The past week has seen a reversal of the bullishness in Greentech, with five of the past six trading sessions down days and nearly two-thirds of stocks in our coverage universe lower over the past week too. Interestingly, our benchmark index, the Wilderhill Clean Energy Index, has seen much more bearishness among its 78 components, with 70 of them lower the past week. Comparing the two shows that EVs and batteries, which the Wilderhill holds a lot of, are the very poor performers. The good performers, most of which the Wilderhill doesn’t hold, are nuclear-related stocks, infrastructure companies, and organic food-related stocks.
Not surprisingly, among the larger Greentech subsectors, nuclear is most bullish, while wind and solar are mixed, looking better generally than the Wilderhill. As noted above, EVs and related suppliers, like next-generation battery manufacturers – are quite bearish. A note, too, that our SPAC holdings reflect how weak the demand is for SPACs generally among investors in the current market. Our SPAC holdings have lots of time – more than four years in the case of the warrants – to wait for renewed demand for growth stocks. And it will come back one day.
Over the previous two days, the Greentech market appears to be holding support at the nascent uptrend line starting from late February, suggesting we could be seeing a setup for a new test of resistance overhead. Given the conditions of the past week we’re tightening up our sell-stops, with most holdings given tighter stops, below.
Advanced Drainage Systems (WMS)
WMS broke through support at 118 this past week, but appears to have enough support that hints shares are at the bottom end of a trading range shaped from early January and could be turning back higher again. Little news. Resistance is at 117-119. Support is at 105 and then 100, so we’re holding our sell-stop at “under 100.” HOLD
Aecom (ACM)
In an ideal momentum trading system (what the Real Money Portfolio primarily is), one should raise the sell-stop up to break-even as soon as feasible – the idea being you willingly take getting shaken out at a wash or small loss in return for preserving capital. We’re going to raise our sell-stop to our buy price, which for the portfolio is 73. ACM is holding support at the 40-day moving average at 78.80 now and sees better buying on up days than selling on down days, suggesting it’s in good shape. Shareholders as of April 6 collected a 15-cent dividend. We’re shifting our recommendation to Hold from Buy based on market conditions. HOLD
Archaea Energy (LFG)
The landfill gas producer had a bit of a volatile day Tuesday, seeing a new intraday all-time high before finishing lower on the day. LFG remains in great shape. There is support at 21.50 and 19.70. We’re moving our stop-loss up to our buy price, 18.27, which is right around the 200-day moving average. At that price, we’ll want to give a little bit of leeway on executing the stop, since a dip for a day below the 200 isn’t unusual before support comes in. Two days of a close below 18.27 should trigger the stop. HOLD
Charah Solutions (CHRA)
We recommended selling half of CHRA last week after its disappointing earnings result. The portfolio booked the sale at 4.47 Thursday, the midpoint of the high and low for the day and a loss of 14% on the portion. Shares sold off yesterday, down as low as 3.83 at one point. Technically, it looks oversold and, with the selloff coming on light volume, suggests the better move is to hold onto the half we have and look for a bounce higher to sell the rest. HOLD HALF
Clean Earth Acquisitions Corp. (CLINU)
The Greentech-focused SPAC is trading closer to its trust value of 10.10 of late. The SPAC will be able to be split into its components soon – probably April 15. The company will issue a release to make it official. At that time, we will move to split the units into shares, warrants and rights. We’re shifting our recommendation for the units from “Buy under 10.10” to “Hold” given their illiquidity and close-to-trust price. There is no sell-stop because we have claim to $10.10 in trust money as long as we own the units or shares. HOLD
Clearway Energy (CWEN/A)
We’re underwater now on CWEN/A, but there is support beneath prices. The company will report first-quarter earnings on May 5 before the market opens. We’re instituting a sell-stop of “around 28.” We’ll keep our recommendation, given there is strong support down to 30.50. BUY
Daseke (DSKE)
DSKE has so far managed to hold chart support even as nine straight down days pushed it to an intraday low of 7.24 Friday. The support comes from a price gap created August 3 – shares opened much higher that day, leaving a window (to use a candlestick analysis term) that closes at 7.19. Under gap theory, there is support until that 7.19 price is touched again, on an intraday basis. So far, we’re holding. There is a lot of headway to get back to prior levels. Clearly, fears of demand destruction from higher fuel prices is at play. The company should report quarterly results in early May. Our stop-loss is “under 7.19,” which would represent a definitive break of support. HOLD
