Alternative Transportation Stocks are publicly traded companies that offer transportation options that use less fuel per passenger-mile or freight-mile than traditional options. Includes mass transit (both rail and bus), bicycles, and two wheel vehicles.

A. P. Moller – Maersk Group (MAERSK-B.CO)
Accell Group (ACCEL.AS)
Blue Bird Corporation (BLBD)
Bombardier Inc (BDRBF)
Construcciones y Auxiliar de Ferrocarriles (0MK5.L)
CSR Zhuzhou Electric Locomotive (ZHUZF)
Canadian National Railway Company (CNI)
Canadian Pacific Railway Limited (CP)
CSX Corporation (CSX)
Cubic Corporation (CUB)
Dorel Industries (DIIBF)
Firstgroup, PLC (FGP.L)
Giant Manufacturing (9921.TW)
Grande West Transportation Group Inc. (BUS.V)
Great Lakes Dredge and Dock (GLDD)
Greenbrier (GBX)
L. B. Foster (FSTR)
Merida Industry Co. Ltd. (9914.TW)
National Express Group (NEX.L)
New Flyer Industries (NFYEF, NFI.TO)
Norfolk Southern Corp. (NSC)
Piaggio & C.S.p.A (PIAGF)
Power REIT (PW), Power REIT 7.75% Series A Cumulative Preferred (PW-PA)
Seaspan Corporation (SSW), Seaspan Cumulative Preferred (SSW-PG,SSW-PH,SSW-PD)
Shimano, Inc. Ltd. (SHMDF)
Stagecoach Group PLC (SGC.L)
Stella Jones (STLJF)
Tandem Group PLC (TND.L)
Trinity Industries (TRN)
Union Pacific Corporation (UNP)
Vossloh AG (VOS.DE)
VMoto Limited (VMT.AX)
Wabtec Corporation (WAB)

If you know of any alternative transportation stock that is not listed here, but which should be, please let us know in the comments. Also for stocks in the list that you think should be removed.

The post List of Alternative Transportation Stocks appeared first on Alternative Energy Stocks.

by Tom Konrad Ph.D., CFA

Sorry I did not have time to write the usual monthly update article this weekend, but I hope to get to it in the next couple weeks.

Until then, here is how the stocks were doing through the end of September (click for larger version):

The recent market downturn continues to make my relatively conservative picks (especially the income stocks) generally outperform. For the year, the model portfolio is down only 6% in dollar terms compared to its clean energy benchmark, which is down 30%, and almost matching its broad market benchmark, which is down 4%.

The income sub-portfolio shines brightest, with a 7% gain for the year to date, despite a 35% decline in its benchmark. The Growth/Value subprotfolio continues to drag, down 26% for the year to date, but now its benchmark has fallen nearly as much, down 23%.

Trades

On the buying/selling side, I’ve been trimming some winners (New Flyer [TSX:NFI/NFYEF] and Accell Group [Amsterdam:ACCEL / ACGPF]) in order to buy a number of yeildcos which are now very attractively priced after the yieldco bubble burst and is now over correcting.

The post 10 Clean Energy Stocks for 2015- September Performance appeared first on Alternative Energy Stocks.

Tom Konrad CFA

The first half of 2015 saw a mild advance in the broad market, but concerns about rising interest rates and the ongoing Greek debt drama sent income stocks, clean energy, and most non-US currencies down decisively.  My Ten Clean Energy Stocks for 2015 model portfolio has heavy exposure to not only clean energy, but income stocks (6 out of 10) and foreign stocks (4 out of 10.)  Despite this the stormy market for all three, the portfolio delivered admirably.

The model portfolio ended the second quarter up 9.7%, compared to its broad market benchmark, which was up only 4.4%.  Its clean energy benchmark is a 40/60 blend of its growth oriented benchmark and its income-oriented benchmark, matching the 4/6 ratio of growth and income stocks in the portfolio.  These two benchmarks are discussed below.  The blended benchmark fell 5.1%. 

For the month of June, the portfolio gained 3.1%, compared to only 0.8% for the broad market IWM and a 6.2% decline of the blended benchmark.

Value/Growth and Income Sub-Portfolio Performance

The four stock value and growth sub-portfolio reversed most of its previous losses in June,  up 7.4% for the month to end the first half down only 0.4% for the year.  Its benchmark, the Powershares Wilderhill Clean Energy ETF (NASD: PBW), fell 3.8% for the month but remains in the black with a 2.3% gain for the first half.

The six stock income sub-portfolio inched up another 0.3% on top of its already impressive gains, ending up 16.4% year to date, despite rising interest rates.  The income benchmark fared much worse.  This benchmark was The Global Utilities Index Fund, JXI for the first 5 months, replaced by the more clean-energy oriented Global X YieldCo Index ETF (NASD:YLCO) when that began trading at the end of May.  It dropping 5.3% for the month for a loss of 7.7% year to date, despite the fact that YLCO fared better than JXI in June.

The chart below (click for larger version) gives details of individual stock performance, followed by a discussion of the month’s news for each stock.

The low and high targets given below are my estimates of the range within which I expected each stock to finish 2015 when I compiled the list at the end of 2014.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
6/30/2015 Price: $20.05. YTD Dividend: $0.52  YTD Total Return: 44.6%.

Sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong started the month strong, and I hope some of my readers took the opportunity and followed my lead by taking some gains as it briefly rose above $21.  At that point, Bank of America broke it’s long climb by lowering its rating to Neutral based on valuation.  This is in-line with my own assessment: I like Hannon Armstrong for the long term, but, because of its much higher price than when it began the year, no longer feel that it deserves to be such a large part of my managed portfolios.

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72.  Beta: 1.54.  Low Target: $10.  High Target: $30. 
6/30/2015 Price: $19.73. YTD Dividend: $0.18  YTD Total Return: 33.6%.

International manufacturer of electrical and fiber optic cable General Cable Corp. rose strongly on the news that it had sold the rest of its Asia Pacific operations for $205 million.  This was a significant step in its ongoing reorganization, which has the goals of simplifying its geographic portfolio, reducing debt, and improving profitability.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.84.   Low Target: C$10.  High Target: C$15. 
6/30/2015 Price: C$12.36. YTD Dividend: C$0.39  YTD Total C$ Return: 11.1%. YTD Total US$ Return: 3.3%.

Unlike most of the other income picks, Yieldco TransAlta Renewables fell 2% in June, deepening the undervaluation which made me predict it would rise in the last update.  The decline was likely in sympathy with the larger, interest rate related, decline of Yieldcos and utilities in general (down 5.3% and 7.7%, as discussed above.)

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30.  Low Target: C$3.  High Target: C$5.  
6/30/2015 Price: C$2.99. YTD Dividend: C$0.15  YTD Total C$ Return: -1.9%.  YTD Total US$ Return: -8.8%.

Canadian power producer and developer (Yieldco) Capstone Infrastructure also declined 2.3% despite my prediction for this stock.  As with TransAlta Renewables, I believe the decline was industry related, not specific to Capstone.  In fact, the company announce progress with its wind projects in Ontario, where it received a final Renewable Energy Approval from the Ontario Ministry of the Environment and Climate Change for the 10-megawatt Snowy Ridge Wind Park.

New Flyer Industries (TSX:NFI, OTC:NFYEF).

12/31/2014 Price: C$13.48.  Annual Dividend: C$0.62.  Low Target: C$10.  High Target: C$20. 
6/30/2015 Price: C$15.48.  YTD Dividend: C$0.30  YTD Total C$ Return: 17.1%.  YTD Total US$ Return: 8.8%.

Leading North American bus manufacturer New Flyer got a very favorable write-up at Seeking Alpha, including speculation that its Brazillian partner, Marco Polo, might acquire the 80% of the company it does not already own in a buy-out.  I’m a little skeptical about such buy-out speculation- I think both companies seem to be benefiting well from the alliance as it is, but I agree that New Flyer remains an inexpensive company with a dominant position in the North American bus industry, which continues to rebound from a long slump. 

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: €0.61.  Low Target: €12.  High Target: €20.
6/30/2015 Price: €16.65. YTD Dividend: €0.61  YTD Total € Return: 26.9%.  YTD Total US$ Return: 16.8%.

Despite Greek wobbles, bicycle manufacturer Accell Group, which makes most of its sales in Europe, maintained its balance with the stock up 2% for the month and 17% for the first half.  The company is a leader in e-bikes, and introduced its own “mid-motor” (i.e. near the pedals so that the motor can take advantage of the bike’s gears) with hardware supplied by Yamaha.  Mid-motors are a premium option, offering better balance, efficiency, and handling than the more common hub motors, but are more complex and come with a higher price tag.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: $0.24.   Beta 0.36.  Low Target: $10.  High Target: $20.
6/30/2015 Price: $12.87 YTD Dividend: $0.12.  YTD Total Return: -0.2%.

