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SX Greentech Advisor
High Profit ESG Investing

Sector Xpress Greentech Advisor | October 5, 2021

The current market is giving investors headaches, but it’s not unusual in Greentech to find savvy investors looking past the near-term economic fears and focusing on companies that are tapping into what promises to be terrific growth from de-carbonizing the economy.

This issue, we highlight a small cap stock with amazing engineering savvy at a minor, but essential, feature of electric vehicles. Management expects it can grow revenue about 50% every year through the rest of the decade as automaker customers begin to churn out EVs. It’s in the early stages of growth and is seeing strong fund buying as well as exceptional technicals.

We also highlight three ESG stocks showing the best technicals in the group, as part of our recurring ESG Three, give the current sector outlook indicated by our Greentech Timer, and provide a detailed rundown of the stocks in our current portfolios. We have some ratings changes and refreshed sell-stop recommendations for many of our holdings.

Read through for more details.

Aspen Aerogels, Inc.

A significant problem with lithium-ion batteries are fire risks. This is particularly worrisome in EVs, where a large volume of li-ion batteries can be involved in incidents at high force. Statistically, EVs seem to account for fewer auto fires than their market share. A study by the Swedish FFI consortium of insurance data from Norway, where EVs now account for 14% of vehicles, is that 3.4% of vehicle fires the past decade were EVs. Yet when accidents do occur – or age or some other factor comes into play – li-ion batteries are subject to thermal runaway, a domino effect that eventually leads to intense fires that require chemical extinguishers. The challenge for the auto industry is to be able to design smaller, denser batteries that can avoid thermal runaway and endure the rugged environment of a car.

Business Model
Aspen Aerogels (ASPN) makes a specialized thermal barrier that is uniquely qualified to be a part of the battery design of EVs. Aerogels are nanoporous, low-density, light-weight materials that can provide a mix of high thermal resistance, superior fire reaction, strong electric conductivity, be a molecular water barrier and permit vapor porosity. Aspen’s silica-based aerogel for EVs is called PyroThin. It’s a complex and very thin thermal barrier designed primarily to mitigate thermal runaway in li-ion batteries and also to act as a mechanical compression pad. They can be used between each cell of a battery, each module and/or around the whole battery pack. They’re not the only business that makes thermal barriers, but Aspen Aerogels has the expertise to combine a number of features automakers want – durability, thinness, flexibility, and superior fire protection. Using PyroThin in an EV will generate sales for Aspen between $100 and $300 per vehicle. The company has a contract with an undisclosed North American automaker already, which will include about $275 worth of the product in each car. Aspen management also recently won inclusion in one model of an undisclosed Asian automaker. That model will be distributed worldwide, also at around $275 worth of revenue per unit. Even better: Aspen Aerogels’ barrier is now being included in the automaker’s base design for all its EVs. That could potentially be huge volume. Aspen’s contracts are on typical auto industry terms – that is, no guarantees.

Right now, the Massachusetts-based business is dependent on the fossil fuel industry. Most of its $100 million 2020 revenue comes from providing thermal insulation products for the LNG industry, which has high requirements for maintaining cold temperatures for liquid natural gas, as well as preventing leaks, fires and corrosion of subsea and onshore oil and gas pipelines and refinery operations. This reliance on carbon-generating industries isn’t where management is staking its future, but it remains part of the business’ revenue mix for the foreseeable years to come. To date, Aspen Aerogels has installed about $1 billion worth of product in the energy infrastructure segment, with billions of potential sales possible in the future, given the company’s barriers – branded Spaceloft, Cryogel and Pyrogel – are typically installed during overhauls of equipment by major oil producer end-clients. Roughly half of sales are to the U.S., with Asia making up the bulk of the rest. The company is still a niche player in the energy infrastructure market, with about 4% share of the $3 billion annual market.

Its unique expertise in thermal barriers is being extended to more environmentally friendly areas. Specifically, the company is targeting the nuclear, geothermal, hydro and solar thermal power plants, which can also benefit from the heat retention and protection high-tech insulation provides. Management also believes it should be able to build sustainable building materials into a market for its product but admits that to date they have unperformed their expectations.

Business Outlook
The emergence of EVs as an end market has suddenly provided a massive growth market for this niche player to address. Globally, auto sales run about 70 to 80 million units a year, depending on the state of the economy. Significant penetration of EVs into that total, and Aspen Aerogels being able to sell $100-$300 of material into every EV unit produced (management estimates) by its customers, means potentially accelerating sales in years to come. Aerogels is telling investors it believes it can double revenue every 24 months – so about $225 million for 2024 to $550 million in 2026. It also believes that the auto industry places such a premium on the qualities of safety and a small form factor – since batteries are very heavy and bulky – that it has the first-mover benefit in the space, in addition to a large patent portfolio that should provide some competitive moat. With its North American client, the unnamed customer projects the rest of the decade could generate $1 billion revenue for Aspen – implying about 3.6 million vehicle sales, based on per-vehicle estimates. Put another way, this customer expects to grab about 2.6% of cumulative U.S. auto sales with its EV by 2030.

