The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Green Stock Experts: Too Soon to Call a Bottom

Last month, I wrote that I'm again finding clean energy stocks that I think are bargains, and listed 10. I was not ready to call a bottom for clean energy, and in fact said I expected the market to get worse before it gets better, so investors should keep some money on the sidelines to wait for more opportunities to emerge.

In a little over a month since then (June 16 to July 18,) those stocks are up, on average, by 5.6 percent in dollar terms, while the largest clean energy ETF, the PowerShares Wilderhill Clean Energy Portfolio (PBW) is down 1.5 percent over the same period. The top performer has been Alterra Power (MGMXF.PK), which is up 24 percent and the biggest loser has been Ambient (ABTG.OB), which is down 10 percent. It's far too soon to declare victory, and I continue to feel all those stocks are cheap today, and that there is plenty of room on the downside for clean energy as a whole. 

But given that I can only follow a small fraction of the hundreds of clean energy stocks out there, I thought it would be interesting to see if other money managers who specialize in clean energy see the current market the same way I do, and what bargains they are finding, in the spirit of my article looking at clean energy money manager's top picks in the wake of the Fukushima disaster. I intend to continue to do articles like this one based on other money managers' views, so if you are a professional money manager or analyst specializing in green stocks and would like to participate in the future, send me an email and I'll add you to my list. You can also reply to the questions here by leaving your comments at the bottom.

This article is the first of a two-part series looking into what they had to say. This first article is about where they see the clean energy sector as a whole, and the second one will take a look at their picks. 

I corresponded with three money managers for this article.

Sector and Market Outlook

All three agree that it's too early to call a bottom.  They raise two basic concerns. 

First, it's simply very difficult to ever time the market.  As Jabusch puts it, "Even when industries become very undervalued, they can remain stubbornly low for some time," while Coven finds it hard to say due to "volatile overall market conditions." 

Coven went on to say, "the correlation with global equity markets is still the [strongest driver] of stock performance and I certainly don’t think that global markets have bottomed nor are cleantech stocks as a whole independent from overall macro economic conditions." 

I think Coven's latter comment is interesting because we really have not seen a lot of correlation between the overall market and clean energy over the last couple years, with clean energy trending flat to down even as the market as a whole has risen.  If the overall market heads down from here, will clean energy stocks follow suit, or will they remain mostly decoupled?  I'm inclined to agree with Coven, which is why I have been focusing my picks on small and microcap stocks. Recent research has shown that portfolios of small and microcap stocks have been better behaved during broad market declines than larger capitalization stocks, so I hope my move toward smaller stocks will somewhat insulate me from an overall market decline.

Healey echoes Coven's concerns about how the larger economic picture might affect cleantech. He said many cleantech subsectors "have revenue generation that is tied in one way or another to government spending/incentives. Until investors have better clarity as to what the government spending/incentive picture will look like after the European debt crisis and U.S. deficit plans have been worked out, I cannot confidently say any equity that benefits from government actions, either policy or financial incentives, has bottomed."

Finding Value

Despite the cautious tone, all three seem enthusiastic about the values now available in specific stocks and subsectors.   

Jabusch said, "we do believe that just as surely as all bubbles must eventually burst, all unreasonably oversold stocks must some time come back to their fair valuation. By "fair valuation" we mean at least to the old-school Benjamin Graham definition of net present value of the probable future stream of cash flows discounted at a reasonable rate, plus the property plant and equipment. We understand that this valuation method seems very conservative and even quaint by current thinking, but surprisingly, there are a lot of cleantech companies that look very cheap right now, even against this standard."

Coven went into more detail about how he would pick stocks in the current climate.

We are also much more comfortable with well-capitalized companies, with broad product lines and strongly prefer those that can flourish with diminished government incentives which are bound to fall further.  This of course has us steering clear of all fuel cell and most biofuel companies for the moment.