Alone among my three predictions for stocks to perform well in June, biodiesel producer FutureFuel did not disappoint.  The company gained 8% for the month on the EPA’s proposed biomass-based diesel volumes for 2014-2017, which were announced on the last trading day of May.  I predicted that the targets, which were good news for biodiesel producers, would continue to propel the stock upward in early May.  That turned out to be the case, and the stock stayed above $13 for most of the month before giving back some of its gains in the recent market turmoil. 

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
6/30/2015 Price: $5.80. YTD Total Return: -30.5%.

Solar and rail Real Estate Investment Trust Power REIT’s stock fell briefly below $5, a price at which I think it represents a good buy despite the negative summary judgement in March. 

The two remaining issues in the lessee’s civil case against it will go to trial in August.

The lessees, Norfolk Southern (NSC) and Wheelling and Lake Erie (WLE) claim that Power REIT and its CEO, David Lesser, acted fraudulently when Power REIT was created and the Pittsburgh and West Virginia (P&WV) (which owns the leased property) became its subsidiary through a reverse merger.  They are claiming damages in the amount of approximately $140 thousand based on interest on funds withheld by third parties, which NSC and WLE claim is due to Lesser’s actions.  It seems to me that if interest is owed, it would be by the third parties.  But, given my track record predicting the court’s rulings, readers should form their own opinions.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
6/30/2015 Price: $7.65. YTD Total Return: 9.3%.

Energy service contractor Ameresco released the usual press releases about new contracts.  Given the timing of the rally, my best guess is that the company attracted the interest of one or more institutional investors by presenting at ROTH London Cleantech Day.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
6/30/2015 Price: $7.77. YTD Dividend: $0.  YTD Total South African Rand Return: 26.3%.  YTD Total US$ Return: 19.8%.

Vehicle and fleet management software-as-a-service provider MiX Telematics published its annual report, which seems to have boosted the stock slightly.  The annual report does not contain information which was not included in its annual results, published at the end of May, but could have drawn the attention of investors to its long term progress.  As I discussed last month, the annual results were very encouraging, and MiX continued to trade at a fraction of the valuation of its developed-market peers.

The Annual General Meeting was also set for September 11th.

Predictions

Last month, I predicted TransAlta Renewables, Capstone Infrastructure, and FutureFuel would advance in June.  The sharp decline in utility and Yieldco stocks prevented the advance and led to a small decline in the first two, but FutureFuel advanced strongly, pulling the average gain to 1.1% for the three stocks.  Over the past four months, I’ve managed to pick 7 out of 9 monthly winners, my average pick has advanced each month. 

While I’m satisfied with both my overall track record and my monthly picks, I don’t encourage readers to trade based on my monthly hunches: Transaction costs would probably cost more than my market timing would help.  That said, for readers new to the list, these monthly picks have so far proven to be among the best stocks to buy if you have new money to invest.

Since the monthly picks have so far seemed useful, I’ll continue my predictions.  Although it did not work out last month, I’ll be sticking with Capstone and TransAlta Renewables.  Despite rising interest rates, both are trading at excellent valuations.  Also, I feel the rapid decline of income stocks over the last couple months is due for a pause or even a small rebound.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, PW-PA, FF, BGC, RNW/TRSWF, REGI.  I am the co-manager of the GAGEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2015: Riding The Storm appeared first on Alternative Energy Stocks.

Tom Konrad CFA

 My Ten Clean Energy Stocks for 2015 model portfolio had a good May, despite headwinds from the strengthening dollar and declines in clean energy stocks in general.  As a whole, the model portfolio rose 2.2% for the month, the same as my broad market benchmark.  In general, clean energy stocks did worse, with the Powershares Wilderhill Clean Energy ETF (PBW) down 1.9% for the month.  The portfolios clean energy benchmark, which blends PBW with the more income oriented Utility ETF, JXI, was flat.

For the year to date, the portfolio is up 7.4%, ahead of all its benchmarks for the first time this year.  Their YTD returns were 3.9% for IWM, 7.2% for PBW, 1.4% for the blended benchmark, and -2.5% for JXI. 

Income Portfolio Performance and New Benchmark: YLCO

The six-stock income oriented sub-portfolio continues to shine, up 1.9% for the month and 16.5% YTD.  The fossil fuel free income oriented portfolio I manage with Green Alpha Advisors, GAGEIP, also continues to do well.  It is up 1.5% for the month and 10.2% YTD. 

The benchmark for these income portfolios is JXI (up 1.2% for May and down 2.5% YTD), but as I discussed in previous articles, it is an unsatisfactory benchmark because it lacks a clean energy focus.  That changed on May 28th, with the launch of the Global X YieldCo Index ETF (NASD:YLCO), which focuses on global income-producing clean energy power producers that pay high dividends.  Three of YLCO’s 20 holdings are also in this portfolio TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF), (Hannon Armstrong Sustainable Infrastructure (NYSE:HASI), and Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF), but they comprise only 9.2% of YLCO compared to half of the income stocks in my model portfolio. 

One of the most important functions of a benchmark is to indicate what part of a portfolio’s return is due to stock selection, as opposed to sector and overall stock market performance.  Hence, YLCO is a much better benchmark for a clean energy income portfolio than JXI because it is also focused on income producing clean energy stocks.  Going forward, I intend to add YLCO as in income benchmark, and substitute it for JXI in the blended clean energy benchmark for the whole portfolio.   I will back-fill performance data for YLCO using JXI for the first five months of the year unless I am able to obtain historical performance information from its underlying Indxx Global YieldCo Index.

Value/Growth Portfolio Performance

The four stock value and growth sub-portfolio  gained 2.6% for the month, and now is down 6.2% for the year.  This remains far behind its benchmark, PBW, which fell 1.9% for the month but is up 7.2% year to date.

The chart below (click for larger version) gives details of individual stock performance, followed by a discussion of the month’s news for each stock.

The low and high targets given below are my estimates of the range within which I expected each stock to finish 2015 when I compiled the list at the end of 2014.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
5/29/2015 Price: $20.48. YTD Dividend: $0.52  YTD Total Return: 47.6%.

Sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong continues to go from strength to strength.  The company released first quarter earnings in line with its previous guidance, growing Core Earnings by 35% over the previous year.

Although I don’t consider HASI overvalued at current prices, I have been selling in my own and managed portfolios for re-balancing.  As I wrote many times in 2013 and 2014, I felt it was extremely undervalued in the $10-$13 range in 2013 and 2014. It was my largest position at the start of the year.  Now that it’s up almost 50% and more fairly valued, I’m selling to bring it back in line with the rest of my holdings.

Long-time readers who also acquired large stakes below $13 should also consider taking some profits.

The company released its annual Sustainability Report Card.  The company estimates “that assets financed by Hannon Armstrong in 2014 will reduce emissions by more than 340,577 metric tons of GHG per year, equivalent to more than 165,000 tons of coal, and save more than 145 million gallons of water annually.”  That’s one annual metric ton of GHG saved for every 96 HASI shares, one annual ton of coal saved per 197 HASI shares, and 4.5 annual gallons of water saved per HASI share. 

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72.  Beta: 1.54.  Low Target: $10.  High Target: $30. 
5/29/2015 Price: $18.89. YTD Dividend: $0.  YTD Total Return: 26.8%.

International manufacturer of electrical and fiber optic cable General Cable Corp. reported strong first quarter results.  After adjusting for the sale of some divisions, revenue was up a modest 3% over the same quarter a year earlier, but net profit more than doubled.  The company attributes the strength to its restructuring efforts, careful management of working capital, and strong demand for submarine products in Europe.

The company will pay a quarterly dividend of $0.18 on June 26th.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.84.   Low Target: C$10.  High Target: C$15. 
5/29/2015 Price: C$12.65. YTD Dividend: C$0.32  YTD Total C$ Return: 13.0%. YTD Total US$ Return: 5.3%.

Yieldco TransAlta Renewables did not advance as much as I expected after increasing its monthly dividend to 7 Canadian cents.  I believe its failure to advance was due to rising interest rate expectations in Canada.  Rising interest rate expectations tend to hurt all income investments, including yieldcos.

I continue to consider TransAlta Renewables to be very attractively valued at the current price, but no longer like the company as much from an environmental perspective.  The acquisition of four natural gas pipelines and a natural gas power station which is currently under development has made TransAlta a lot less “Renewable”.  When the gas power station is commissioned, ap
proximately a third of the yieldco’s assets will be transportation or electricity generation from natural gas. 

I am currently holding my positions in the company, but intend to sell when the stock is no longer so undervalued.

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30.  Low Target: C$3.  High Target: C$5.  
5/29/2015 Price: C$3.13. YTD Dividend: C$0.15  YTD Total C$ Return: 2.5%.  YTD Total US$ Return: -4.5%.

