It’s not a surprise for those following the market lately: it’s a bear market in Greentech. The past week, only 5% of the Greentech universe is trading higher and every subsector – water, wind, solar and nuclear – are bearish too. At some point, the sell-off will create some real buying opportunities and a pathway toward another bull run, given that Greentech has now given back all the gains it made from the post-pandemic market crash. The sector today is priced the same as it was on July 1, 2020, which matched the prior peak of February that year, which, at the time, was a nine-year high for cleantech stocks. Right now, stay cautious, seek to cut losses and preserve capital as cash, given we’re seeing good stocks with good stories being dragged down in the broad market turmoil.
We have one new sell recommendation today, NRGV – see more below.
Advanced Drainage Systems (WMS)
Broke below our stop-loss level of “under 100” and we sent a special bulletin mid-morning Monday advising to sell. The 100 mark is a chart support level established and held since February and, given market conditions, the deck is stacked against shares for now. The Real Money Portfolio booked the sale at 96.59, the mid-point between the high and the low. We also collected an 11-cents per share dividend during our holding period. SOLD
Archaea Energy (LFG)
LFG settled below our stop-loss of “under 20” Monday and we issued a special bulletin advising to take profits yesterday ahead of the market open. The portfolio books the sale at 19.93, the mid-point between the high and low Tuesday, a profit of 9%. The company also reported Q1 earnings yesterday, posting a loss of 28 cents a share when Wall Street had expected a profit. SOLD
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
The clean-energy-seeking SPAC is profitable for us, with the trust money the shares can claim at 10.10, even as shares trade under 10 in the weak market. Warrants and rights represent additional profit and exposure to the future deal the SPAC finds. Based on recent prices in the weak market for SPAC warrants and rights, plus the trust, we’re about 2% profitable. HOLD
Clearway Energy (CWEN/A)
Clearway earnings reported Thursday were below consensus, on the lower end of analyst opinion, at a loss of 28 cents per share on revenue of $214 million, with the wind portfolio underperforming expectations. Management raised the per-share dividend to $0.3536, payable to shareholders as of June 15. Our sell stop is “around 28,” with the mid-27 area a level that would be a bearish break out of a price channel. HOLD
Darling Ingredients (DAR)
Darling earnings released yesterday evening beat consensus expectations, with earnings per share of $1.14 on revenue of $1.37 billion (consensus was for $1.12 and $1.3 billion.) Shares so far this week are holding support, being tested at the 200-day moving average and appear, technically, to be ready to move higher. Our sell-stop is “below 62,” which would be a break of some long-term chart support. HOLD
Daseke (DSKE)
Daseke is slowly recovering from trucking-wide bearishness after posting good earnings and a very positive outlook last week. There are signs of an uptrend being established since bottoming in early April. Resistance remains overhead, though, especially in the 9 area. Our sell-stop is “under 7.19.” HOLD
Energy Vault (NRGV)
We’re recommending selling NRGV today. On top of filing a prospectus related to the SPAC going-public transaction which appeared to spook the market Monday, leading to a sharp drop, a law firm is now claiming the company has misrepresented a $50 million licensing fee it will receive from China, citing a Chinese-language newspaper story that says Energy Vault will front $25 million to build the demonstration unit. Whether or not the issues are serious, our immediate focus is on the technical damage that has been done to shares this week, so we recommend selling. Two things could reverse the slide here: the company reports earnings Monday, which is likely the last chance (for some time) management will have to change the narrative and reverse shares’ steep sell-off – of course, a bad report and outlook could fully crater shares. The other potential catalyst is that an agreement to build out a series of Energy Vaults for DG Fuels could advance with a grant from the Department of Energy – but DG Fuels told us the grant announcement may not come till year’s end, which would lead Energy Vault management to have to revise its projections for 2022 revenue even if the grant comes later, which would be a negative. In reviewing the performance of the SPAC sponsor’s earlier merger, with AppHarvest (APPH), a grower of organic vegetables, that company’s first quarterly earnings report vastly missed merger projections from management, suggesting the SPAC sponsors, Novus Capital of Chicago, plays loose with projections. Unfortunately, technical-based signals, which form the basis of our approach, occasionally walks us into clunkers. This is a half-sized position, which, by design, limits the damage to us overall. Under our portfolio construction of a maximum of 12 full positions of even initial investments, each full position is about 8.3% of our capital, meaning the half-sized NRGV committed 4% of our portfolio. Selling at these levels, the loss amount to 2% of our capital, statistically a wise value-at-risk for a sustainable, successful long-term strategy. SELL
