Tom Konrad CFA
Worries including the conflict with ISIL, Ebola, and economic
slow-down in Europe, sent the stock market down in the month to
October 3rd, with small cap stocks and clean energy stocks falling
even farther than the large cap S&P 500. My 10
Clean Energy Stocks for 2014 model portfolio
storm relatively well because of its emphasis on defensive and
, the model portfolio was down 4.8%, compared to
5.5% for small cap stocks (as measured by the Russell 2000 index
ETF, IWM) and a 9.8% decline for clean energy stocks, as measured by
PBW, the Powershares Wilderhill Clean Energy Index. The
relative strength of the model portfolio was in spite of significant
weakness in foreign currencies. The Canadian Dollar, Euro, and
South African Rand fell 3.3%, 3.4%, and 5.8% for the month, dragging
the model portfolio down 2.8% more in US Dollar terms than in local
Since portfolio inception on December 26th, 2013, the model
portfolio is up 1.5% in dollar terms, and 3.8% in local currency
terms. The small cap stock index was down 3.9%, while the
clean energy stock index eked out a tiny gain of 0.3%.
Stock market trends down in September. Image
source Yahoo! Finance.
Individual Stock Notes
The chart and discussion detail the performance of individual stocks
in the 10 Clean Energy Stocks for 2014 model portfolio, along with
relevant news items since the last update.
(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: $13.77. YTD
Total US$ Return: 4.2%
Sustainable Infrastructure REIT Hannon Armstrong paid its regular
$0.22 dividend for the third quarter. The REIT has a goal of
paying dividends equal to 100% of distributable income, which were
$0.20 in the first quarter, and $0.22 in the second quarter.
I expect third and fourth quarter distributable income to be
sequentially higher as the company deploys capital from its $75
secondary offering. This implies that we can expect a
small increase in December's fourth quarter dividend, which I
expect to be approximately $0.24.
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$4.32. YTD Total C$ Return:
-7.2%. YTD Total US$ Return:
Green building company PFB re-authorized
its normal course issuer bid to purchase up to 50,000 shares of its
own stock over the next year. Over the past year, the company
repurchased 19,500 of its shares at an average price of
C$4.92. Given the current price of C$4.32, I would expect it
to step up these purchases.
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$4.21. YTD
Total C$ Return: 27.0%. YTD Total US$
Independent power producer Capstone Infrastructure announced
strong second quarter operating results based on higher wind
production and increased income from its British water utility,
Bristol Water. The results were generally in line with analysts'
forecasts, but Scotiabank increased its price target for the
company to C$4.50 from C$4.00 while keeping its "Market Perform"
Last week, Capstone closed
C$76 million financing for its 25 MW Goulais wind farm which
is under construction in Northern Ontario.
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$5.54. YTD Total C$
Return: 16.7% . YTD Total US$ Return:
Waste heat recovery firm Primary Energy Recycling did not release
any significant news since the last update.
[formerly ACCEL], OTC:ACGPF).
12/26/2013 Price: €13.59. Annual
Dividend €0.55 Low Target: €11.5.
High Target: €18.
Current Price: €12.99. YTD
Total € Return:
-0.04% . YTD Total US$ Return:
Bicycle manufacturer and distributor Accell Group continued to
decline because of worries about the European economy and the
declining Euro. I think the current weakness is leading to
an excellent buying opportunity, especially since the company has
been diversifying its revenue geographically with a significant
push into the United States. The company signed
a deal with US sports and outdoors retailer REI to
distribute its Ghost bikes in the US, and E-bikes, one of Accell's
strengths, seem to be accelerating
on this side of the Atlantic.
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$13.23. YTD Total C$
Return: 29.3% . YTD Total US$ Return:
Leading transit bus manufacturer New Flyer paid its regular
monthly dividend of C$0.0475 but did not release any significant
7. Ameresco, Inc.
12/26/2013 Price: $9.64. Low
Target: $8. High Target: $16. No Dividend.
Current Price: $4.44 YTD Total US$
The stock of energy performance contracting firm Ameresco fell in
sympathy with other small cap stocks, reversing gains from the
previous month. I continue to think AMRC presents an
excellent buying opportunity at the current price.