Canadian power producer and developer (yieldco) Capstone Infrastructure suffered from the same Canadian interest rate expectations as TransAlta Renewables, but did not have a dividend increase to offset that effect.

Revenues fell by 21%, and Adjusted Funds From Operations (AFFO) fell by two-thirds mainly because of the new power contract at Capstone’s Cardinal facility offset by newly commissioned wind farms.  The company maintained its full year forecast.  AFFO is important because it is management’s estimate of how much money they have available to pay dividends.  

In 2013, before the agreement was signed, I made some estimates about its effect on 2015 AFFO.
The actual contract was essentially in line with my lowest estimate, which I predicted would result in a 2015 approximately C$21 million AFFO.  First quarter AFFO was C$6.5 million, easily on track to exceed my low prediction, especially with the addition of the Goulais Wind Farm which was commissioned in May and will be contributing to results for the rest of the year. 

At the current rate, 2015 dividends are likely to be a little above AFFO, but I expect the dividend to be maintained, despite the fact that the market seems to be pricing in a dividend cut.  (The current dividend yield is 9.6%, many analysts feel that anything above 8% indicates expectations for a cut.)

I believe a cut is unlikely for several reasons, starting with company insider’s confidence in the stock.  Management has repeatedly said that they intend to maintain the dividend, and they have been buying shares in the public market and not selling any of the shares they receive as part of their compensation.  Company insiders would not be buying the stock if they thought there was any likelihood of a dividend cut.

Second, while 2015 AFFO could easily fall below dividends paid, there are many reasons to expect that 2016 will be a much better year.  Capstones’ development projects will continue to add incremental AFFO, and more importantly, two more of Ontario’s nuclear reactors will begin refurbishment next year.  This this will reduce overall electricity supply and likely lead to periods of higher electricity prices and increased profits at Cardinal.  These increased profits will provide extra AFFO to maintain the dividend as Capstone’s development projects are commissioned and increase long run AFFO.

New Flyer Industries (TSX:NFI, OTC:NFYEF).

12/31/2014 Price: C$13.48.  Annual Dividend: C$0.62.  Low Target: C$10.  High Target: C$20. 
5/29/2015 Price: C$15.60.  YTD Dividend: C$0.25  YTD Total C$ Return: 17.6%.  YTD Total US$ Return: 9.6%.

Leading North American bus manufacturer New Flyer also suffered from increasing Canadian interest rate expectations, but these were more than offset when the company announced a surprise dividend increase in conjunction with its first quarter results. 

As I’d previously discussed, I was expecting a dividend increase towards the end of the year.  From the discussion in the conference call, I get the impression that this will likely be the first of many dividend increases in coming years.  New Flyer’s CEO, Paul Soubry, stated “We are not going to disclose our exact formulas and methodologies, but I can tell you that we are now in a methodology of a regular review” of the dividend.  This means that as long as the company’s financial performance continues to improve, some of that improvement will flow through to shareholders in the form  of increased dividends.

Investors tend to value growing dividends highly, often much more highly than stable dividends.  If I am right that his is just the first of many dividend increases, I would expect New Flyer’s stock to increase even more rapidly than the dividend. 

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: €0.61.  Low Target: €12.  High Target: €20.
5/29/2015 Price: €16.66. YTD Dividend: €0.61  YTD Total € Return: 27.0%.  YTD Total US$ Return: 14.5%.

Bicycle manufacturer Accell Group did not report any significant news in May, although there was an interesting article about Accell’s leadership in the new and growing category of speed e-bikes in its home country of the Netherlands.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: $0.24.   Beta 0.36.  Low Target: $10.  High Target: $20.
5/29/2015 Price: $12.00 YTD Dividend: $0.06.  YTD Total Return: -7.4%.

Ethanol producers are again up in arms about proposed cuts to biofuels mandates in the EPA’s proposed 2014-2016 targets, but renewable diesel producers such as FutureFuel would be “reasonably OK with it,” according to Jim Lane, publisher of Biofuels Digest.  Given how bad the EPA’s track record over the last couple years has been, that’s a ringing endorsement.

FutureFuel has not released a statement on the proposal, but Renewable Energy Group’s statement gives some insight. “We are positive about today’s EPA announcement related to proposed biomass-based diesel volumes for 2014-2017 and overall advanced biofuels for 2014-2016. This proposal reduces uncertainty and points towards con
tinuing growth for the near future and beyond. … This is a significant improvement over the original 1.28 billion gallon 2014 [biomass-based diesel] proposal.”

The news came out on Friday, and FutureFuel and a more pure-play biodiesel producer, Renewable Energy Group (NASD:REGI) I also follow were both up on the news, by 3% and 4%.  I expect them to climb further next week as the market digests the news. 

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
5/29/2015 Price: $5.03. YTD Total Return: -39.8%.

Solar and rail Real Estate Investment Trust Power REIT’s stock continued to decline in the wake of the negative summary judgement I wrote about last month.  This decline was partly due to the fact that the few outstanding issues in the case were not resolved, and so the case will go to trial in August. 

Most of the legal work on both sides has already been done, so I don’t expect legal expenses to balloon again, and I expect that, even if Power REIT appeals the ruling, it will only do so if expenses can be contained.  Hence I maintain my expectation that the dividend will be resumed before the end of 2016, and think the stock will again be a good buy if it falls substantially below $5.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
5/29/2015 Price: $7.26. YTD Total Return: 3.7%.

Energy service contractor Ameresco released strong first quarter earnings, again beating analyst estimates for the third quarter in a row.  The company continues to see recovery, especially in the Federal market.  Ameresco is also reducing its risk profile by developing renewable assets which it keeps on its books.  The resulting depreciation reduces income in the short term, but leads to long term stable income streams.

These positive developments have not yet drawn significant investor attention and the stock price remains low.  Company insiders, on the other hand, are taking advantage by continuing to add to their positions.  Four different insiders have bought a total of 265,000 shares over the last three months.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
5/29/2015 Price: $7.70. YTD Dividend: $0.  YTD Total South African Rand Return: 27.0%.  YTD Total US$ Return: 18.5%.

Vehicle and fleet management software-as-a-service provider MiX Telematics also announced quarterly results on Thursday, as well as annual results for its fiscal year, which ends on March 31st.  The company resoundingly beat the consensus earnings estimate (14¢ vs. 7¢ per share) and was very upbeat about its opportunities in the North American market. 

The stock has rallied strongly since the announcement, but given its massive undervaluation, I think there is still plenty of room to the upside.

Predictions for June

Last month, I thought TransAlta Renewables and MiX Telematics had the best chance of short term gains.  TransAlta’s dividend increase produced only a small (2%) advance in Canadian dollar terms, but this was wiped out by the strong US dollar, leading to a small loss of 1.2% since last month.  MiX’s strong earnings, on the other hand, helped to push its stock up 12.3% in terms of the South African Rand, which was reduced to 10% for US investors because of the strong dollar.

So my perfect track record of predicting five out of five monthly winners in previous updates was broken by TransAlta’s slight decline.  The record is now 6 out of 7.  But given that MiX’s advance was much larger than TransAlta’s decline, I’m happy with the result and willing to stick my neck out again. 

I don’t expect much news as we move into the slow summer months, so price moves should be driven mostly by valuation.  I’m quite bullish on all four of TransAlta, Capstone, FutureFuel, and MiX right now, but given MiX’s recent advance, I think that it may give back some gains in the short term.  Hence I’m going to limit my prediction for June advances to just the first three: TRSWF, MCQPF, and FF.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, PW-PA, FF, BGC, RNW/TRSWF, REGI.  I am the co-manager of the GAGEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post May Dividends Rise: Ten Clean Energy Stocks For 2015 appeared first on Alternative Energy Stocks.

Tom Konrad CFA

 My Ten Clean Energy Stocks for 2015 model portfolio held on to first quarter gains in April, despite a 29% fall for one of the stocks.  (For details on that decline, see the Power REIT (NYSE:PW) section below.)  The portfolio as a whole was rescued by the recovering Canadian Dollar and Euro, as well as mild advances for most of the other stocks across the board.  That includes a 4.9% gain for TransAlta Renewables (TSX:RNW, OTC:TRSWF), and a 5.8% gain for FutureFuel (NYSE:FF) which I singled out as having “fallen too far” in last month’s update.

As a whole, the model portfolio fell 0.7% in April and is up 4.9% for the year to April 30th.  This compares to a 2.6% April decline for its broad market benchmark, IWM, which is down 3.7% year to date (YTD).

