By the looks of the market, skyrocketing fossil fuel prices have recently made Greentech the growth stock safe harbor. Since Russia’s invasion of Ukraine began on February 24, oil, as represented by the U.S. Oil Fund ETF (USO) is up 24%, a spike to be expected from the uncertainty around the supply of fuel commodities. No surprise, then, that most equities are down – the S&P 500 and the Nasdaq Tech 100 (the QQQ) have a negative return of about 1% apiece in the nine days since the invasion. Greentech, meanwhile, is up more than 9%, as represented by our benchmark, the Wilderhill Clean Energy ETF (PBW). The reason is renewable energy is being seen as an alternative energy that will benefit from jumps in oil, natural gas and gasoline prices.
That means, chart-wise, Greentech is building what looks to be a good recovery from late January’s concerning break through support. The Greentech Timer is still mixed, but looking much better, with Greentech now over both its 20- and 40-day moving averages for the first time since November. Another week or two of positive action would turn the 40-day moving average from downward to upward sloping, making the Timer bullish. The solar sector is already mostly bullish, based on the same moving average indicator, also a first since November, while wind, fuel cells and nuclear are mixed to “almost bullish.” Water is bearish, and EV stocks are all over the place, which is another way of saying basically bearish.
Real Money Portfolio
Advanced Drainage Systems (WMS)
The maker of pipes and other water flows infrastructure items from plastic fell steeply Monday, probably due to the effect higher energy prices will have on plastics. Even though more than half of their feedstock is recycled, it takes energy to melt and reform plastic into pellets for further product creation. The fear is demand destruction from much higher plastics prices. We’ll collect an 11 cents dividend next week, having gone ex-dividend last week. Our sell-stop is “under 100.” HOLD
Aecom (ACM)
Aecom cut its business ties with Russia “immediately” Monday, saying Russia is both immaterial to its operations and that it will take a $40 to $50 million one-time charge. Shares bounced higher yesterday with the de-risking. Shareholders as of April 6 will collect a 15-cent dividend. Our sell-stop is “under 58;” 75 then 78 are resistance. BUY
Archaea Energy (LFG)
Archaea is one energy business not joining the world energy party. That’s because its dynamic is purely domestic U.S., and Henry Hub conventional gas prices are down on mild weather. Shares are battling around resistance and support right now in the 17 area. Management releases earnings March 17 before the open. Estimates are for Q4 EPS of 3 cents on sales of $57.4 million. Our stop-loss is “under 12.85.” HOLD
Charah Solutions (CHRA)
Charah reports earnings in two weeks, with a whisper number of $87 million of revenues circulating, above the high end of published Wall Street estimates. Shares are weaker with no obvious reason to us (since the coal ash Charah collects displaces energy usage in concrete, higher energy prices should be a positive). To the upside, moves to 5.40 will find resistance, while support is down toward 4.80. Our stop-loss is “under 4,” with a probable sell recommendation from us before shares would reach that level. HOLD
Clean Earth Acquisitions Corp. (CLINU)
The Greentech-focused SPAC is a way to preserve capital while having exposure to the upside of the business Clean Earth merges with. The portfolio added a position at 10.01 last week, the high-low mid-point of trading Thursday. That means we’re already profitable, with the per-share trust value we can demand back being 10.10. We’ll hear little news until a deal announcement. The next action here will be to split the units when possible. That will be on or about April 15. Units are still trading around 10.01, but liquidity has basically dried up this week after very active trading last week, following the IPO. BUY under 10.10
Daseke (DSKE)
Daseke is slipping back to support, around our buy price. It’s not as technically strong as it had been, and it’s possible rising fuel prices are also creating fears of demand destruction here as well and quashed an expected push through the 12 level. Our stop-loss is “under 7.19,” which would represent a definitive break of the multiple levels of support. We’re changing our rating from Buy to Hold based on this past week’s price action. HOLD
Good for Growth SPAC Units (GFGDU)
Our other SPAC holding, we’re under water if we had to sell now, based on the trading prices of the share, warrant and right components of the units we purchased. But we don’t need to sell and we’re profitable on the shares alone given the $10 trust value, with the warrants and rights therefore all profit even at their depressed prices. HOLD
