Greentech stocks held the support levels this past week we wanted and, yesterday and today, have rallied back over the sector’s 40-day moving average, a bullish sign. Our benchmark index, the Wilderhill Clean Energy Index, is now over its 20-day and 40-day moving averages, which have flattened from being downward trending. But we remain below the 200-day moving average. We’d need a 15% rally to test that resistance, so let’s not get ahead of ourselves; there remains work to be done before we can be full-throated bulls. For now, we’re cautiously optimistic, especially as our most recent buys in the portfolio are doing quite well. Still, there are signs investors are quick to bail on any hint of weakness – we are selling decking maker Trex (TREX) due to closing below our sell-stop Tuesday.
Real Money Portfolio
Aemetis (AMTX)
Shares are performing very well, putting us up more than 45% on the position so far. AMTX has surmounted resistance at 20 and the next level of pushback should come at 26, the long-term high. There’s little news this week, but follow-through on the Delta Airlines (DAL) renewable aviation fuel deal should continue. Our prior sell-stop is too far below us here, so we’re moving it up closer to our buy price, but with a buffer since that level is at support. The new sell stop is “around 14.” BUY
Aspen Aerogels (ASPN)
In last week’s issue of Greentech Advisor, delivered ahead of the market open, we recommended ASPN as a “buy, below 46.” We hit that target the same day as trading fell into the 45 area for a couple of hours. For the purposes of marking the portfolio buy price, we’re crediting ourselves with the least-best price of 45.99. Shares look very orderly and are climbing upward at a steady pace, with the portfolio up about 9% on the position. Likely helping sentiment today is new coverage from brokerage Cowen & Co., which has Aspen Aerogels as “outperform.” The company will report earnings on Thursday, October 28, after the market close. We need to set a sell-stop on our position, and we’ll mark it at “below 39.75.” This accounts for normal price volatility as well as the fact that two levels of chart support need to be broken to violate that level. Depending on how shares perform ahead of earnings, we’ll likely adjust higher. BUY
Centrus Energy (LEU)
Uranium prices are at their highest since 2012 and hedge funds are taking bullish positions, as noted in a story in the Financial Times yesterday. That likely drew traders’ eyes to Centrus – and other uranium stocks – and vaulted LEU up more than 15% Tuesday. That puts us up more than 54% on the position. We’re raising our sell-stop as a result, from “near 28” to “near our buy price” (34.46 for the portfolio), which coincides with the 40-day moving average and some chart support. BUY
Chipotle Mexican Grill (CMG)
Chipotle is drifting lower on little news. The company reports third-quarter earnings next week, on Thursday the 21st after the market close. Consensus is for $6.32 EPS on $1.92 billion of sales. Our sell stop is “around 1,773,” right around our buy price. HOLD
Onsemi (ON)
Little news for the semiconductor maker. Shares are drifting lower but holding over the gap support at 41. Shares look due to turn back upwards again, after getting close to oversold. Our sell-stop remains “below 39,” which is below additional support at the 200-day moving average at 40. HOLD
Trex (TREX)
Yesterday Trex plunged on the most volume since November. Shares gapped lower below crucial support at the 200-day moving average and continued to drop, closing at 91.92, down 11% on the day. This broke our standing sell-stop of “below 98” and we should sell today, as is our approach. The catalyst was a downgrade by a Wall Street analyst who declared shares fully valued. While we know nothing fundamental about Trex’s business not executing, we do know this: the strength of the reaction to an analyst opinion shows us investor confidence in Trex is weak and we likely will have trouble breaking back through the 200-day moving average and the gap resistance that sits now between 100 and 103. We also know that in prior quarters Trex has executed its plan and performed better than expected, yet shares lacked much follow-through. For that reason, it’s hard to see the next earnings announcement at month’s end reversing sentiment. This all suggests we need broader market momentum to get Trex moving higher again. If you haven’t already based on the sell-stop being triggered, SELL
Excelsior Portfolio
Our special opportunities portfolio right now consists of warrants in six companies that have gone public or are going public by SPAC. Our horizon here is longer term, as it needs to be with young SPACs. We’re shifting our rating from BUY to HOLD on the six as a basket and will likely start rating them separately soon as all businesses have now closed their SPAC mergers. We have no sell-stops.
Li-Cycle (LICY.WS)
Li-Cycle has been working with scooter maker Helbiz on recycling lithium, hitting the “milestone” (says a press release) of recycling more than 716 pounds of lithium since July. Any news is good news, as it demonstrates the effectiveness of the business model. Our warrants are at 2.77 midday Wednesday, meaning we’re up 15%.
Navitas Semiconductor / Live Oak II (LOKB warrant)
The Live Oak SPAC shareholders approved the merger yesterday. The Nasdaq-listed company will begin trading on October 20 under the ticker NVTS and warrants under the ticker NVTSW.Warrants surged 20% yesterday, but have retreated back to being basically unchanged on the week, at 1.90 today.
Origin Materials (ORGNW)
Origin has joined the Drive+ group, a partnership of automakers that allows suppliers the chance to work more closely with carmakers on sustainability goals. Basically, it should help the carbon-negative plastics maker get noticed by a potentially important end-market. The Drive+ automakers are: BMW, Daimler, Ford, Honda, Jaguar Land Rover, Scania, Stellantis, Toyota Motor Europe, Volkswagen Group, Volvo Cars and Volvo Group. Warrants are unchanged on the week, at 1.48.
Ree Automotive (REEAW)
A new Ree presentation says they expect to have working protypes with vehicle maker clients in a year. The company’s design plans with Hino, a Toyota truck making division, also won a design award, which lends some hope the alliance between the two will bear fruit. Warrants are up about 6 cents to 0.84 this week, but they, and shares (at 4.20 recently) clearly show we need to let Ree have time to execute.
ReNew Energy Global (RNWWW)
ReNew said Tuesday that its fiscal 2022 ebitda will be $810 million on 8.2 gigawatts of renewable energy capacity. Warrants are up about 20 cents the past week, to 1.75, putting us at a 17% profit.
Volta Inc (VLTA.WS)
Volta warrants have surrendered about 50 cents from last week, to a recent 2.16, or a paper loss of 2% for the portfolio. The volatile EV charger maker has put out a couple press releases this week of reaching deals to install chargers at Connecticut Stop & Shop grocery stores and Floor & Decor warehouses.
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday October 20. Contact me anytime with questions or comments at brendan@cabot.net.