8. Power REIT (NYSE:PW).
12/26/2013 Price: $8.42. Low
Target: $7. High Target: $20. Dividend currently
Current Price: $10.12 YTD Total US$ Return: 20.2%
Solar and rail real estate investment trust Power REIT advanced
strongly during the month. Norfolk Southern Corp. (NYSE:NSC)
and its subleasee Wheeling & Lake Erie Railway filed motions for
summary judgment in the civil case in which they are trying to
prevent Power REIT from foreclosing on their lease of 112 miles of
track from a Power REIT subsidiary. Power REIT also filed a
motion for summary judgment, and both motions (along with many other
court documents in the case can be found on the Power
The stock action seems to imply that some investors expect that
something of substance may come out of the summary judgment, or from
the mediation which the parties have entered into at the Court's
urging. The parties are extremely far apart in the case, and
so there remains a good chance of going to trial in early
2015. In any case, the judge seems to be pushing for as quick
a resolution as possible, which gives shareholders good reason to
believe that the case will come to some sort of conclusion in months
rather than years.
9. MiX Telematics
12/26/2013 Price: $12.17. Low
Target: $8. High Target: $25.
Current Price: $8.93. YTD Total ZAR Return: -19.3%.
YTD Total US$ Return: -26.6%
Global provider of software as a service fleet and mobile asset
management, MiX Telematics stock decline for the month was entirely
due to the declining South African Rand. The was not any
significant news about the company, but a good, in-depth article on
the company appeared on Seeking Alpha with the thesis that the
stock is near a bottom
. Note that Seeking Alpha Pro
articles are only available for free for a month, so if you plan to
read the linked article, you should do so in the next week.
The author provided excellent background and detail about the
[Note: I've reversed the order of Power REIT and MiX Telematics
in the chart above in order to group the two growth stocks (MIXT
and AMRC) together.]
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$0.31 YTD Total C$
Return: 10.7% . YTD Total US$ Return:
Renewable energy developer and operator Alterra Power acquired
ownership of 684 thousand shares of Greenbriar Capital Corp (TSXV:GRB)
and a similar number of warrants in payment for a US$1 million
debt owed to Alterra as the result of a previously terminated
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$0.015 YTD Total C$ Return: -81.3%
. YTD Total US$ Return: -82.1%
Terminal US$ Return -57% (when I said to sell on June 3rd.)
Geothermal power developer Ram Power's stock fell further in very
active trading. 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 held its annual general meeting
(AGM), but did not release more details about its plan to purchase
California residential solar installation marketing firm Solar
Alliance of America prior to the meeting. I checked in with
CEO Jason Bak by email on September 18th, and this is what he had
to say about the meeting:
We couldn’t publish anything in advance of the AGM because of
the stage of DD [due diligence] that we’re at – I don’t feel
confident presenting accounts or projections until the audit in
complete (ETA end of [September]). We did however, discuss
the opportunity with shareholders at the meeting and had a vote
on a motion from the floor for the approval of the acquisition,
based on the successful completion of DD and the approval of the
stock exchange. The resolution passed with ~85%
approval of approximately 12MM shares voting (~32% of
shareholders, which is a good turn out).
I will be putting out a company update on the transaction
shortly. Things are progressing well and the projections
look impressive, though they are continuing to be refined.
I have not seen the promised press release about the annual meeting
or any more details on the the results of due diligence. Given
Bak's track record, it would have been surpising if the press
release about the AGM had materialized. It's also likely that
he was being overly optimistic about how long the due diligence
would take. I expect that the timeline for the deal to buy
Solar Alliance will also slip significantly before it closes.
The recent declines in a number of clean energy stocks are creating
buying opportunities. In this list, I think Accell, Ameresco,
MiX and PFB are currently very attractive. I'm also seeing buying
opportunities elsewhere in the sector, such as biodiesel producer
FutureFuel Corp (NYSE:FF
which I recently wrote
Disclosure: Long HASI, PFB, CSE, ACC, NFI, PRI, AMRC, MIXT,
PW, AXY, FVR, FF.
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