning except that Greenbriar’s CEO is none other than Jeff Ciachurski, whom I am all to familiar with after covering Western Wind Energy for over two years.

Ciachurski built up Western Wind from nearly nothing to a sale for C$182 million to Brookfield Renewable Energy Partners (TSX:BEP-UN, OTC:BRPFF) in March while relying entirely on bank financing.  Shareholders like myself who got in at the right time did very well, but a development partnership with Pacific Hydro ended in a lawsuit and eventual settlement, with Western Wind keeping the development assets. My assessment of Ciachurski is that he is good at developing renewable energy projects on a shoestring, and working the system of a public company to pay himself very handsomely for doing so.  Shareholders and development partners may also profit, given good timing and better legal representation.

I trust that Alterra’s management is well aware of this, and Alterra’s CEO and IR representative have agreed to an email interview in which I hope to get some more insight into their perspective on the Greenbriar partnership.  I suspect they are already aware of my opinion of Ciachurski: When I first inquired about an interview, Alterra’s IR representative was confident I could speak with Alterra’s CEO, John Carson.  A day later, he got back to me, saying Carson was unavailable for an interview, but he would relay my questions.  I suspect that someone at Alterra made the connection to my rather public disagreement with Ciachurski over the sale of Western Wind to Brookfield in the intervening day, and they were worried I might ask Carson uncomfortable questions about the relationship.

Waste Management (NYSE:WM)

Waste Management was up 7% in April. The company’s first quarter results missed expectations by a penny, but analysts liked what they heard about the company’s expectations of future profits, based positive pricing trends, an increase in volumes in the first quarter, and cost control. 

Six Alternative Clean Energy Stocks

LSB Industries (NYSE:LXU< /a>)

Chemicals and climate control company LSB Industries also seems to have bottomed out.  In the absence of news, I think much of its decline since the start of February may be explained by rising prices for natural gas, but the stock seems to me to have fallen too far.  While I was selling when the company was over $42 in February, I was buying in April when the company was below $32.

Maxwell Technologies (NASD:MXWL)

Ultracapacitor firm Maxwell rallied 13.4% on the back of unaudited financial highlights for the fourth quarter (Q4) of 2012 and first quarter (Q1) of 2013.  Invoiced shipments were down 1.5% compared to reported revenues from the previous year in Q4, but up 19% in Q1 from the previous year’s reported revenue.  The company is not currently reporting quarterly revenues because improper revenue recognition is why the company is having to restate previous financial statements.  The company attributes the strong Q1 invoicing to a surge in demand for ultracapicitors for buses in China after a government subsidy program was reinstated, but is unable to predict if this demand will prove durable.

Perhaps Lime Energy’s (NASD:LIME) stock would be doing better if they’d taken a page from Maxwell’s book and provided unaudited quarterly updates on sales even while they are sorting through the mess of the last several years’ financial statements.


Power REIT took one more step along the road to becoming a renewable energy focused Real Estate Investment Trust by signing a term sheet for the acquisition of 100 acres of land underlying approximately 20MW of to-be-constructed solar projects with existing power purchase agreements to sell power to Pacific Gas and Electric (NYSE:PCG) and Southern California Edison (NYSE:SCE.)  PW will pay approximately $1.6 million for the land.  Unlike PW’s proof of concept deal for land under a solar farm signed in December, this deal is with an established solar developer with a proven track record. As such, it could lead to a series of future deals with PW providing the financing for land under many solar project in the future.  Such an assembly line approach will be key to PW building its portfolio of renewable assets without excessive demands on management time.

Power REIT plans to finance the deal with a combination of equity and debt.  The equity will be raised under PW’s existing At Market Issuance Sales Agreement, meaning that the stock will be sold to ordinary investors bidding on the New York Stock Exchange.  Investors who buy shares in PW over the coming months will have a good chance of having their money go directly to finance these solar projects.

US Geothermal (NYSE:HTM)

US Geothermal’s long time CEO Daniel Kunz retired and was replaced by Dennis Giles, who brings with him 23 years of experience at Calpine Corporation (NYSE:CPN), a leading independent natural gas and geothermal independent power producer.  Kunz will stay on as a consultant to advise the transition for one year.  The stock fell on the news, and I used the dip to increase my position because I expect the company to achieve its first full year of profitability in 2013 with earnings in excess of $0.04 per share based on power sales from its operating plants.  At $0.33, that would give HTM a forward price/earnings ratio of 8 or lower, which I consider attractive.

The company also has room for growth from its expansion plans at existing plants, and, longer term, the commencement of drilling at its El Ceibillo project in Guatemala.


My swap of Maxwell for Ameresco last month proved poorly timed, but this portfolio is designed as a tool for infrequent traders.  It’s only under extraordinary circumstances that I move any stocks into or out of the portfolio in the middle of the year.  This can be seen from the fact that I sold much of my holdings of both Kandi and Zoltek in April, but I’m leaving both in portfolio.

The blistering performance of my clean energy benchmark PBW in April has much to do with a rally of always volatile solar stocks.  I can’t say if that rally will continue for the rest of the year.  I’ve spent so long focusing on other clean energy sectors because of the poor industry structure I see in Solar that I simply don’t have the solar expertise to judge if this current solar rally is the start of something bigger, or will prove to be just one more abortive flash in the pan.

A continued economic recovery along with industry consolidation could continue to allow solar stocks to shine, with other clean energy stocks following close behind.  On the other hand, such trends can reverse as quickly as they started.  This is why I’ve significantly reduced my exposure to Zoltek  and Kandi.  At Zoltek, price appreciation has reduced the inherent protection of the company’s former inexpensive valuation.  At Kandi, the valuation still appears extremely cheap, but I’ve become more cautious about judging the company solely on appearances. In both cases, discretion seems the better part of valor.


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 guaranteed.


  1. Mr Conrad, you mention in your article that in the past, kandi has long been held back by these kind of articles. Articles that always seemed to mention inconsistencies by the company in one form or another. Yet your confinedence remained unfazed as was shown in the numerous pro kandi articles you authored. But now another hit piece comes out, which is essentially a paraphrase of past articles bashing kandi, and your confidence is wavered. I’m wondering what was different in this last hit piece versus the others? Why did this last one change your mind??

  2. Jeff,
    The big difference is that I decided to analyze the “hit” pieces more deeply… When I made that decision I was confident that the claims of inconsistencies would turn out to be trivial when subjected to detailed scrutiny. That turned out not to be the case.
    So I changed my mind.
    That’s not to say I’m anti-Kandi. I think they have a good business model, and if any company is going to make EVs a success and reward its shareholders handsomely, it’s going to be Kandi.
    That’s why I still own some. But I decided that I had allowed my previous enthusiasm for the company to blind me to the risks. My current position better reflects my new assessment of both risk and reward.


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