Longer term, the company is developing ways to replace graphite used inside lithium-ion batteries. Graphite is typically used for the battery anodes, and researchers believe a way to improve the performance of li-ion batteries is to replace the graphite with silica. Aspen Aerogels is using its carbon-based aerogel (which it has developed mainly for defense and space applications) as a protective scaffolding to contain silica, using the whole thing to replace graphite. Don’t expect revenue from this line in the near term, but management has expanded its research team this year and has deals with SK and Evonik, Korean and German companies, respectively, in pursuing the idea.

Issues to Consider:

  • Aspen Aerogels has never made a profit. It lost 83 cents a share last year and probably loses 98 cents this year.
  • The undisclosed automaker customers are a big variable. If they’re established brands like Tesla and Toyota, investors will celebrate. If they’re start-ups, like Canoo and Fomm, sales projections are far more speculative.
  • A lot of expectation is already built into the price: price-to-sales is 15 – Greentech is around 8, while Internet software, the richest sector, is around 12. If management can hit revenue – and they do strike us as conservative – then P/S is 7 times 2023 sales, and 3 times 2026. The S&P 500 as a whole has a price-to-sales ratio of 3.
  • Thermal barrier competitors are much larger and better capitalized: 3M (MMM), Parker Hannifin (PH), Cabot (CBT) and Saint Gobain, among others.

Technical Analysis
ASPN went public in 2014 at $11 a share. a level it never returned to until October last year, bedeviled by the reputation of aerogels as an expensive – and therefore niche – product. Shares broke out of the long-term range as the EV market became apparent and funds began moving into the stock, with institutional ownership rising 28% in the past year. For a small ($1.5 billion market cap) stock, ASPN has been quite steady, outperforming the S&P since May. Shares haven’t tested the 200-day moving average in 13 months, and the 40-day average has been a reliable support/resistance indicator. At all-time highs here, there is no pent-up selling waiting to swoop in. Despite the run-up and the price-sales multiple, there’s very little short interest in ASPN, a sign that, so far, bears don’t see much to sensationalize.

What to Do Now
Market conditions provide headwinds to action, but technically ASPN scores at the top of our scans both in Greentech and across the broader market – the technicals all yell “buy”. A pullback to or just below the 40-day moving average would provide a good way to get in at a slightly better price and take off some risk. BUY 41-46


Aspen Aerogels (ASPN)
Revenue (trailing 12 months): $106.98 million
Earnings per share (TTM): -$0.94
All-time high (intraday): 48.39
Market cap: $1.55 billion
Recommendation: Buy between 41 and 46

The ESG Three

The ESG Three are three technically strong stocks selected from the 200 most-held stocks in environmental, social and governance focused mutual funds and ETFs. ESG fund holdings tend to be weighted toward blue-chip companies drawn from every industry which are rated highly in social and governance aspects. We screen further to eliminate widely held companies we believe have clear environmental, social and/or governance problems. These aren’t formal stock picks but suggestions for those looking to explore additional stocks beyond the Greentech portfolio.

SVB Financial Group (SIVB)
What is it?
Silicon Valley Bank, a financial services company specializing in banking for technology companies.

Why is it ESG?
The bank has a majority-independent board and splits the chair and CEO roles between two people, both considered pluses for governance. ESG funds own $124 million of shares.

Why now?
Superior returns, given the bank’s banking of high-growth tech stocks. Shares just broke out of a trading range set in April.


What is it?
The world’s largest real estate services and commercial property development firm.

Why is it ESG?
The company focuses on developing green buildings (17% of its stock is now green) and has weaved environmental expertise into its consulting business. ESG funds own $136 million in shares.

Why now?
Despite talk of the pandemic making office space obsolete, leasing and construction trends remain healthy, leading many to think there are bargains in commercial real estate stocks.


Robert Half (RHI)
What is it?
A staffing agency and human resources consulting firm.

Why is it ESG?
A majority-independent board benefits governance, and privacy standards reduce the likelihood of legal exposure to a data breach. ESG funds own $64 million of shares.

Why now?
Companies need staffing, which should boost Robert Half’s pricing power as the labor market remains tight.


