In December, I asked my panel of professional green money managers for their top three stock picks for 2014. You can find the full list and descriptions of the companies here.
Three months have passed since I asked them for their picks, and given the popularity of my regular updates on my own 10 clean energy picks for 2014, I decided to ask them what to tell us what they thought of the performance of their picks (shown in the chart below):
3 month total return for the picks from my panel of professional green money mangers. The blue “Avg” bars are for each manager’s three picks, while the red/brown “Fund” bars show the returns of the publicly traded mutual funds or ETFs they manage, if any. Robert Wilder (PBW) is also on my panel, but as an indexer, he does not pick stocks.
Here is what each manager had to say about their picks, in the order they got back to me:
Shawn Kravetz is the solar expert on my panel. He is President of Esplanade Capital LLC, a Boston based investment management company one of whose funds is focused on solar and companies impacted by the emergence of solar. He says:
Solar stocks have enjoyed a sensational start to 2014, reminiscent of 2013. We expect more bumps than in 2013, with both long positions and short positions offering opportunity.
Meyer Burger (Swiss:MBTN) is up a whopping 50 percent year-to-date as investors have suddenly embraced the emerging turn in the equipment cycle that we have been discussing for several months. We have sold our holdings of this stock.
Hannon Amstrong (NYSE:HASI) is up a bit in 2014, after digesting strong returns in Q4 2013. Their solid dividend and business performance in Q4 set the stage for what should be a solid year in 2014 as they continue to execute and grow their dividend.
Renewable Energy Trade Board (OTC:EBODF) is also up a bit in 2014, after digesting strong returns in 2013. I believe it is like a jet burning off a bit of fuel before climbing higher. Its core holding United Photovoltaics Group Ltd. (formerly known as Goldpoly) just announced a partnership for crowd-funding solar projects. EBODF is a partner in this venture. This appears to be an outstanding business opportunity and it further reinforces EBODF’s standing in high potential ventures poised to add substantial incremental value for shareholders. This remains the quirkiest and yet most compelling opportunity we have seen in our decade investing in solar. With asset value ($22) nearly four times the current ($6.50) stock price and emerging business ventures starting to gain traction, I would not be surprised if EBODF were our largest winner in the remainder of 2014.
Garvin Jabusch is cofounder and chief investment officer of Green Alpha Advisors, and is co-manager of the Shelton Green Alpha Fund (NEXTX), and the Sierra Club Green Alpha Portfolio. He says:
First Solar (NASD:FSLR) is up 2.69 percent YTD through 3/7/14. First Solar has had a volatile year, swinging down on a Goldman downgrade, back up on project news, and most recently down on what some felt was a disappointing earnings report (on February 25th). For me, the bottom lines are that FSLR continues to lead the solar industry by providing panels at a manufacturing cost of $0.48 per watt of generation capacity, with plans to and a track record showing ability to decrease costs further, potentially rapidly (e.g. their thin film tech is gaining conversion efficiency faster than silicon PV tech is). This has and will continue to make FSLR the go-to for utility-scale projects both in the US and abroad. The shares will continue to be volatile, and demand and pipeline visibility will vary, but overall, FSLR will grow in proportion to the economy’s growing use of solar both for new electricity demand and to replace coal and other fossil fuel based generation.
Solar City (NASD:SCTY) is up 36.92 percent YTD through 3/7/14. After last year’s outrageous run, some folks thought I was crazy to keep SCTY in portfolios for 2014. But this is simply one of my favorite stories. SolarCity buys the least expensive quality panels they can, installs them on home and commercial properties, signs a 20-year lease or maybe a PPA with a business or other enterprise like a utility, and collects revenues for decades with little further capex. The only thing limiting SCTY’s growth potential is in raising enough capital to grow as rapidly as they’d like, but we’ve so far seen them come up with some very creative and relatively inexpensive ways to do that. To those who object that SCTY is still negative EPS, I say that every penny they spend growing now represents essentially unlimited recurring revenue in the future, and that if they wanted to be positive EPS today, they easily could, simply by slowing growth to less than current revenues. So, it’s not like they’re negative EPS because they’re failing. On the contrary, rapid growth now is the obvious move while the industry is still in its infancy.
Digi International (NASD:DGII) is down 17.49 percent YTD through 3/7/14. Obviously a disappointment so far this year, DGII missed on both revenue and EPS for Q4 (Q1 in DGII’s world), and guided lower for 2014 in their report of Jan 23. Digi International works in the mobile Internet and machine-to-machine Internet space, by all accounts and anecdotal visibility one of the the fastest growing pieces of telcom and IT and even commerce. I picked DGII because it is profitable and showing good growth (even with the revised, lower numbers), it has no debt, its products have a good reputation and it was (and still is) trading below book value. Moreover, as DGII is a smaller firm (mkt cap $256mm), I liked the potential for rapid growth or even possible takeover. It is unfortunate that the company has not been able to grow revs or earnings as fast as I had hoped, but I think the long term prospects are still in place, and the recent decline therefore represents a more attractive entry point.