Income and Value Divergence

However, the overall averages are a product of the excellent performance of the six income stocks masking the miserable performance of the four value and growth stocks.  The income group was up 4.2% for April, and is up 14.6% YTD.  This compares to a 1.9% monthly gain and 3.7% year to date loss for its benchmark, JXI.  The fossil fuel free income portfolio I manage with Green Alpha Advisors, GAGEIP, is also doing well, with a 3.1% gain in April, and a YTD 8.6% gain.

In contrast, the four growth and value stocks lost 8.0% for the month, and are down 9.7% for the year.  This compares to their clean energy ETF benchmark (PBW), which rose 3.0% for the month and is up 9.3% for the year.

The chart below (click for larger version) gives details of individual stock performance, followed by a discussion of April news for each stock.

The low and high targets given below are my estimates of the range within which I expected each stock to finish 2015 when I compiled the list at the end of 2014.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
4/30/2015 Price: $19.00. YTD Dividend: $0.26  YTD Total Return: 35.3%.

The stock of sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong added to previous gains in April, despite a secondary share offering of 4 million shares priced at $18.50 a share.  The strength is most likely due to a well timed earnings guidance update for the first quarter released on April 28th.

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72.  Beta: 1.54.  Low Target: $10.  High Target: $30. 
4/30/2015 Price: $16.31. YTD Dividend: $0.  YTD Total Return: 9.5%.

International manufacturer of electrical and fiber optic cable General Cable Corp. gave back some of its previous gains.  The gains come because of buyout rumors, discussed in the last update.  Although the reasons for a possible buyout are just as good as they were in March, this is typical performance for a stock after buyout rumors: The stock declines slowly as traders lose interest and move on to the next item in the news cycle.  The company will discuss first quarter earnings with analysts on May 7th.  Management is sure to be asked about the rumors at that time, although I doubt they will say anything to feed renewed speculative frenzy.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.77.   Low Target: C$10.  High Target: C$15. 
4/30/2015 Price: C$12.47. YTD Dividend: C$0.26  YTD Total C$ Return: 10.9%. YTD Total US$ Return: 6.6%.

I highlighted Canadian yieldco TransAlta Renewables as a good short-term buy last month because of what I believe to be a temporary sell-off following the announcement of a secondary offering of stock priced at C$12.65.  The stock initially advanced, but then fell back when the deal closed.  After its normal monthly C$0.06416 dividend, the stock was flat in local currency terms, but up 4.9% in US$ terms because of the appreciating Canadian dollar. 

If anything, now is an even better time to buy TransAlta Renewables given that it has not advanced in local currency terms, and it will soon increase its monthly dividend to C$0.07.  Analysts seem to agree: TD Securities upgraded the stock from “hold” to “buy” and raised its price target from C$13.50 to C$15.50. Macquarie maintained a neutral rating, but increased its price target from C$13 to C$14.

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30.  Low Target: C$3.  High Target: C$5.  
4/30/2015 Price: C$3.70. YTD Dividend: C$0.075  YTD Total C$ Return: 18.0%.  YTD Total US$ Return: 13.5%.

Canadian power producer and developer (yieldco) Capstone Infrastructure revealed that Ontario Electricity Financial Corporation had appealed the March 12th decision from the Ontario Superior Court discussed in the last update.  If the ruling is upheld, it will result in a C$25 million (C$0.26) retroactive payment and an ongoing revenue increase at two of Capstones hydropower facilities.  The stock continued to recover from previous lows.

5. New Flyer Industries (TSX:NFI, OTC:NFYEF).
12/31/2014 Price: C$13.48.  Annual Dividend: C$0.585.  Low Target: C$10.  High Target: C$20. 
4/30/2015 Price: C$14.32. YTD Dividend: C$0.20  YTD Total C$ Return: 7.7%.  YTD Total US$ Return: 3.6%.

Leading North American bus manufacturer New Flyer announced its new orders and backlog for the first quarter.  Order activity remains brisk.  Although New Flyer delivered 572 EUs in the quarter, compared to 494 new firm orders and exercised options, backlog including options increased from 2,469 to 29,30 EUs.  The company’s aftermarket business continues to grow as well.

For investors new to New Flyer, Livio Filice gave a good overview on Seeking Alpha.

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: €0.61.  Low Target: €12.  High Target: €20.
4/30/2015 Price: €16.84. YTD Dividend: €0.61  YTD Total € Return: 28.3%.  YTD Total US$ Return: 18.9%.

Bicycle manufacturer Accell Group reported record revenue and profits for 2014, on strong electric and sport bike sales and favorable weather in Europe this past winter.  The company also reported that 2015 had gotten off to a favorable start, despite the volatility of the Euro.  Shareholders approved a €0.61 dividend, up from €0.55 last year.  The stock went ex-dividend on April 27th.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: $0.24.   Beta 0.36.  Low Target: $10.  High Target: $20.
4/30/2015 Price: $10.87 YTD Dividend: $0.06.  YTD Total Return: -16.1%.

Last month, I highlighted specialty chemicals and biodiesel producer FutureFuel as one of two short term buys based on undervaluation.  Like TransAlta Renewables, FutureFuel’s return was not particularly impressive, but it did advance 5.8%.  The advance was helped by the EPA’s agreement to finalize volumes for 2014 and 2015 under the Renewable Fuel Standard by November 30th.  The Agency also intends to finalize the rule for 2016 before the end of the year.  Uncertainty over the repeated delays of the EPAs rule making have been undermining the biofuels markets and FutureFuel’s profits since the EPA missed its deadline for the 2014 rules in November 2013.

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
4/30/2015 Price: $6.14. YTD Total Return: -26.5%.

As mentioned above, the judge ruled against Power REIT in summary judgement on April 24th.  I wrote about the ruling and my new valuation for Power REIT ($5 to $7) here.  The judge also called a status conference with both parties for April 29th.  My hope is that Power REIT decided not to appeal and its lessees dropped the remaining minor claims, but the company has not yet released any information regarding the outcome of the conference.

Although the judge ruled against Power REIT on every count, there were two bright spots in the ruling.  First, the company can now drop the case without the expense of a prolonged trial. It was due to this savings in legal expenses that my current valuation exceeds my previously estimate ($5) of Power REIT’s value in the case of a total loss.

The other upside comes from Power REIT’s preferred stock (PW-PA,) which I have previously described as a hedge against the possibility of a loss in the civil case.  Although the preferred sold off briefly in the wake of its ruling, calmer heads soon prevailed. Prior to the ruling, the preferred had been trading in the $25.50 to $26 range, but it is now trading around $27.  The increase is due to the fact that the preferred dividends (like dividends on the common) should now be treated for tax purposes as return of capital, rather than as ordinary income.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
4/30/2015 Price: $6.72. YTD Total Return: -4.0%.

Energy service contractor Ameresco continues to announce both solar and energy efficiency contracts, but has yet to catch investor attention.  The stock drifted down after some excitement last month over the Obama administration’s renewed push for energy efficiency in Federal agencies.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
4/30/2015 Price: $7.00. YTD Dividend: $0.  YTD Total South African Rand Return: 11.0%.  YTD Total US$ Return: 7.7%.

Vehicle and fleet management software-as-a-service provider MiX Telematics was mostly flat with a slight decline in South African rand terms offset by appreciation of the rand against the dollar.  I find the lack of movement puzzling, given the likelihood that the company is currently negotiating a sale.  Readers can find an excellent in-depth look at MiX’s current undervaluation and prospects for a buy-out here.

Final Thoughts

With my growing focus on income stocks and the launch of the Green Alpha Global Equity Income Portfolio strategy late last year, I had seriously considered placing only income stocks on this list for 2015.  Unfortunately, a colleague talked me out of the idea, saying that readers expect a broader focus for my lists of “Ten Clean Energy Stocks,” which I have been publishing since 2007. 

If this year’s results are anything to go by, I’m a lot better at picking income stocks than I am at picking value and growth stock.  I also suspect that a systematic review of previous years would lead to the same conclusion. Many of my biggest winners have been income stocks, and many my biggest losers have been value or growth stocks. 

It’s hard to be good at all things, but it is possible to know your strengths.  I’m tired of getting caught in value traps.  I’m re-considering making the tenth annual “10 Clean Energy Stocks” list into “10 Clean Energy Income Stocks for 2016.”

On the subject of a much more recent tradition, I’ve managed to pick two or three winners from this list for the coming month for two months running.  For May, I’m go
ing to stick with TransAlta Renewables and bring MiX Telematics back from March, for the reasons discussed above.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, PW-PA, FF, BGC, RNW/TRSWF.  I am the co-manager of the GAGEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Value Trapped: Ten Clean Energy Stocks For 2015, April Update appeared first on Alternative Energy Stocks.