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
Given the trust value of 10 per share, we’re profitable on the position, even as shares trade below that price. With the recent warrant and rights prices – which are very weak due to a SPAC-wide market slump – we’re about 1.7% profitable. HOLD
Natural Grocers by Vitamin Cottage (NGVC)
We expected Q2 earnings per share of 20 cents and the company reported 28 cents EPS, with same-store sales up 13.5% versus pre-pandemic 2019, and 4.3% versus the year-ago period. Shares sold off sharply before earnings and have rebounded a bit since the announcement, after the close of trading Monday. The sell-off muddled the technical picture and we’re going to continue to watch and see how action continues. WATCH
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
No news after management reported good earnings results that were in line with SPAC-period projections. Our warrants are just 61 cents now due to market-wide lack of demand for SPAC-derived stocks. It’s a level we’d be tempted to add more, given we have a long horizon for the trade to pay off. HOLD
Constellation Energy (CEG)
Little news this week. The company will pay a dividend of $0.141 a share to owners as of May 13, payable on June 10. Shares are holding up decently around support. HOLD
FuelCell Energy (FCEL)
We’ve said repeatedly that fuel cell stocks, of which FCEL is one, are very volatile, and will suffer in bear markets and should outperform in bull markets. We’re seeing the bear market reaction here, with shares now down to the high 3s. FuelCell Energy is a half-sized position taken with an eye toward longer-term performance (late 2022, early 2023). ExxonMobil (XOM) extended its test project on carbon sequestration with FuelCell, which had a May opt-out for the oil giant. As we described in our January 5, 2022, issue featuring FCEL, the parties claim they can capture 70% of emissions without reducing power plant output, with an increase in the cost of electricity by about 33%. That’s in contrast to current carbon capture processes at power plants which reduce energy output some 20% with a cost of electricity increase on the order of 80%. FuelCell earns about $7 million a quarter from the project, which is now extended to year’s end. While we’re usually not value buyers, we’d considered dollar-cost averaging ourselves into a full-sized position. Shares are still in a downward move, however, so we’ll be looking for signs of a bottom before adding. HOLD
Origin Materials (ORGNW)
Origin reported earnings after trading Monday – 3.3 cents EPS on a fully diluted share count – although the company’s core business has yet to get off the ground; its first carbon-negative plastics plant in Ontario remains on target to open by year’s end. Management said capacity agreements from companies, including Ford (F), LVMH, and PepsiCo (PEP) have hit $7.4 billion. That means the company has enough order indications to operate its first three plants at capacity for 10 years (the offtake agreements roughly equate to $950 million in annual orders). Our warrants are weaker, to 1.25, over the past week. HOLD
Ree Automotive (REEAW)
Ree will release earnings May 17 before the open of trading. Warrants are weaker this week over last. As we’ve noted, the EV chassis maker needs something to spark investor interest. HOLD
ReNew Energy Global (RNWWW)
The India renewable energy operator has a new CFO, General Counsel and Chief Growth Officer, moves that don’t seem to have had great effect on shares or warrants. Our warrants are weaker on the week. HOLD
Volta Inc (VLTA.WS)
The EV charger maker has rolled out a new offering for ad buyers to better target consumers. Recall, Volta’s strategy is to place EV chargers in high-visibility locations that get a lot of foot traffic (supermarkets, gyms, etc.) and generate ad revenue from the positioning. The new product is “Store Next Door,” which the company claims will allow marketers to deploy ads for stores adjacent to the ones at which Volta has placed chargers. It sounds like basically Volta now knows the names of the stores around the stores they’re in front of. Warrants are weaker, to about 56 cents. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, May 18. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabotwealth.com.