Tom Konrad CFA
After a rough January, the stock market recovered in February, while clean energy stocks partied like it was 2013. My annual Ten Clean Energy Stocks model portfolio also had a good month, rising 6.0%, and is now up 4.7% for the year in dollar terms, and up % in local currency terms. My broad market benchmark (the iShares Russell 2000 index) is up 7.5% for the period and 1.5% for the year. Clean energy stocks soared higher, with the Powershares WilderHill Clean Energy ETF (NYSE:PBW) up 16.3% for the period and 15.7% for the year.
Turning to individual stocks in the model portfolio, several companies have reported 2013 results. I cover this and other significant news below.
Individual Stock Notes
(Current prices as of February 3rd, 2014. The “High Target” and “Low Target” represent the ranges within which I predicted these stocks would end the year, although I expect a minority will stray beyond these bands due to unanticipated events.)
1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
Current Price: $14.05. 12/26/2013 Price: $13.85. Annual Yield: 6.3%. Low Target: $13. High Target: $16.
YTD Total US$ Return: 1.4%
Sustainable Infrastructure REIT Hannon Armstrong announced full year results. While management reaffirmed their 13% to 15% target for core earnings and dividend growth, the company took a provision of $0.69 per share on investment in a geothermal loan, which was a larger write-down than I had anticipated. Some of this may be recovered in future quarters.
Because of the loss, management presented significant details about the credit quality of its other assets in the conference call, 96% of which is investment grade. This seems to have reassured investors, as the stock has been rising to bring its yield more in-line with other clean energy income stocks.
2. PFB Corporation (TSX:PFB, OTC:PFBOF).
Current Price: C$5.30. 12/26/2013 Price: C$4.85. Annual Yield: 4.5%. Low Target: C$4. High Target: C$6.
YTD Total C$ Return: 10.5%. YTD Total US$ Return: 6.8%
Green Building company PFB scaled back its stock repurchase program in February, but board member and large shareholder, Edward Kernaghan has continued his purchases, buying 3,700 shares since the last update. The company paid its regular C$0.06 dividend in February.
3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
Current Price: C$3.84. 12/26/2013 Price: C$3.55. Annual Yield: 7.8%. Low Target: C$3. High Target: C$5.
YTD Total C$ Return: 10.3% . YTD Total US$ Return: 6.6%
Independent power producer Capstone will hold its annual results conference call on March 7th.
4. Primary Energy Recycling Corp (TSX:PRI, OTC:PENGF).
Current Price: C$5.44. 12/26/2013 Price: C$4.93. Annual Yield: 4.1%. Low Target: C$4. High Target: C$7.
YTD Total C$ Return: 11.5% . YTD Total US$ Return: 7.8%
Waste heat recovery firm Primary Energy announced the long-anticipated recontacting of its largest facility on Friday. In the two trading days since, only 920 shares have traded, compared to a three month average daily trading volume of over 20,000 shares. This reflects a lack of willing sellers as shareholders await the company’s annual results, to be released on March 18th.
5. Accell Group (Amsterdam:ACCEL, OTC:ACGPF).
Current Price: €14.27. 12/26/2013 Price: €13.59. Annual Yield: 3.9%. Low Target: €11.5. High Target: €18.
YTD Total € Return: 5.0% . YTD Total US$ Return: 5.0%
Bicycle manufacturer and distributor Accell announced annual results on February 21st. Sales increased 10%, led by a 23% increase in e-bike sales. Earnings declined 18% mostly due to reorganization costs. The company proposed a €0.55 annual dividend, to be approved at the annual meeting. The lower earnings and dividend were expected, and the stock has reacted favorably since the announcement.
6. New Flyer Industries (TSX:NFI, OTC:NFYEF).
Current Price: C$11.33. 12/26/2013 Price: C$10.57. Annual Yield: 5.2%. Low Target: C$8. High Target: C$16.
YTD Total C$ Return: 8.1% . YTD Total US$ Return: 4.5%.
Leading transit bus manufacturer New Flyer will announce annual results on March 19th. The company paid its normal C$0.04875 monthly dividend.