Tom Konrad CFA

 My Ten Clean Energy Stocks for 2015 model portfolio added a second month to its winning streak, with a 6.1% gain for the month and a 5.7% gain for the year, despite a continued drag by the strong dollar.  If measured in terms of the companies’ local currencies, the portfolio would have been up 7.5% for the month and 10.5% for the quarter or year to date.  For comparison, the broad universe of US small cap stocks rose 1.5%  for the month and 4.0% for quarter, as measured by IWM, the Russell 2000 index ETF.

The six income stocks continue to lead, with a gain of 5.9% for the month and 10.2% for the year.  This compares to a miserable performance by my income benchmark of global utility stocks (JXI), which was down 3.1% for the month and 5.5% for the year.  The fossil free Green Alpha Global Enhanced Equity Income Portfolio (GAGEEIP), which I co-manage, also outperformed the global utility trend and turned in a 0.6% gain for the month, and 5.3% gain for the year to date.

The four growth and value stocks gained 6.3% for the month, but remain down 1.0% for the year.  This compares to their clean energy ETF benchmark (PBW), which rose 1.6% for the month and is up 5.9% for the year.

The chart below (click for larger version) gives details of individual stock performance, followed by a discussion of March news for each stock.

The low and high targets given below are my estimates of the range within which I expected each stock to finish 2015 when I compiled the list at the end of 2014.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
3/31/2015 Price: $18.28. YTD Dividend: $0.26  YTD Total Return: 30.3%.

The stock of sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong continued its impressive advance. 

The market price is now above the $17 “High Target” I gave it at the start of the year.  That means that it is higher than I expected it to go by the end of 2015, and while I revised my expectation upward when Hannon Armstrong increased their core earnings per share growth target from its previous 12% to 15% range to its current 14% to 16% range, I now feel the company is near its fair valuation.  While I am happy to hold the company for its dividend and dividend growth prospects, I have begun trimming my position for rebalancing.  It was already my largest holding at the end of 2013; it’s time to bring the stock back in line with the rest of my positions.

Although I am trimming my holdings, I think HASI retains significant upside potential.  While I feel it is near its fair valuation now, there is no reason to believe it cannot become overvalued.  That has certainly happened with many of the conventional YieldCos: NRG Yield (NYSE:NYLD) and NextEra Enegy Partners (NYSE:NEP), for example.  These boast similar growth prospects to HASI, but much lower dividend yields.  To bring HASI’s yield down to 4%, which is in the middle of the range for YieldCos today, the stock would have to rise to $26.  While I believe many YieldCos are overvalued at current levels, I see no reason why Hannon Armstrong can’t join them.

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72.  Beta: 1.54.  Low Target: $10.  High Target: $30. 
3/31/2015 Price: $17.23. YTD Dividend: $0.  YTD Total Return: 15.6%.

International manufacturer of electrical and fiber optic cable, General Cable Corp.’s stock spiked on March 17th based on rumors that it might be bought by larger Italian rival Prysmian (OTC:PRYMF).  Prysmian later said in a statement that it had consulted with its advisors about the possibility of buying General Cable or France’s Nexans, but had had no direct discussions with either company.  General Cable’s stock held on to most of its gains as investors revalued the company as a possible acquisition target.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.77.   Low Target: C$10.  High Target: C$15. 
3/31/2015 Price: C$12.55. YTD Dividend: C$0.19  YTD Total C$ Return: 11.0%. YTD Total US$ Return: 1.6%.

Canadian yieldco TransAlta Renewables, agreed to invest C$1.78 billion in a portfolio of Western Australian assets owned by its parent, TransAlta (NYSE:TAC), with the purchase funded mostly by issuing stock on the public market and to TransAlta at C$2.65 a share.  TransAlta will own 76-77% of the yieldco after the transaction closes.  TransAlta Renewables will use the increased cash flow per share enabled by the acquisition to increase its monthly dividend to C$0.07 (an increase of 9%) and intends a further 6% to 7% increase after the completion of the South Hedland gas power plant, which is part of the acquisition.  After the first dividend increase, the annual dividend will be C$0.84, or 6.7% at the current price.

Although I’m a fan of dividend increases, and think this is a good transaction for current shareholders, the gas pipeline and gas power plant included in the transaction mean TransAlta Renewables will no longer be completely fossil fuel free.  That means that all the accounts I manage with Green Alpha Advisors using the Green Alpha Global Enhanced Equity Income Portfolio will need to sell TransAlta Renewables when the deal closes or soon after, which I expect in May.  We will be holding on to the stock for the now, however, because I expect the dividend increase should increase the share price once the market absorbs the stock from the secondary offerings.

In fact, I bought the company in some accounts which are managed to a green, but not strictly fossil fuel free, mandate.  For my non-fossil fuel free accounts, I consider a company to be green if it would benefit from increased action to combat climate change and other environmental problems.  I believe this will still be the case for TransAlta Renewables after the transaction closes. In practice, I tolerate some natural gas assets in managed accounts which are not strictly fossil fuel free as long as they are not large compared to the clean energy assets of the same company.

For readers who do not follow a strict fossil fuel free mandate themselves, I consider the pull-back caused by the secondary offering to be a buying opportunity.

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30.  Low Target: C$3.  High Target: C$5.  
3/31/2015 Price: C$3.55. YTD Dividend: C$0.075  YTD Total C$ Return: 13.6%.  YTD Total US$ Return: 4.0%.

Canadian power producer and developer (yieldco) Capstone Infrastructure lost ground gained in January, and is now down almost 7% in US dollar terms, although all of that decline is due to the weakness of the Canadian dollar.  I continue to think that this 9%+ yield company remains one of the best values among clean energy income stocks: it’s high yield and low price are entirely due worries about a very disappointing decision by the regulator of its British water utility subsidiary.  Capstone is appealing that ruling, but management has stated that the dividend is not at risk even if the appeal fails.  Insiders has put their money where their mouths are by buying the stock on the open market.

In addition to the high yield (which alone seems sufficient reason to own the stock), there is potential for upside if the Bristol Water appeal is successful. Even if this appeal fails, I expect the high yield to cause the stock to appreciate as investors gain confidence that the dividend will not be cut.

5. New Flyer Industries (TSX:NFI, OTC:NFYEF).
12/31/2014 Price: C$13.48.  Annual Dividend: C$0.585.  Low Target: C$10.  High Target: C$20. 
3/31/2015 Price: C$14.08. YTD Dividend: C$0.15  YTD Total C$ Return: 5.5%.  YTD Total US$ Return: -3.4%.

Leading North American bus manufacturer New Flyer report 2014 fourth quarter and full year results on March 18th.  Revenue and Adjusted EBITDA were up for the year, but earnings lagged slightly because of a number of low margin contracts which had been negotiated during the industry downturn.  The company is currently focusing on consolidation of its model line after the acquisition of NABI last year.  When this consolidation of models is complete, New Flyer will have more free cash flow to return to shareholders or make additional investments. There was some interesting discussion about this at the end of the Q&A part of the conference call.  CEO Paul Soubry said:

[W]e continue to look at opportunities where we can acquire and/or invest in new programs. And so we have done that very aggressively and very prudently to look at scenarios that makes sense for us, some inside our space, some adjacent to our space. So as we evaluate some of those scenarios as we look at the leverage of the business, as we execute now on [the consolidation of bus models] for the first part of this year, it’s not out of the realm that we would look at shareholder value enhancement, right now we want to get through this next chapter before make a decision on that. But, we are in a way better place as you know to be able to have that conversation today than we were two years ago than we were six years ago. So that one is a little bit of kind of wait and see for a little bit, but very, very pleased about our ability to have the conversation.

I take this to mean that the board is thinking about dividend increases or share buybacks.  Nothing is going to happen until the business consolidation is complete; we could hear more on this in the second half of the year.

Overall, I liked what I heard on the conference call.  I wasn’t the only one.  New Flyer had its price traget raised by analysts at National Bank and BMO Capital Markets.  Canaccord Genuity upgraded the stock to “Buy” from “Hold.”

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: Varies: at least 40% of net profits. €0.55 in 2014.  Low Target: €12.  High Target: €20.
3/31/2015 Price: €17.31. YTD Dividend: €0.  YTD Total € Return: 27.3%.  YTD Total US$ Return: 12.9%.

The stock of bicycle manufacturer Accell Group continued to advance, although US investors will not see as much of an increase because of the declining euro, which had its worst quarter against the dollar in the 12 years it has existed. Part of Accell’s appreciation may in fact be due to the declining euro, since the strong dollar may help sales in North America, where Accell has its greatest growth potential.  But the rising Euro is mixed news for the Netherlands based bicycle manufacturer, which had to raise prices 5% in its core European market because of higher Euro import prices for components. 

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: $0.24.   Beta 0.36.  Low Target: $10.  High Target: $20.
3/31/2015 Price: $10.27 YTD Dividend: $0.06.  YTD Total Return: -20.7%.

