February 23, 2022
Russia’s invasion of Ukraine likely brings some short-term effects that matter to the Greentech sector. The primary one is probably a rise in costs for oil and natural gas, partly because oil tends to react upward on global crises generally, and also because the cancellation of the Nord 2 undersea natural gas pipeline to western Europe from Russia means natural gas will leave the U.S. as LNG to supply Europe.
Russia’s invasion of Ukraine likely brings some short-term effects that matter to the Greentech sector. The primary one is probably a rise in costs for oil and natural gas, partly because oil tends to react upward on global crises generally, and also because the cancellation of the Nord 2 undersea natural gas pipeline to western Europe from Russia means natural gas will leave the U.S. as LNG to supply Europe. Rising fossil fuel prices are bullish for renewables, though long-time readers know it’s not as important a correlation as it seems (renewable energy enjoyed huge growth during the past decade of low energy prices). Longer term, however, Ukraine’s large natural resources deposits of rare metals used in new technologies could become a pressure point if Russia occupies the whole country.
Right now, Greentech is bearish, below the moving averages and moving back toward the recent lows. We’re still in a range, so all isn’t dire, with our Greenetch benchmark index, the Wilderhill Clean Energy, on top of an area of decent support set in both January and as an area of some congestion in September 2020. Major subsectors – wind, solar, water, nuclear – are also bearish, but action hasn’t been terrible. As long as our individual positions are holding up, there’s no need to bail.
Real Money Portfolio
Advanced Drainage Systems (WMS)
Shares go ex-dividend March 1, after which we’ll collect an 11-cent dividend. WMS is on the wrong side of the moving averages, and has failed the past two weeks in tests to push through the 40-day moving average. It should be an infrastructure spending beneficiary. We don’t have a firm sell-stop on right now. HOLD
A buy recommendation with last week’s issue, the portfolio added a full-sized position at 73.00, the mid-point of Thursday’s high-low. Shares are hugging the 40-day average and have support to 67. 75 and 78 are resistance. No news this week as management makes the rounds of investor conferences. BUY
Archaea Energy (LFG)
There’s a confluence of resistance around 18, but shares are holding up fine after some recent jitters over two executives departing the business. With market conditions, we’re shifting our recommendation from Buy to Hold. HOLD
Chara Solutions (CHRA)
Little news for the remediator of coal ash ponds. Shares look to be working toward forming a more bullish pattern and have been sitting right on support at its 200-day average. Earnings come at the end of March. BUY
Shares look excellent, possibly the best-looking set of technicals in our ~280-stock Greentech universe. The technical picture is backed by the strong outlook for trucking. Shares are just a tad off 4-year highs. BUY
Good for Growth SPAC Units (GFGDU)
The ESG-focused SPAC is on the hunt for an acquisition target. The units remain a buy if you can find them (10-day average volume is 83,000 a day, but is falling fast). Per our strategy, we split the units into components shares, warrants and rights. At market prices, we’re underwater in our buy price among the three. However, we’re guaranteed to collect $10 a share if we hold, which means we’d make 3 cents on the units’ buy price with the warrant and rights prices representing pure profit. Our recommendation for the split securities – shares, warrants and rights – is Hold. HOLD
Heritage-Crystal Clean (HCCI)
Shares are on a support level at 27. They’re overall bearish, but waiting for earnings to be announced after the market close on March 2. Consensus is for earnings of 58 cents a share; we’re waiting until then to decide whether or not to enter. WATCH
KraneShares China Green Energy (KGRN)
The China-listed stock fund remains in a range, and looks likely to see another test to the downside, near 36. We don’t have a sell-stop, since we want long-term exposure to Chinese-listed renewable shares. Given global uncertainty, we’re shifting our recommendation from Buy to Hold. HOLD
Lithium Americas (LAC)
Shares are in a neutral price pattern, with a short-term downtrend line above and a long-term support line below current prices at 27. We’re have a sell stop at “near 22,” which is below major support levels. There has been no company-specific news this week. BUY
The climate and water engineering firm shares are skewed mildly weak in a range with price internals suggesting they’ll move a little higher from here. There is resistance up to 54 and support at 50. With shares in between, we’ll continue to Watch. WATCH
A reminder that if you haven’t sold your Navitas warrants with the portfolio, you must do so by March 7 to avoid being cashed out at 10 cents a warrant.
ADS-Tec Energy (ADSEW)
The company disclosed last week that it sold 200 EV charging systems for deployment in Florida for $30 million. The buyer, Smart City, likely buys another 200 this year for deployment in other states. We like ADS-Tec’s execution. Shares and our warrants haven’t seen much enthusiasm however, largely unchanged compared to last week. HOLD
FuelCell Energy (FCEL)
A carbon capture demonstration project using the company’s proprietary carbonate fuel cell technology has been awarded $6.8 million funding as part of Canada’s Clean Resource Innovation Network low-emission fuels and products technology competition. Shares are improving, above their 20-day average and below the long-term ones. We hold a half-position with a longer-term (think a year) investment horizon. HOLD
Origin Materials (ORGNW)
Origin has selected a site in Louisiana for its second facility to make plastics from carbon-negative materials. This new plant would be up and running by mid-2025. The current plant, dubbed Origin 1, is on track to open by the end of this year. Warrants are basically unchanged from last week, around 1.13. HOLD
Ree Automotive (REEAW)
The maker of EV chassis is seeing shares at their weakest level to date, in the high 2s. Warrants are a little weaker, at 62 cents. Part of this is widespread lack of market appetite for SPAC-derived companies. Fourth-quarter earnings come Thursday, March 3, before the market opens. The one known Wall Street estimate is for a loss of 16 cents a share. Outlook is important, as well as a sign share-grant expenses to new hires is under control. HOLD
ReNew Energy Global (RNWWW)
India’s renewable energy leader announces Q3 earnings tomorrow after the market closes. Consensus is for a loss of 6 cents a share. Shares have recovered nicely, adding about $2, from lows near 5 in January. Our warrants, around 1.45, are basically unchanged on the week. HOLD
Volta Inc (VLTA.WS)
Warrants are up 30 cents – about 20% – the past week, to 1.80. Like all our remaining warrant holdings in Excelsior, we’re underwater from our buy price, but time is our ally as business plans get executed. Most recently, Volta announced a deal to install 1,000 chargers at Walgreens locations. HOLD
Thank you for being a subscriber. Our next Cabot SX Greentech Advisor issue is published Wednesday, March 2. I welcome your comments and questions any time. Reach me at email@example.com.