Our Greentech Timer

Greentech sectors by and large are negatively skewed – solar, fuel cells, EVs, and now water, long a hold out to the bearish pressure, have all fallen below their near-term moving averages. Much of the weakness for us comes from a general fear of inflation, which hurts tech and growth stocks the most, and the failure of Congress to pass the infrastructure or long-term spending bill that have been debated. Expectations for both got built into prices earlier this year and their failure to materialize is causing reevaluation of positions taken in anticipation of that spending.

Right now, we’re not creating new lows in Greentech, compared to the low points of 2021, but we’re getting close to testing them. Trendlines all show a bear move and, chart-wise, odds are increasing that Greentech will break below this year’s bottoms. There are some positives: if we are in a trading range, which effectively has been the case since the spring, we’re at the level we should be getting stronger within the range. Also, selling pressure shows increasing weakness as the sector’s retracement ages. Thirdly, the best technically looking Greentech stocks are acting like they “should” (more properly, as expected) as seen with the positive entries we’ve had recently in Aemetis and Centrus Energy. That’s in contrast to entries we had earlier this year in stocks that by all chart indications “should” have risen but didn’t. But as reflected in the recent loosening of our sell-stops for our better performers, we’re anticipating that we may need to wait longer to see the payoff for our current portfolio, which all demonstrate fundamental reasons for price growth.

The Greentech Timer is bearish. We’re below the 20-day, 40-day and 200-day moving averages and all are trending downward. That doesn’t mean we can’t have winning stocks; they just face headwinds. We’re still about 5% over significant support we’d like to see hold.


Our Greentech Timer is fully bullish when the index is above the 20-day and 40-day moving average and those averages are upward trending (ideally, the index is also above an upward trending 200-day moving average too, but not essential). Right now, the Timer suggests caution.

Current Portfolio

About the portfolios
Our primary portfolio is the Greentech Real Money Portfolio – we invest alongside subscribers in the picks we make. That portfolio is designed to be fully invested at 12 stocks of equally sized initial investments. This gets us enough opportunities to capitalize on Greentech’s advances without risking too much money in any one position. Adding Aspen Aerogels will have us 50% invested.

Sell-stops are essential to long term success to our approach. We prefer to execute sell-stops on daily closes at or below our sell-stop mark, rather than intraday lows, because closing prices are far more important than dips during mid-session. However, if you prefer to have a standing sell order on intraday violations of the level, in the long run it shouldn’t affect performance too badly and certainly not as badly as not having sell-stops at all. Sell-stops allow us to absorb small losses preserving capital for big winners we let run.

The special opportunities portfolio is named Excelsior, which is managed without consideration to the Real Money Portfolio. The current Excelsior portfolio is an evenly divided basket of SPAC warrants. We have no firm sell-stops; use your discretion.

SX Greentech Advisor Real Money Portfolio

StockBuy DateBuy PricePrice on 10/5/21Sell-StopGain/LossRating
Aemetis, Inc. (AMTX)9/24/2114.6317.88under 12.3022%Buy
Aspen Aerogels (ASPN)New48.23Buy between 41 and 46
Centrus Energy (LEU)9/21/2133.4638.87near 2816%Buy
Chipotle Mexican Grill (CMG)7/22/211,773.911,830.12around 17733%Hold
Onsemi (ON)8/3/2144.6345.64below 392%Hold
Trex (TREX)5/5/21107.44103.89below 98-3%Hold

SX Greentech Advisor Excelsior Portfolio

SecurityBuy DateBuy PricePrice on 10/5/21Gain/LossRatingNote
Li-Cycle (LICY) Warrant6/16/212.422.38-2%Buy
Live Oak Acquisition Corp. II (LOKB) Warrant6/16/212.571.89-26%BuyNavitas Semi
Origin Materials (ORGN) Warrant6/16/212.431.53-37%Buy
Ree (REE) Warrant6/16/211.100.78-29%Buy
ReNew Power (RNW) warrant6/16/211.811.77-2%Buy
Volta (VLTA) warrant6/16/212.212.6319%Buy

Real Money Portfolio
Aemetis (AMTX)
Shares fell as much as 14% at one point Monday, but, chart-wise, it’s not terribly significant, and Tuesday’s bounce-back helped. Shares are starting a Golden Cross, where the medium-term moving averages (the 40-day for us, 50-day for most analysts) cross the 200-day above it. It’s a signal of improving confidence and one of the better indicators of strong sentiment ahead for a security. There’s no news this week, but for a restated loan agreement with Silicon Valley Bank, the details of which aren’t revealed until the next quarterly earnings disclosure. The renewable jet fuel off-take deal with Delta (DAL) likely draws in new investors to the stock. As we noted on jet fuel in our August 18 feature of AMTX, “revenue from the idea is a little farther off, perhaps starting in 2023.” That’s still the case, but with sales orders coming now, it improves Aemetis’ business case, which has been built on renewable natural gas – methane collected from area dairy farms in central California. We set a dynamic sell-stop last week – that is, the price shifts with the 200-day moving average. We’re giving Aemetis a long leash, with a stop triggered after two consecutive closes beneath the 200-day average. That’s at 12.30 now, up from 11.91 last week. BUY

