It's been a busy six weeks since I last updated readers on the news events driving my Ten Clean Energy Stocks for 2013 and six alternative picks. I looked into the performance of the portfolio as a whole at the start of the month, along with some comments about the four renewable energy developers. I thought at the time we might be seeing a bottom for these beleaguered stocks, but if I was right, we have yet to see the upturn. Nevertheless, the fundamental factors I discussed are still in place.
I've updated my regular chart of stock performance with intraday prices on October 15th to reflect the two weeks of changes since the performance update, and you can see it below.
From a couple reader comments, I realize that not everyone understands how to read these charts, which are designed more for the compact display of a lot of information than for easy readability. You will see bars above and/or below the axis for each stock, with different colors representing each time period or dividends for the year to date. The total performance of the stock is the sum of the bars above the line, minus the bars below the line, and is represented by the green diamond "Total" and also labeled with the percentage gain or loss since the end of last year.
All stock movements mentioned below refer to the six weeks since the last update on August 30th to intrad day prices on October 15th. During that period my benchmarks IWM and PBW advanced 9 percent and 28 percent, respectively.
Waterfurnace Renewable Energy (TSX:WFI, OTC:WFIFF)
Geothermal heat pump manufacturer Waterfurnace advanced 5 percent for a total gain this year of 26 percent.
Lime Energy (NASD:LIME)
Utility demand-side management contractor Lime Energy completed a seven-to-one reverse split and issuance of preferred stock necessary to maintain its NASDAQ listing. With the additional $2.5 million in cash from the sale of convertible preferred shares, Lime should have enough cash to see it to profitability late this year or early next.
The company continues to be awarded significant contracts, such as the $22 million direct install contract from National Grid (NYSE:NGG) announced on September 20th.
Lime fell 22 percent for the period, after adjusting for the reverse split. The preferred dividend payments are payable in additional preferred shares at the company's option at a rate of 12.5 percent per annum, and are convertible into common shares at a post-split conversion price of $3.87, a 17 percent premium to the current price of $3.23.
Until I see some more financial statements for this much changed company, I'll have trouble valuing it, but the replacement of most of its outstanding debt with preferred shares on which the dividends are payable with equity clears the way for Lime to achieve profitability in the next couple quarters. I have not yet, but am seriously considering increasing my position.
The company is down 18 percent for the year.
PFB Corporation (TSX:PFB, OTC:PFBOF)
Green builder PFB fell 7 percent for the period, and has gained 8 percent for the year to date.
Ameresco, Inc. (NASD:AMRC)
Turnkey Energy Service Company (ESCO) Ameresco has recovered 18 percent on a growing backlog of business, and is now up 14 percent for the year. Its combined contribution to the portfolio with Maxwell Technologies after it replaced the latter in the portfolio is -13 percent for the year.
Navigant research recently published a study of the US Energy Service Company (ESCO) market, which predicts strong year-over year growth in 2014, and 7.7 percent compound annual growth from 2013 to 2020. This fits well with my belief that Ameresco is temporarily undervalued because of a weak ESCO market in 2012 and early 2013 resulting from the end of the 2009 stimulus.
Strong growth in the ESCO market should also help Hannon Armstrong Sustainable Infrastructure (NYSE:HASI), which arranges financing for and invests in ESCO projects. I expect the dividend to ramp up to over 8 percent over the next three quarters (based on the current stock price of $11.33) and the stock to appreciate as it does.
Accell Group (Amsterdam:ACCEL)
Bicycle manufacturer and distributor Accell Group gained 7 percent for the period and 18 percent for the year to date. The company continues to reorganize its Dutch operations to better match costs to a sluggish local bicycle market.
Zoltek Companies (NASD:ZOLT)
Carbon fiber manufacturer Zoltek rose 38 percent for the period and 122 percent year to date after announcing an agreement with Japanese carbon fiber maker Toray Industries, Inc. (OTC:TRYIF) to purchase the company for $16.75 per share.
There was some speculation in September which temporarily caused the stock to shoot up over $19 on rumors of a $22 bid from Mitsubishi Heavy Industries. I thought the rumored price was much too high given that the group which had forced Zoltek to put itself up for sale, Quinparo Partners, had only been discussing making an offer "in the low teens," so I sold some $17.50 calls which I expect to expire worthless.
Kandi Technologies (NASD:KNDI)