Energy Vault (NRGV)
We warned last week Energy Vault would be volatile, and shares have, unfortunately, proven that. We recommended buying a half position under 20. The first day in which the average price of trading was under 20 was Friday, and the portfolio added a half-sized holding at 18.87, the midpoint of the range. Shares have knifed sharply down to initial moving average support at the 50-day moving average. That’s a significant support level where we often see institutional investors come in to prop up shares. It’s a spot where the fearless can initiate a position, but the more negative Greentech environment of the past week warns against it. Complicating matters, too, is that we see the possibility 2022 revenue from a Louisiana plant may be delayed. A representative for DG Fuels, the renewable jet fuel start-up that has non-binding deals for three Energy Vault storage facilities, tells us the Department of Energy is guiding them to a late 2022 decision on its application for a sizeable grant. We suspect the DOE grant is necessary to sign firm contracts for building an Energy Vault plant at the first site. We’ll hold here for now and watch for a rebound, dropping our “buy half” recommendation. HOLD
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
No news for the SPAC seeking a Greentech target. Even though market prices for the warrants, rights and shares put us under our original unit buy price, the $10 per share trust value which gives us a floor to our risk – plus the prices for the warrants and rights, have us slightly profitable. There is no sell-stop, given the trust value we have claim to. HOLD
Infrastructure & Energy Alternatives (IEA)
A decisive move below 11 would be problematic, with IEA on top of a range of support at 11.20-11.60. Selling volume has been light, suggesting shares will hold here. With no news, we’ll hold and initiate a sell-stop of “under 10.80.” HOLD
KraneShares China Green Energy (KGRN)
Chinese environmental stocks are weak, but holding gap support. The fund is heavily weighted in EV makers Li Auto (LI), Nio (NIO) and Xpeng (XPEV), which total 24.5% of the fund. They’re all suffering from continuing pandemic lock-downs in China. Our sell-stop is “under 32.” HOLD
Lithium Americas (LAC)
Shares are lower, on top of support here. Little news, although a company, Arena Minerals, part owner of land adjacent to Lithium America’s holdings in Argentina, reported excellent preliminary results from drill holes for lithium brine. That suggests Lithium America’s operations could be long-lived too. Our sell-stop is our buy price of 27.60. HOLD
MP Materials (MP)
MP looks bullish despite a wide-range down day Tuesday. There are multiple levels of support, and volume to the downside has been light. We’re initiating a sell-stop at our buy price, 45.01, in case action continues to reverse. Given market conditions, we’re shifting our recommendation from Buy to Hold. HOLD
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
Warrants are much weaker on general market action, at 1.10. No news for the ultra-fast EV charger maker. HOLD
FuelCell Energy (FCEL)
FCEL has weakened and we’re modestly profitable. The half-sized position is a hold, as our pick for a stock that should have an excellent 2022. We have no firm sell-stop, and will allow a lot of leeway to the downside. HOLD
Origin Materials (ORGNW)
Warrants are basically unchanged the past week around 1.48. No news. HOLD
Ree Automotive (REEAW)
Warrants are basically unchanged at a weaker-than-average (of SPAC warrants) of 34 cents. HOLD
ReNew Energy Global (RNWWW)
Japan’s Mitsui conglomerate will own 49% of a new 1.3GW renewable energy project in three Indian states to start construction in 2023. It de-risks the financing of the project a good bit. Warrants are stronger at 1.85 this week. HOLD
Volta Inc (VLTA.WS)
Volta and Southern Co. (SO), a utility, are teaming up provide software to fleet owners transitioning to EVs. The new product, PredictEV Fleet, analyzes data on existing vehicle fleets and premises to identify key planning components. Reading between the lines, the JV probably means Volta won’t make much revenue from working with Southern directly, but hopes to use the proof of concept to spark sales in the future. Warrants have softened 10 cents to 0.85 this week. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, April 20. Get in touch with comments, suggestions and questions any time! Reach me at brendan@cabotwealth.com.