Centrus Energy (LEU)
No news this week, but shares continue to look technically very strong. Shares hit a seven-year high Friday and were relatively insulated from Monday’s volatility. The spot price and the long-term price for uranium have been strong in recent weeks, which benefits Centrus somewhat, because some contracted sales to utilities adjust by market price. BUY

Chipotle Mexican Grill (CMG)
Chipotle is down below its 40-day average, on what appears to be some worries it can’t sustain growth. We still believe management is innovating in exciting ways that continue to boost same-store sales. The additional drive-thru pickup lanes, in about 225 stores now, for instance, appear to be generating 20% more sales per order, according to an interview a Chipotle executive gave a trade magazine. Long term, late nights and breakfast are potential huge areas to address, too. Last week we lowered our sell-stop to “around 1773” in recognition of increased market bearishness and our belief we want to hold shares for the long-term price gains we expect. HOLD

Onsemi (ON)
The semiconductor maker is testing initial support around 45 this week but has the technical look of turning higher, or at least maintaining levels here. Given market conditions and the test of support, we’re shifting our rating from Buy to Hold. Our sell-stop is “below 39,” below the 200-day moving average. HOLD

Trex (TREX)
Little news for Trex this week. Technically, the picture still looks positive, helped by the fact a bearish test of the 200-day moving average at 99 Monday was met by firm buying. Still, we’re likely stuck in a range here, waiting for a catalyst. Our sell-stop remains at least week’s adjusted level, “below 98.” HOLD

Excelsior Portfolio
Our special opportunities portfolio currently consists of warrants in six companies that have gone public or are going public by SPAC. Our horizon here is longer term, as it needs to be with young SPACs. Our rating is BUY on the six as a basket. We have no sell-stops.

Li-Cycle (LICY warrant)
The lithium recycler filed a form registering insiders and SPAC PIPE investors to sell their shares. It’s a typical move and doesn’t mean all those shares will be sold (many PIPE investors, however, do like to sell out of completed mergers), but it’s still unnerving to see some 65% of shares listed for sale. Based on the document, 8 million warrants were registered for sale, all by an affiliate of the Peridot SPAC that brought Li-Cycle public. The filing also disclosed that hedge fund billionaire Louis Bacon owns 8% of the company, and TechMet, a fund that acquires stakes in Greentech-related metals businesses, owns 7.9%. Shares and our warrants have been weaker the past week, but fine.

Navitas Semiconductor / Live Oak II SPAC (LOKB warrant)
SPAC shareholders vote on the 12th to approve the merger. Shares will trade under the ticker NVTS when the deal is approved, and our warrants will trade as NVTSW. Share and warrant action is normal, if slightly weaker this week.

Origin Materials (ORGN warrant)
Origin, which is gearing up to make carbon-negative chemicals used in plastics and other applications, released a video walkthrough of its process here. It’s worth the eight minutes of time if you’re interested. Otherwise, there is little news. Shares are weak, in the low 6 area, while our warrants imply a much better outlook at around 1.56, when one would expect warrants to be below 1, given they’re exercisable at 11.50.

Ree Automotive (REE warrant)
Ree is the weakiest in our SPAC basket, with shares now in the low 4 area and warrants below 1, a cut-off that implies widespread skepticism (but given SPACs are largely new to the market, such demarcation may be purely speculative). EVs are weak as a group, so the current slump isn’t too worrisome. The strategy in buying our basket of SPACs came with the realization there may be a clunker in the group. Ree needs time.

ReNew Power (RNW warrant)
ReNew warrants are slightly weaker this week, while shares are showing some legs, holding over 10. There’s no news from India’s largest renewable power owner and operator this week.

Volta Inc (VLTA warrant)
Volta warrants have been volatile, falling 96 cents last Wednesday then recovering most of the plunge, to reach the mid-2.50 area in recent sessions. Shares, meanwhile, are around 8.50, well below the 14 price warrants imply.

Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday October 20. Our next regular weekly portfolio review is out next Wednesday, October 13. Contact me anytime with questions or comments at

The next Sector Xpress Greentech Advisor issue will be published on October 20, 2021.

Cabot Wealth Network
Publishing independent investment advice since 1970.

President & CEO: Ed Coburn
Chief Investment Strategist: Timothy Lutts
Cabot Heritage Corporation, doing business as Cabot Wealth Network
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