Specialty chemicals and biodiesel producer FutureFuel, has been hit hard over the last few days since it revealed that Proctor & Gamble had given notice that it would terminate its contract with Future Fuel at the end of 2015.  FutureFuel makes a bleach activator for P&G: The little blue specks (NOBS) in Tide detergent, which accounted for 13% of 2014 sales.

Sales to P&G have been declining over the last few years because of the overall decline in the market for dry laundry detergents.  2014 sales of NOBS had already declined 27% in 2014 compared to 2013.  This announcement is more an acceleration of the existing timeline for FutureFuel to find replacement products than a bolt out of the blue.  FutureFuel’s chemical business has a natural churn.

The 18% sell-off in the four days since the termination was announced is far out of proportion to the damage to FutureFuel’s future prospects. Although the current agreement was terminated, the two companies are in talks about a new agreement going forward. It’s likely that FutureFuel will continue to supply some bleach activator to P&G in 2016 and beyond, if at reduced volumes, while it is also likely that FutureFuel will find other products to fill much of the chemical capacity not being used for the bleach activator.  I added to my position on the decline.

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
3/31/2015 Price: $8.65. YTD Total Return: 3.6%.

Rail and solar investment trust Power REIT filed its annual report on March 31st.  I have not yet had time to review it, but a first glance shows core FFO per share growing to $0.49 in 2014 from $0.41 a year earlier.  FFO is a non-GAAP measure of recurring cash flow used by many REITs as a measure of cash available for distribution to shareholders.  Net losses, however, were substantial because of litigation costs, property acquisition expenses, and an unrealized loss on an interest rate swap which is part of the financing for one of its solar farms.

As far as I can tell, there was nothing unexpected in the annual report, and the future value of the stock continues to hinge on the outcome if its civil case with its railway lessees.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
3/31/2015 Price: $7.40. YTD Total Return: 5.7%.

Energy service contractor Ameresco released fourth quarter and full year 2014 results on March 5th.  Once again, management was upbeat about the improvement of its industry.  To quote from the press release, “We anticipate that our traditional U.S. energy services segments, which have tempered our financial performance the past few years, will experience broad-based revenue growth in 2015.” 

The market failed to react to the news, but Obama’s executive order on March 19th for Federal agencies to greatly increase their efforts to reduce Greenhouse Gas emissions seems to have galvanized investors.  The stock gained 18% for the month, with almost all of the gain coming after the executive order.  Much of Ameresco’s business comes from cost-effectively helping government agencies meet goals like these.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
3/31/2015 Price: $6.98. YTD Dividend: $0.  YTD Total South African Rand Return: 12.9%.  YTD Total US$ Return: 7.4%.

Vehicle and fleet management software-as-a-service provider MiX Telematics turned in a very strong month.  I’m not sure what drove the rise other than the extreme undervaluation I discussed in detail last month.   Despite the rise, it’s still quite cheap, in my opinion.

There was one interesting news story about how many companies struggle to make use of the data collected by the spread of telematics devices to more vehicles.  MiX is a leader in providing the sort of sophisticated solution which helps customers with this problem, and its relatively inexpensive South African software engineers should enable MiX to keep its lead in this area.

Summary

Last month, I used this section to comment that “Capstone Infrastructure and MiX Telematics look particularly attractive at their current prices.  Ameresco also looks quite attractive, but its near term performance will hinge on the March 5th earnings announcement and management’s outlook for the rest of the year.”

I was wrong about the reaction to Ameresco’s earnings announcement. It was exactly what I hoped for, but the market was unimpressed.  Instead, it took Presidential action to get the stock moving two weeks later.  But move it did, and Capstone, MiX, and Ameresco were up 11.6%, 23.5%, and 18.2% for the month in dollar terms, and even more for MiX and Capstone in terms of their local currencies.

I should probably quit while I’m ahead, but this month’s losers, TransAlta Renewables and Future Fuel both look to me like they have fallen too far.  I think it would be too much to ask to expect them to do in April what the three stocks above did in March.  That said, these two are the stocks I’m buying now.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, FF, BGC, RNW/TRSWF.  I am the co-manager of the GAGEEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2015: Marching Ahead appeared first on Alternative Energy Stocks.

Tom Konrad CFA

After a rough start to the year,  My Ten Clean Energy Stocks for 2015 posted a strong recovery in February. 

For the month, the model portfolio rose 7.9% in local currency terms and, 8.3% in dollar terms.  For comparison the broad universe of US small cap stocks rose 5.9% (as measured by IWM, the Russell 2000 index ETF), and the most widely held clean energy ETF, PBW, shot up 11.6%.

This year I split the model portfolio into two sub-portfolios of six income stocks (NYSE:HASI, NYSE:BGC, TSX: RNW, TSX: CSE, TSX:NFI, and XAMS:ACCEL) four value and growth stocks (NYSE:FF, NYSE:PW, NASD: AMRC, and NASD:MIXT). 

PBW (+11.6%) is a good benchmark for the value and growth stocks, which underperformed with a small gain of 1.6% in both local currency terms and dollar terms.  The six income stocks, on the other hand, gave a strong performance with a 12.0% gain in local currency terms and a 12.8% gain in dollar terms.  This is particularly surprising because global utility stocks (as measured by JXI) fell 3.5% for the month on worries about rising interest rates.  The fossil free Green Alpha Global Enhanced Equity Income Portfolio (GAGEEIP), which I co-manage, also bucked the global utility trend and turned in a 5.5% gain for the month.

For the year to date, the portfolio is up 3.1% in local currency terms, and down 0.2% in dollar terms.  This contrasts to a 4.2% gain for PBW and 2.5% for IWM.  The four growth and value stocks are down 6.1% in local currency terms and down 6.3% in dollar terms.  The income stocks are up 9.1% in local currency terms and up 3.9% in dollar terms.  GAGEEIP has gained 4.6% in January and February.

The chart below (click for larger version) gives details of individual stock performance, followed by a discussion of February news for each stock.

The low and high targets given below are my estimates of the range within which I expect each stock to finish the year.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
2/28/2015 Price: $16.63. YTD Dividend: $0.  YTD Total Return: 16.9%.

The stock of sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong staged a dramatic advance of 21.4% in February.  I believe this advance was catalyzed by an article by Brad Thomas, the author of a leading REIT newsletter.  In the almost two years since its IPO, Hannon Armstrong has been the odd man out among renewable energy yieldcos, because of its REIT structure and focus on energy efficiency financing so different from the higher profile renewable energy project ownership of other yieldcos.  There are also no real comparables among conventional REITs, meaning that HASI has also struggled to catch the attention REIT investors.

Thomas’ strongly positive article seems to have changed that, and now REIT investors seem to be pricing HASI closer to what that would be expected from traditional REITs that have a comparable level of risk.  Not that I’m selling at this point; I’m happy to hold a company that pays a 6.3% dividend at the current price, especially since management expects to continue to increase that dividend by 12-15% over the next 12 months.

An ironic note to this whole story is that Brad Thomas himself was surprised by the sea-change his article catalyzed.  Reading between the lines of his comments, he made up his mind that HASI was very attractive, but decided to share his insight with his readers before buying himself.  He has an admirable policy of waiting 10 days between publication and trading a stock.  In this case, the stock was trading at $14.57 when he wrote the article, but it closed at $16.37 10 days after publication.  A more recent note from Thomas leads me to believe he is still waiting for HASI to pull back. 

Thank you Brad, for finally bringing Hannon Armstrong the attention I have been unable to attract with my many articles about the company since its IPO.  For your sake, and for anyone else who has not yet bought the stock at the very attractive prices we had for the last 20 months, I hope the pullback you’re waiting for materializes.

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72.  Beta: 1.54.  Low Target: $10.  High Target: $30. 
2/28/2015 Price: $15.04. YTD Dividend: $0.  YTD Total Return: 0.9%.

Last month  the stock of international manufacturer of electrical and fiber optic cable, General Cable Corp. declined 23% because of several analyst downgrades and worries about Europe.  A couple more downgrades followed before the company released its fourth quarter earnings and outlook for 2015 on February 4th.  The stock sold off that day, but I felt the discussion of restructuring and outlook were generally positive.  Investors seem to be coming around to my more optimistic point of view, since the company recovered all of its January losses in February with a percentage climb even more spectacular than Hannon Armstrong’s.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.77.   Low Target: C$10.  High Target: C$15. 
2/28/2015 Price: C$13.13. YTD Dividend: C$0.12832  YTD Total C$ Return: 15.5%. YTD Total US$ Return: 7.3%.

Investors and analysts also liked the strong earnings announcement from Canadian yieldco TransAlta Renewables, propelling the stock up another 3.6% after strong January gains. Scotiabank, Macquarie, and CIBC all increased their price targets for the stock, with the average price target now C$12.71.

