By some measures, Greentech looks more bearish than it has since March last year, with our benchmark Wilderhill Clean Energy Index breaking below support around 70-68, which now appears to be notable resistance. Wind and solar are equally bearish while water and nuclear stocks are holding up better. Over the past week, losers outnumber winners by a 3-to-1 ratio in our 290-stock Greentech universe. That’s the same ratio as over the past month, and a worsening from about a 2-to-1 decliners over gainers the past three months. This sets up two things: one is it makes it easier to spot the Greentech stocks that are holding up, and they tend to be in water/utilities and semiconductors. For the rest, it starts to return valuations to levels where we will start to see some relatively safer bets. Our sense is that the near term brings challenges and we need to stay cautious. The long-term strength of renewable energy remains unquestioned.
Real Money Portfolio
Advanced Drainage Systems (WMS)
A buy recommendation our last issue, the portfolio added WMS at 130.86 Thursday, the mid-point of the high and low for the day. Shares have tested some support around these levels, but generally shares look fine in consolidating action. Little news with the next earnings to come in early February. We can give shares a wide berth here for a stop loss, with support down through 116. We’re going to recommend “near 111,” as a 15% loss from our buy price and an area that would signal unusual price volatility from recent prices. BUY
Aptiv (APTV)
Aptiv is buying Wind River for $4.3 billion. It’s a software firm that makes cloud computing systems for the automotive, defense and aerospace industries. The deal will position Aptiv better for the software-ification of vehicles, in which data feeds to the automaker and new products and services can be fed to the driver, like what Tesla does. The price tag is seen as expensive on the Street, as it’s Aptiv’s most expansive acquisition ever, but it puts Aptiv right in the midst of car megatrends for the next decade, with the near term being the electrification which Aptiv is nicely positioned in already. The difference of investor opinion on the Wind River deal is seen in shares, which are seeing high volume and real push-pull action between bulls and bears. Right now, APTV sits above 200-day support and below shorter moving averages, acting as resistance. Our stop-loss remains “around 152.50.” HOLD
Archaea Energy (LFG)
Little news from the landfill gas producer, which opened the world’s largest RNG facility in Pennsylvania to end 2021. Shares are right around where they were a week ago, above a nicely uptrending support line and below some near-term resistance. Examining action through a few different lenses, they appear neutral, technically, right now. Our sell-stop is “under 16.” HOLD
ESS Tech (GWH)
GWH triggered our sell-stop and we issued a sell recommendation special bulletin on Thursday. The portfolio booked the sale at 10.34, a loss of 30.9%, as the breach of support brought sharp downward trading. Shares shed another 10% after Thursday, and though they have bounced a touch to the 9.30 region today, they appear to have a long road ahead. As a SPAC-derived listing, it needs a bullish market to drive enthusiasm as it works to draw in long-term institutional ownership. Expect more price declines in the near term. SOLD
Heritage-Crystal Clean (HCCI)
We’re searching for a reason to pull the trigger and buy HCCI, right now, but given market conditions, there’s nothing that says we need to jump in today. On a relative basis, HCCI is outperforming the sector, but we want to see signs it isn’t just resisting being pulled down longer than others. The next earnings announcement is late February. WATCH
KraneShares China Green Energy (KGRN)
KGRN is in a downtrend, making lower lows and lower highs of late. Shares of the ETF are trading at a premium to net asset value, which remains a compelling reason to stay on the sidelines just yet. In the long term, we’ll likely want to hold China-listed Greentech companies that this fund offers access to, but it is quite possible we have a materially better entry price ahead. In the meantime, we’re going to look under the hood of the fund and conditions in China to form a stronger opinion not based on trading charts WATCH
Onsemi (ON)
Onsemi is our happy place in the portfolio these days, with a trading chart and outlook that continue to chug along, well above the mishigas of other growth stocks. What can turn the tide however? For one, semiconductors have been the worst performing sector of the S&P 500 for the past 20 years, according to a recent analysis by Credit Suisse. That could mean recent outperformance is a sign of continued things to come – or a sign that semiconductors have gotten well ahead of themselves. With Onsemi, we should keep in mind it historically has been traded as a discount chip stock. There are fundamental reasons for it to have closed the valuation gap to peers like it has done since we bought in. But never underestimate the power of long-held market perceptions. Being up more than 50% on the position we have a split sell-stop recommendation: sell half the position if shares fall to “near 60” and book the rest of profits if we tumble to “under 54.” We’re shifting our rating from Hold to Buy, to reflect the fact we’re ultimately quite optimistic about Onsemi. BUY
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
Warrants in the ultra-fast EV charger maker have been unusually weak, dipping near 80 cents this past week. But we also see good bargain buying on the dips, and we suggest that adding to the position at a deep discount price, like around 75 cents, seems like a good longer-term opportunity. Warrants are at 1.15 today, up from 0.85 a week ago, but below our purchase price of 1.66. No news. HOLD
FuelCell Energy (FCEL)
A half-sized position of the fuel cell maker was added to the portfolio last Thursday at 5.20. We’re looking ahead to the expected rebound of Greentech to come, until then, expect weakness in FCEL as a small growth stock in a bearish market. A 7.4MW FuelCell project on Long Island has begun operation. The project is part of a repurposing of a Brookhaven landfill to a fuel cell, landfill gas and solar facility. BUY a Half
Navitas Semiconductor (NVTSW)
Warrants have fallen to 3.80 today from 4.65 last week. We have a standing sell order at 6.50 on the quarter-sized position we hold on the EV-focused semiconductor maker. We sold three-quarters in mid-November at 6.68, booking 160% profit on that portion. No recent news. SELL at 6.50 or Higher
Origin Materials (ORGNW)
Warrants are essentially unchanged over the week, at 1.40 today, a 41% drawdown we’re waiting out. Japanese conglomerate Mitsui announced a deal for Mitsui to buy carbon-negative plastics from Origin. However, no details were disclosed, so we’ll need to wait to see how significant the offtake is. HOLD
Ree Automotive (REEAW)
The EV chassis maker hired a new CFO, from contract automaker Magna International, replacing its start-up CFO. Warrants at 91 cents today have surrendered much of their recently doubling to the 1.40 range last week. HOLD
ReNew Energy Global (RNWWW)
ReNew raised $400 million through a green bond issuance last week, largely to refinance higher-cost debt incurred as part of its rapid expansion in India. Our warrants have been generally weaker in recent weeks, and are off 15 cents this week, to a recent 1.35. HOLD
Volta Inc (VLTA.WS)
Warrants of the EV charger company are off 10 cents this week on little news and weighed down by general bearishness around growth stocks at the moment. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, January 19. I welcome your comments and questions anytime. Reach me at brendan@cabot.net.