Winds of Change: Renewable Energy Stocks

wind farm

Clean Energy Boom

Leading clean energy stocks such as Tesla (NASD:TSLA), SolarCity (NASD:SCTY) and other solar stocks such as First Solar (FSLR) have been recently catching investors’ attention and producing stellar returns.

Since the last update on May 5th, my portfolio has advanced 3.0 percent for a 10.5 percent return for the first half.  However, the portfolio continues to lag both the broad market of small cap stocks as measured by my benchmark the iShares Russell 2000 Index (IWM), and the blistering performance of clean energy stocks, as measured by the leading clean energy ETF, the Powershares Wilderhill Clean Energy Index (PBW).

IWM inched up 2.7 percent for a 17.9 percent total return, while PBW rocketed up another 13.9 percent for a 34.9 percent total first half return.

The core of the problem was the renewable energy developers: Finavera Wind Energy (TSX-V:FVR, OTC:FNVRF), Alterra Power (TSX:AXY, OTC:MGMXF), US Geothermal (NYSE:HTM, TSX:GTH), and Ram Power Group (TSX:RPG, OTC RAMPF).  This group declined an average of 23 percent for the year (including the effects of the declining Canadian dollar), despite a number of positive developments for the individual names.  All are trading a a significant discount to the value of their assets, with Alterra and Ram Power cash flow positive, and US Geothermal profitable on a GAAP basis.  Finavera, meanwhile, is in the possess of selling its assets and I expect it to have cash equal to more than twice its current share price by the end of next year.


GT Advanced Technologies Inc. (GTAT) may be a solar overlap now more than a solar pure-play, but it is back in focus now that Apple reached a pact with GT to supply sapphire glass for Apple products. Apple may be looking to work around the Gorilla Glass from Corning, but the gains if the project works out as well as the stock indicated could be a good omen for GT.

GT’s stock even managed to hit a new 52-week high above $10 this week on the Apple news. The question to ask is whether the Apple deal will be enough of a bang for the company to make leaps in the solar operations as well. The GT HiCz systems produce low-cost monocrystalline ingots for high-efficiency solar cells. Its DSS furnaces are also called the solar industry standard by the company itself, with more than 3,200 units shipped worldwide. After a 20% gain to $10.10, the stock is up about 300% from its 52-week low, and the consensus analyst price target was down around $7.60 on last look.

First Solar Inc. (FSLR) shares have somehow managed to come all the way back to more than $60.00. This is nearly triple from the lows of the last year. What has driven this interest so much of late was when First Solar managed to dazzle investors with its earnings. Some of the huge upside may have simply been in the timing of the revenue recognition. It seems odd that the stock jumped so much when you consider that sales guidance for year was effectively trimmed by about $200 million while it simultaneously raised its earnings guidance.

SunEdison Inc. (SUNE) almost brings back too much pain to trust as a serious and sustainable turnaround in the solar sector. This is the old MEMC outfit, which makes and sells silicon wafers to semiconductor and solar energy companies. The company now offers home solar solutions and intelligent energy solutions, and it announced plans to spin off its chip-related operations in August.



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