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30.  Low Target: C$3.  High Target: C$5.  
2/28/2015 Price: C$3.21. YTD Dividend: C$0.  YTD Total C$ Return: 0.3%.  YTD Total US$ Return: -6.8%.

Canadian power producer and developer (yieldco) Capstone Infrastructure lost ground gained in January, and is now down almost 7% in US dollar terms, although all of that decline is due to the weakness of the Canadian dollar.  I continue to think that this 9%+ yield company remains one of the best values among clean energy income stocks: it’s high yield and low price are entirely due worries about a very disappointing decision by the regulator of its British water utility subsidiary.  Capstone is appealing that ruling, but management has stated that the dividend is not at risk even if the appeal fails.  Insiders has put their money where their mouths are by buying the stock on the open market.

In addition to the high yield (which alone seems sufficient reason to own the stock), there is potential for upside if the Bristol Water appeal is successful. Even if this appeal fails, I expect the high yield to cause the stock to appreciate as investors gain confidence that the dividend will not be cut.

5. New Flyer Industries (TSX:NFI, OTC:NFYEF).
12/31/2014 Price: C$13.48.  Annual Dividend: C$0.585.  Low Target: C$10.  High Target: C$20. 
2/28/2015 Price: 13.91$. YTD Dividend: C$0.0975  YTD Total C$ Return: 3.2%.  YTD Total US$ Return: -4.1%.

Leading North American bus manufacturer New Flyer continues to announce significant new orders of buses, such as 110 compressed natural gas (CNG) buses and options ordered by Nassau county, NY, and smaller orders from Lane Transit in Eugene Oregon and Hamilton, Ontario for up to 20 hybrids and 18 CNG buses, respectively.  These orders follow on the strong backlog of orders I discussed in the last update.

Although a date has not yet been announced, the company should report 2014 fourth quarter and full year results in March.

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: Varies: at least 40% of net profits. €0.55 in 2014.  Low Target: €12.  High Target: €20.
2/28/2015 Price: €16.06. YTD Dividend: €0.  YTD Total € Return: 18.1%.  YTD Total US$ Return: 9.2%.

The stock of bicycle manufacturer Accell Group also advanced strongly in February.  This does not seem to be due to company specific news, but rather to growing interest by institutional investors in the bicycle industry.  It seems that fund managers, especially US fund managers, have become disappointed in the performance of golf companies, and are looking to replace these positions with well known bicycle brands.  Fund managers may be beginning to realize that bikes not no longer just for kids, and are increasingly popular among high income adults.

Outdoor retailer REI knows this fitness-conscious demographic well, and has recently begun offering Accell’s “premium, high-performance, award-winning” Ghost Bike brand in its stores countrywide and on its website.

While it may seem strange that investment managers’ attitude towards golf companies should have any bearing on how they feel about the bicycle companies, this connection is a product of widespread practice of diversifying and portfolios among industries.  While there is probably little economic connection between the economics prospects of Accell and Callway (NYSE:ELY), many fund managers specialize in certain industries.  When such analysts and managers upgrade or buy one stock in their universe, they often will downgrade or sell another stock.  Hence, if a mutual fund manager who specializes in sports equipment sells Callaway, it might not be surprising to see him buy Accell.

Even this annual list shows that effect.  I focus on clean energy companies, so in order to add four new companies to this 2015 list, I had to drop three clean energy companies I still liked from the 2014 list.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: $0.24.   Beta 0.36.  Low Target: $10.  High Target: $20.
2/28/2015 Price: $12.3 YTD Dividend: $0.06.  YTD Total Return: -5.1%.

Specialty chemicals and biodiesel producer FutureFuel, also recovered (and paid a 6¢ quarterly dividend) in February.  While there has not been significant company news, the EPA has made strong statements about getting “back on track” setting quotas under the Renewable Fuel Standard (RFS.)  The lack of quotas in 2014, and the delay of the 2015 quota are the main reason the stock is currently so cheap.  EPA transportation chief Christopher Grundler recently told a meeting of ethanol producers that the agency would combine three years’ worth of standards for 2014, 2015 and 2016 into a single regulatory action. EPA plans to release a proposal this spring and finalize it by the end of November.  The RFS is at least as important to biodiesel producers like FutureFuel as it is for ethanol producers.

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
2/28/2015 Price: $8.65. YTD Total Return: 3.6%.

Rail and solar investment trust Power REIT reversed some of its January gains.  Investors await a decision (or more likely, non-decision) in the summary judgment stage of its civil case with its lessee Norfolk Southern Corporation (NYSE:NSC) and sub-lessee Wheeling & Lake Erie Railway (WLE).  Unless the court renders a very strong summary judgement, a trial will begin in the next couple months.  I expect few of the outstanding issues to be resolved in summary judgment, so a trial is very likely.

Power RET released a new investor presentation on its website, which includes a management estimate of the net asset value of the company’s assets if they were sold on the open market (page 19.)  Management feels that, even without a win in the civil case, its railroad asset is significantly undervalued compared to NSC’s bonds, which have simila
r credit and cash flow characteristics.  However, the company has not revealed any plans to sell any of its assets, and would not consider a sale of the railroad asset before the civil case is resolved, even if a buyer could be found.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
2/28/2015 Price: $6.26. YTD Total Return: -10.6%.

Energy service contractor Ameresco will release fourth quarter and full year 2014 results before the market opens on March 5th.  Over the last two quarters, the company has spoken of signs that its market for may be recovering from a multi-year slump.  If the trend continues, the stock should reverse its long decline, possibly dramatically.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
2/28/2015 Price: $5.65. YTD Dividend: $0.  YTD Total South African Rand Return: -12.3%.  YTD Total US$ Return: -13.1%.

Vehicle and fleet management software-as-a-service provider MiX Telematics released its third quarter fiscal 2015 results and increased its guidance for the full fiscal year ending March 31st.  I found the outlook and results discussion moderately encouraging, but other investors do not seem to see it that way.  The stock slipped 3.6% for the month.

MiX also signed its 500,000th subscriber in February.  To put this in perspective, US-based competitor Fleetmatics (FLTX) announced that it had achieved 500,000 vehicles under subscription in January.  I’m not sure how comparable MiX’s “subscribers” are to Fleetmatics’s “vehicles under subscription” but, if they are not the same thing, I have trouble seeing how MiX could have less vehicles under subscription than it has subscribers.  Further, Fleetmatics’ offering is suitable to the small and medium sized businesses to which it caters, and so its offering is less sophisticated (and hence lower value) than the solution MiX delivers to the large multinational companies which are its core clients.

Given the similar size of the two companies’ client bases, one would expect that the two companies would also be valued similarly.  In fact, Fleetmatics’ enterprise value is $1.4 billion (approximately $2,800 per vehicle under subscription in January) compared to MiX’s enterprise value of only $106 million, or $212 per “subscriber” in February.  Based on this metric, the market seems to be undervaluing MiX compared to FLTX by a factor of approximately 13.

Summary

I found the January declines of many of the stocks in this list inexplicable, and wrote that the start of February was an excellent time to buy any of them.  The rapid rises in Hannon Armstong, General Cable, and Accell Group show that I was right in at least these three cases. 

Several excellent values remain.  Capstone Infrastructure and MiX Telematics look particularly attractive at their current prices.  Ameresco also looks quite attractive, but its near term performance will hinge on the March 5th earnings announcement and management’s outlook for the rest of the year.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, FF, BGC, RNW/TRSWF.  I am the co-manager of the GAGEEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2015: A Fine February appeared first on Alternative Energy Stocks.

Tom Konrad CFA

2015 got off to a rocky start for both the broad market in general, as well as clean energy.  My Ten Clean Energy Stocks for 2015 model portfolio dd not fare any better, since the main bright spots for the portfolio were its three Canadian stocks, but these were dragged down by the 9% decline in the Canadian dollar for the month.

For the month, the model portfolio was down 3.6% in local currency terms, but fell 7.2% in dollar terms.  For comparison the broad universe of US small cap stocks was down 3.3% (as measured by IWM, the Russell 2000 index ETF), and the most widely held clean energy ETF, PBW, was down 6.6%.

This year I split the model portfolio into two sub-portfolios of six income stocks (NYSE:HASI, NYSE:BGC, TSX: RNW, TSX: CSE, TSX:NFI, and XAMS:ACCEL) four value and growth stocks (NYSE:FF, NYSE:PW, NASD: AMRC, and NASD:MIXT). 

PBW (-6.6%) is a good benchmark for the value and growth stocks, which fell 6.6% in local currency terms and 6.8% in dollar terms.  The six income stocks fell 1.6% in local currency terms and 7.4% in dollar terms. 