7. Ameresco, Inc. (NASD:AMRC).
Current Price: $9.99 12/26/2013 Price: $9.64. Annual Yield: N/A. Low Target: $8. High Target: $16.
YTD Total US$ Return: 3.6%.
Energy performance contracting firm Ameresco will announce its annual results on March 13th. The Pentagon announced that Ameresco is now eligible to bid on projects included in its $7 Billion green energy program.
8. Power REIT (NYSE:PW).
Current Price: $9.25 12/26/2013 $9.34 Price: $8.42. Annual Yield: N/A. Low Target: $7. High Target: $20.
YTD Total US$ Return: 9.9%
I took a look at the preferred stock offering from solar and rail real estate investment trust Powe
r REIT, and decided to invest.
9. MiX Telematics Limited (NASD:MIXT).
Current Price: $11.88. 12/26/2013 Price: $12.17. Annual Yield: N/A. Low Target: $8. High Target: $25.
YTD Total US$ Return: -2.4%
Global provider of software as a service fleet and mobile asset management, MiX Telematics, announced its fiscal third quarter results on February 6th, including slightly-better than anticipated growth in its closely watched subscription revenues. After the results were out, I interviewed CEO Stefan Joselowitz and industry expert Clem Driscoll. I had initially included MiX in this portfolio because I felt it was the best valued company is a rapidly growing industry which can significantly reduce fuel uses and improve driver safety.
After doing the research for that article, I am even more enthusiastic about the company. In addition to the stock being a better value than those of its competitors, I believe MiX is a leader in globalization and its tools to provide driver feedback, which improve efficiency and safety. Given the recent stock pullback, I added to my holdings, and consider the current price an excellent entry point.
10. Alterra Power Corp. (TSX:AXY, OTC:MGMXF).
Current Price: C$0.30 12/26/2013 Price: C$0.28. Annual Yield: N/A. Low Target: C$0.20. High Target: C$0.60.
YTD Total C$ Return: 7.1% . YTD Total US$ Return: 3.6%.
Renewable energy developer and operator Alterra Power completed the acquisition of a 202 MW wind development and announced the results of its 66% owned Icelandic subsidiary, HS Orka. Revenues and electricity production increased, but EBITDA and income were down, mostly due to one-off factors. HS Orka continues to use most of its cash flow to rapidly pay down debt. This cash flow should be available for other uses from 2017 onwards.
Two Speculative Penny Stocks for 2014
Ram Power Corp (TSX:RPG, OTC:RAMPF)
Current Price: C$0.08 12/26/2013 Price: C$0.08. Annual Yield: N/A. Low Target: C$0.20. High Target: C$0.60.
YTD Total C$ Return: 0% . YTD Total US$ Return: -3.3%.
Geothermal power developer Ram completed the remediation of its San Jacinto-Tizate project on January 22nd, and expects to complete a plant capacity test in March. Management expects the remediation to have increased the plant capacity to between 58 and 63 MW. We can expect the stock to appreciate significantly if it is in the upper part of the range. If it fails to reach 58 MW, look out below!
Finavera Wind Energy (TSX-V:FVR, OTC:FNVRF).
Current Price: C$0.075 12/26/2013 Price: C$0.075. Annual Yield: N/A. Low Target: C$0.20. High Target: C$0.60.
YTD Total C$ Return: 0% . YTD Total US$ Return: 0%.
There were no updates from wind project developer Finavera.
Final Thoughts
Clean energy stocks are starting off the year at a blistering pace. Although my picks have not kept up, I’m very happy with the 4.7% return from these relatively conservative and income-heavy stocks. Of the ten, only MiX is down, and I’m also happy to see the stock there for now. Its recent US listing only came to my attention in December, and the current weakness comes at an opportune time, as I am becoming more enthusiastic about the company’s long term prospects.
Disclosure: Long HASI, PFB, CSE, ACCEL, NFI, PRI, AMRC, MIXT, PW, AXY, RPG, FVR.
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.
