One change to our ratings this week – We’re buying Aptiv (APTV) after spending some weeks on “watch.” Our reasoning and suggested sell-stop are below. For greentech at large, the Senate passage of the $1 trillion infrastructure bill is a positive. Winners likely won’t really be known until the details of how the money is to be spent is hammered out, but thematically, water and grid efforts should see a lot of support. Clean water and efforts to reduce lost water in the system (from leaks and other inefficiencies) should benefit, as should decentralized power efforts, such as microgrids, smart metering and energy storage. Our Greentech Timer shows we’re over the 20-day and 40-day moving averages (MAs) entering Wednesday. The 20-day is turning upward but the 40-day is still downtrending. We’re also still below the 200-day moving average, which is upward trending. Buying volume Tuesday in greentech was better than recent average. So positives: our sector is above the two near-term moving averages, two of the three Mas we watch are trending higher and there was good buying volume on infrastructure news. Negatives: we’re under the 200-day, the 40-day is downtrending, suggesting bearish sentiment lingers. With the broad market bullish, we’re hopeful Greentech can get fully in line with the broader move. The timer continues to tell us to be cautious while being optimistic, however, so let’s maintain sell-stops. Real Money Portfolio Ameresco (AMRC) AMRC is clearly bumped up against a ceiling at 67-69. Recent earnings didn’t wow investors so the concern here is that there may not be enough momentum to break over 70. That would be bullish and clear a path to a potentially nice gain. WATCH Aptiv (APTV) We’ve been cautious with the automobile electrical parts supplier since we featured it as a “watch” in our July 7 issue. Primarily, we wanted to see chart resistance at 160 broken and ensure earnings didn’t whipsaw us. We’re through both and APTV looks good. While we sacrificed, say, 10 points of upside while we waited for confirmation, there is still a high ceiling here to capture. There is support around 158-160 here but we’re going to recommend a sell-stop around 153, which is based on three times Average True Range, a measure of recent price volatility. It’s typically a good indicator of when downward action is more than just temporary noise. BUY Chipotle Mexican Grill (CMG) Chipotle has taken a breather after a great run up from earnings. Shares have been needing to let an overbought condition ease before resuming higher. Right now, there is little by the way of headwinds otherwise. We’re raising our sell-stop to around 1,765 which nearly gets us to our buy price. That level is where shares would indicate something’s gone awry, just below where both the 20-day moving average and normal volatility – which we measure as three times the Average True Range – coincide. Our expectations are there is still a good bit of upside to shares here. BUY First Trust Water ETF (FIW) One of our two “buy” recommendations from last week’s Greentech issue, the portfolio entered FIW at 88.29, the mid-point of the high and low for August 4. We’re up slightly entering Wednesday’s action. The ETF portfolio is heavily invested in companies with large U.S. exposure (only one, Brazil’s SBS, is completely non-US), so it should gather tailwinds from infrastructure spending. Our sell-stop is around 82, where numerous support levels will have been broken. BUY General Motors (GM) GM shares are in a clear short-term downtrend, from a high of 64 (hit in early June) to 54 now, and a test of the 200-day moving average around 52.50 seeming certain. Shares moved the wrong way from earnings as investors worry that global semiconductor supply issues will slow automaker sales. Part of our thesis with GM is the share price doesn’t value the company’s parts, so it’s bound to go up. But since the core of our Real Money Portfolio approach is to use technicals to increase our odds of success, we can’t ignore the recent trend. We’re going to continue to watch and see how shares handle tests of support. WATCH ON Semiconductor (ON) A “buy” from our most recent issue, ON is consolidating, holding on to the gains from gapping higher on earnings. The portfolio entered the semiconductor maker at 45.77, with our sell-stop around 39-40, where all the good sentiment from the earnings gap up would be erased. BUY Steel Dynamics (STLD) Shares of the American steel-maker – which uses nearly all recycled metal and emits just 12% of the greenhouse gases of global peers, spiked Tuesday on infrastructure hopes. Provided there’s follow-through today, STLD should be out of the consolidation range it’s been in since early May and start moving higher. HOLD Stem Inc. (STEM) The energy storage company will report earnings today, after the close of trading. The company will probably report a loss of 11 cents on sales of $18-$19 million. The outlook is the primary driver here – utility-scale energy storage is expected to be a high-growth business. We’ll wait to see management’s outlook on the future and how investors react. WATCH Trex (TREX) One of the useful things about technical analysis is that it reduces and (sometimes) eliminates subjectivity. Trex is one example. For the past year, management has had only positives to report during earnings which, to our ears, seemed quite bullish for shares, only to see them do nothing. Now, Trex reported still-positive earnings last week, but with some negatives we assumed bears would latch onto (mainly the price of recyclable plastic, which is the deck-maker’s primary raw material, is rising). Instead, shares saw strong price moves as buyers came in force against early post-earnings sellers. The net result is we’re still in the trading range started in mid-winter, so maybe the ultimate action is the same as it has been. Nonetheless, up days of better-than-average volume are positive and now some indicators suggest we could break higher. HOLD Excelsior Portfolio Our rating remains BUY on each of our SPACs, preferable as a basket of even positions. We have no sell-stops. Li-Cycle (LICY warrant) Peridot SPAC shareholders approved the merger with Li-Cycle and the company began trading under a new ticker, LICY, today. The old ticker was PDAC. Shares and warrants of the lithium battery recycling firm have risen nicely the past week, although we’re still below our buy price after a rally into the close yesterday. Navitas Semiconductor / Live Oak II SPAC (LOKB) Navitas, which makes gallium nitride (GaN) semiconductors, which run faster than silicon chips in a smaller and less energy intensive footprint, inked its fifth deal with Lenovo for GaN-based chargers for laptops. We’re basically unchanged this week. Origin Materials (ORGN) Origin is a carbon-negative plastics maker. It was awarded the right to use the USDA’s Certified Bio Based Product label, which is meant to inform consumers how much of renewable resources something contains and that it performs as well or better than petroleum-based alternatives. Shares and warrants are up this week. Ree Automotive (REE) Ree shares and our warrants have shown nice action most of the past week, a sign that new investors interested in the company’s fundamental business are taking over from SPAC-related arbitrageurs who helped get the company to market. The maker of EV chassis releases its first quarterly earnings as a public company next week, August 17, before the market opens. Ree is still a development-stage company – it’s important to see progress on commercial partnerships that indicates management is on track to meet its robust future sales estimates. Management has been telling Wall Street 2021 will have a negative gross margin of 2%, negative EBITDA of $42 million, and little by way of sales just yet. ReNew Power / RMG II SPAC (RMGB) ReNew inked a 25-year power supply deal with the Indian government for what it calls the first round-the-clock renewables supply facility. That is, it will combine wind and solar development with battery storage to supply 24-hour power. The deal calls for 400MW of continuous supply from 1,300MW of solar and wind to be built. Our warrants are down a touch, RMGB shares are up a touch. Volta Charging / Tortoise 2 SPAC (SNPR) The EV charging station maker signed a deal with Place Exchange, an out-of-home media business (that is, outdoor display ads, like billboards), to add Volta chargers to Place’s options for large ad campaigns for its clients. Volta’s charging business is predicated around ads on its strategically placed stations. Shares and warrants haven’t moved much this week. Thank you for being a subscriber. Contact me anytime with questions or comments at brendan@cabot.net. The next issue of SX Greentech Advisor is out Wednesday August 18. We’ll alert you with any buy or sell alerts as needed before then.