Heritage-Crystal Clean (HCCI)
Earnings beat estimates, but management sounded dour notes to analysts about the effect of inflation, with price hikes needed this quarter. Analysts also felt the earnings report is odd, for various reasons around lumpy line items, which makes it harder to have visibility on earnings going forward. All that means shares got no bounce from earnings and remains stuck under resistance in the mid 27 area. We’re dropping HCCI from our watchlist today. DROP
KraneShares China Green Energy (KGRN)
Does China’s alignment with Russia mean problems ahead for investors in China-listed stocks? That’s doubtful in the near term – economics are much more intertwined with the communist country than with Putin’s Russia. Shares are testing the 36 support level this week and buyers appear to be coming in to support shares. Resistance is in the 38-40 area. Our sell-stop is “under 32.” HOLD
Lithium Americas (LAC)
The Thacker Pass Nevada mine received its state-level permits at the end of February, while the last appeals against mining the site are expected to be settled by a court in the third quarter, after a court allowed opponents to see more documents from the Bureau of Land Management. Shares bounced off support at the 200-day average yesterday with resistance in the low 27 area. Our sell-stop is “near 22,” which is below major support levels. BUY
MP Materials (MP)
The only Western Hemisphere miner of rare earth metals was a watch in our issue last week. International dynamics probably add to the bull case for MP, which owns a large operating mine in California. Buyers sent shares up sharply yesterday on good volume and we’re changing our recommendation from Watch to Buy here. Support is at 38, resistance is at 47. BUY
Stantec (STN)
We said last week we were going to drop the Canadian engineering firm without improvement, given the lack of follow-through buying on earnings. STN is now slumped to 48, a six-month low and below major averages and with a Death Cross largely inevitable on the chart. DROP
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
We remain highly optimistic about the German turbo EV charger maker, and expect the market will eventually join us. The company has chosen GenZ EV Solutions as its Western Hemisphere distributor to the automotive industry (that is, dealers). GenZ is a new business led by the former head of Nissan’s North and South America operations. Warrants are a little stronger at 1.15 lately. Shares are at 7. Warrants can only be redeemed with share prices at $18 for 20 of any 30 trading days, which means we have plenty of time to wait for the trade to develop. HOLD
FuelCell Energy (FCEL)
The fuel cell maker has turned bullish, with a caveat that usually strong resistance at the 200-day average sits above shares here, at 7. We’re up more than 20% here now. Earnings come tomorrow, before the market opens. Consensus is for a loss of 5 cents a share. Outlook from management will drive sentiment. Set an intraday sell-stop now if you want to get out with a profit ahead of earnings. We have no firm sell-stop on shares now, and recommend holding. HOLD
Origin Materials (ORGNW)
Warrants are a little stronger this week at 1.27 recently. There’s little catalyst for the maker of carbon-neutral plastics right now, with its first plant on track to open late this year. HOLD
Ree Automotive (REEAW)
A trio of brokerage analysts cut their price targets on the EV chassis maker, keeping sentiment negative on Ree. Warrants are weaker at 40 cents. We likely need to hold until broad EV sentiment turns higher again. HOLD
ReNew Energy Global (RNWWW)
ReNew is buying back $250 million of its shares, about 7% of its market cap, in the open market under a program registered with regulators in late February. Shares have strengthened by about 50 cents to 8.50 since the program started. ReNew can redeem the warrants when shares trade at $10 for 20 of any 30 days. At 1.88 to close Tuesday, our warrants are about 4% profitable, and more than 35 cents stronger over the past week. HOLD
Volta Inc (VLTA.WS)
Volta’s earnings will be announced after the close of trading Monday (not April 4, as we wrote last week). Seven brokerage analysts have a consensus loss of 18 cents a share on sales of $12.3 million. Outlook and business developments will be very important for the maker of EV charging stations. Warrants have shed about 15 cents the past week to 1.75 recently. HOLD
Thank you for being a subscriber. Our next Cabot SX Greentech Advisor issue is published Wednesday, March 16. I welcome your comments and questions any time. Reach me at brendan@cabot.net.