We continually are reminded how fast certain sectors have product commoditization.  Where intellectual property isn’t strong enough to differentiate products sufficiently, prices have been collapsing even faster that we had anticipated. This is true for smart power meters, solar panels, wind turbines, and most lighting products – especially LEDs. The LED market is going to be massive, but the number of new entrants (particularly in China) and increased production capacity (mostly in China) has grown so much faster than demand, that prices are falling faster than they did for solar panels. This will be good for adoption, but the LED market for general illumination (non-consumer electronics) is still nascent and won’t really takeoff until LED prices drop further. Sector growth doesn’t necessarily mean that many companies will make economic profits in LED lighting or solar PV, but probably those with really great I.P. or the lowest cost manufacturing will. The rest will die or struggle to survive.

Stock Picking Guidelines

Which clean energy stocks will:

  • have strong intellectual property or other advantages that help them avoid commoditization of their products?
  • have great net present value of future cash streams?
  • aren't tied to government spending/incentives? 

Stay tuned for these three managers' stock picks later this week. 


This article was originally published on and was republished with permission.


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.

Untitled Document

Get All the Renewable Energy World News Delivered to Your Inbox

Subscribe to Renewable Energy World or email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Solar water heating

California Regulators Propose Expansion of Eligibility Requirements for Solar Water Heating Program

Jennifer Delony The California Public Utilities Commission has proposed expanding the eligibility requirements for customers seeking ...

Florida Supreme Court Takes Up Solar Question

Wayne Barber Because Florida remains one of only four states where current laws expressly deny citizens and businesses the freedom...
solar net metering

Lithuanian Net Metering Hits Snag from Outset

Linas Jegelevicius The much anticipated net metering in Lithuania has hit a major snag from the very start – the introduced network oper...
Solar energy

Colorado PUC Orders No Changes to Solar Net Metering

Vince Font In what is being lauded as a “fair outcome” for consumers, utilities and the solar industry alike, the Colorado Publi...


Fronius Shifting the Limits in Solar-Plus: It’s not just about products, it’s about solutions.

Fronius USA, who just recently launched the all-new Fronius SnapINverter line this past...

IREC Announces Changes in Regulatory Team

The Interstate Renewable Energy Council (IREC), a not-for-profit organization which for...

IREC Awarded New Funding to Advance Digital Credentials

The Interstate Renewable Energy Council (IREC) proudly announces funding for an innovat...

$100 Discount on 5-day Advanced PV Project Experience Workhop

Upcoming 5-day Workshops: Nov. 7 - 11 Feb. 6 - 10


NY Gov. Cuomo Pledges to Create Carbon Market use Solar, Wind to reduce Climate Change

This week former Vice President Al Gore joined with New York Gov. Andrew Cuomo (D) to sign the Under 2 MOU, a directi...
clean energy

In Clean Energy, The Truth Matters

A group of about 20 protesters gathered outside the Sheraton in Burlington, Vt., early on Oct. 8 as attendees arrived...

Industry Focus: Cleantech: 1366 Technologies joins Solarcity in New York

1366 is set to build a factory just up the road (OK, it is a long road – NYS Thruway) from Solarcity.  The...


Tom Konrad is a private money manager and freelance writer focused on Peak Oil and Climate Change as investment themes. He manages portfolios for individual clients and is Head of Research for the JPS Green Economy Fund (http://jpsgreeneconomyfund...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @jennrunyon



Successfully Integrating Solar: A Proactive Approach

•      What does the increasing solar penetrati...

Doing Business in Europe – in partnership with GWEC, the Global Win...

There is now 128.8 GW of installed wind energy capacity in the EU (appro...

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...


Sell Through Hypothesis

You first learned to hypothesize, or make educated guesses, in grade sch...

Vacancy? No Problem!

Have you ever tried to sell an efficiency product or service to a prospe...

Final Program Now Available for GRC Annual Meeting & GEA Geothermal...

GRC Annual Meeting & GEA Geothermal Energy Expo - Final Program f...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now