All three of the Canadian stocks mentioned above are income stocks, as is the lone European stock, which was hurt by the 6.8% decline in the Euro compared to the dollar.  I have searched in vain for good benchmarks for equity income portfolios, but have not found any that do not contain some aspect of active management, making them poor benchmarks for differentiating between category performance and stock picking skill.  The best I could come up with are JXI, the iShares Global Utilities index, since many income stocks are also global utilities.  Global utilities are a very defensive sector, with JXI rising 1% for the month. 

To date, there are no income oriented clean energy ETFs or mutual funds, so I instead settled on the Green Alpha Global Enhanced Equity Income Portfolio (GAGEEIP), a fossil-free equity income strategy which I co-manage.  GAGEEIP fails several tests of a good benchmark.  Most importantly, it is actively managed in large part by me, meaning I’m simply comparing one of my strategies to another. It also is not a pure equity strategy, in that covered call options are used to reduce risk and increase income.  The best benchmarks are easily investable, and GAGEEIP is not yet available to investors except as separately managed accounts through Green Alpha Advisors.  For January, GAGEEIP fell 0.7%.  The large difference between its performance and the income stocks in the model portfolio is mostly due to better diversification, and the advantage of the covered call strategy in a down market.

The chart below gives details of individual stock performance, followed by a discussion of January company news for each stock.

The low and high targets given below are my estimates of the range within which I expect each stock to finish the year.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
1/31/2015 Price: $13.70. YTD Dividend: $0.  YTD Total Return: -3.7%.

Sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong did not announce any significant news for the quarter.  Analysts at Roth Capital initiated the stock with a very bullish “buy” rating and a $19 price target.  Zacks upgraded the stock from “underperform” to “neutral,” and now has a $14.60 price target on HASI.

2. General Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90.  Annual Dividend: $0.72 (4.8%).  Beta: 1.54.  Low Target: $10.  High Target: $30. 
1/31/2015 Price: $11.44. YTD Dividend: $0.  YTD Total Return: -23%.

International manufacturer of electrical and fiber optic cable, General Cable Corp. was already cheap as the month began, and sold off by more than a quarter in mid-January before staging a slight recovery to a loss of 23% at $11.44 at the end of the month.  The decline seemed to halt when S&P removed its negative credit watch for the company’s bonds.  Stock analysts were more bearish.  Analysts and Longbow Research downgraded BGC from buy to neutral, those at DA Davidson dropped their price target from $14 to $12, while Stifel Nicolaus cut its price target to $13 from $17.

The company will release fourth quarter earnings after market close on February 4th.

3. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
12/31/2014 Price: C$11.48.  Annual Dividend: C$0.77 (6.7%).   Low Target: C$10.  High Target: C$15. 
1/31/2015 Price: C$12.74. YTD Dividend: C$0.064  YTD Total C$ Return: 11.0%.  YTD Total US$ Return: 1.2%.

Analysts at Scotiabank increased their price target on Canadian yieldco TransAlta Renewables from C$13 to C$14, and this may have contributed to the stock’s 11% local currency gain for the month.

4. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/31/2014 Price: C$3.20.  Annual Dividend C$0.30 (9.4%).  Low Target: C$3.  High Target: C$5.  
1/31/2015 Price: C$3.37. YTD Dividend: C$0.  YTD Total C$ Return: 5.3%.  YTD Total US$ Return: -4.0%.

Insiders at Canadian power producer and developer (yieldco) Capstone Infrastructure continue to purchase the stock on the open market.  Their conviction, along with the generous dividend yield make me consider this the best risk-adjusted stock value available in the market today.

5. New Flyer Industries (TSX:NFI, OTC:NFYEF).
12/31/2014 Price: C$13.48.  Annual Dividend: C$0.585 (4.3%)  Low Target: C$10.  High Target: C$20. 
1/31/2015 Price: 13.72$. YTD Dividend: C$0.04875  YTD Total C$ Return: 1.8%.  YTD Total US$ Return: -7.2%.

Leading North American bus manufacturer New Flyer announced its fourth quarter deliveries and backlog.  Orders remain strong, and the company continues to rebuild its b
acklog of firm orders as the industry recovers from a prolonged downturn, and management expects that recovery to continue.

6. Accell Group (XAMS:ACCEL, OTC:ACGPF).
12/31/2014 Price: €13.60.  Annual Dividend: Varies: at least 40% of net profits. €0.55 in 2014 (4.0%).  Low Target: €12.  High Target: €20.
1/31/2015 Price: €13.50. YTD Dividend: €0.  YTD Total € Return: -0.7%.  YTD Total US$ Return: -7.4%.

The main news for bicycle manufacturer Accell Group was the decline of the Euro, which not only hurt the returns of US shareholders, but may eventually lead to price hikes from some of its European customers due to the increased price of parts sourced from Asia when bought in Euros.  The flip side of this coin is that the strong dollar may help the company in its efforts to spread the adoption of e-bikes on this side of the Atlantic.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
12/31/2014 Price: $13.02.  Annual Dividend: C$0.24 (1.8%).   Beta 0.36.  Low Target: $10.  High Target: $20.
1/31/2015 Price: $10.99. YTD Dividend: $0.  YTD Total Return: -15.6%.
 
Lee Mikles  resigned as President of specialty chemicals and biodiesel producer FutureFuel, but will remain as a member of the board, and the retirement was not the result of a dispute, but for personal reasons.  Analysts at Roth Capital maintained their $19 price target and buy rating.

8. Power REIT (NYSE:PW).
12/31/2014 Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
1/31/2015 Price: $9.58. YTD Total Return: 14.7%.

Rail and solar investment trust Power REIT posted the transcript of the oral argument for summary judgement in its civil case with its lessee Norfolk Southern Corporation (NYSE:NSC) and sub-lessee Wheeling & Lake Erie Railway (WLE) to its website.  This argument did not seem to include anything which was not already in the written arguments, but the stock has rallied.

9. Ameresco, Inc. (NASD:AMRC).
12/31/2014 Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16.
1/31/2015 Price: $5.83. YTD Total Return: -16.7%.

Analysts at Northland Securities began coverage on energy service contractor Ameresco with an outperform rating.  The stock’s decline seems to be due more to the general market decline than news.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
12/31/2014 Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
1/31/2015 Price: $5.87. YTD Dividend: $0.  YTD Total South African Rand Return: -9.0%.  YTD Total US$ Return: -9.7%.

Vehicle and fleet management software-as-a-service provider MiX Telematics did not release any significant news.

Summary

In January, we saw a number of already very cheap stocks get even cheaper.  I thought the start of the year an excellent time to initiate a position in any of these, and now I’m even more convinced.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, FF, BGC, RNW/TRSWF.  I am the co-manager of the GAGEEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks: A Rocky Start To 2015 appeared first on Alternative Energy Stocks.

Tom Konrad CFA

2015 marks my seventh annual list of ten clean energy stocks.  An equal weighted portfolio of the ten stocks in each year’s list has outperformed my industry benchmark every year except 2013.  2014 was no exception, but it was a bittersweet victory in that the model portfolio was slightly down while the benchmark lost considerably more in a very challenging year for clean energy stocks.

I will publish a wrap-up article for the 2014 list in the next couple days, but I wanted to get the 2015 list out on New Year’s day. 

Again this year, I will be providing a high and low target for each stock.  These are the range within which I expect the stocks to end the year.  In 2014, three of the picks violated the downside targets, and none violated the upside targets.  I’ve also included annual dividends and yield, and Beta, a measure of market risk for US stocks.  Low Beta stocks generally perform better than high Beta stocks in market downturns; the market average Beta is 1.

Finally, I include a discussion of insider sentiment: company insiders buying or selling the stock.  Since company insiders usually receive stock as part of their compensation, insider sales are generally more common than insider purchases.  Hence insider buying is almost always a good sign, and I consider it particularly important in the small capitalization stocks I favor.  These stocks are more likely to be mispriced than larger, more widely followed stocks for which there is much more information available to investors.  Company insiders are the ones most likely to see such mispricing.  Since insider trading information is much easier to find for US stocks than foreign stocks, I include links to my sources of information for insider trading.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
Current Price: $14.23.  Annual Dividend: $1.04 (7.3%).  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
Insider Sentiment: Mildly Positive. One insider is selling but three are buying; sale was an automatic sale which is unlikely to be a response to market conditions.
Why it’s green: All financed projects reduce greenhouse gas emissions.

Hannon Armstrong is a Real Estate Investment Trust and investment bank specializing in financing sustainable infrastructure.  I consider it a peer of the yieldcos (companies that invest in clean energy infrastructure and use the cash flows to pay a high dividend yield to shareholders, but HASI trades at a substantial discount to most yieldcos because other investors seem to compare it more closely to mortgage REITs.  However, Hannon Armstrong’s investments are very different from those of other mortgage REITs.

In 2014, management delivered on it promise to increase the dividend by 12-15%, something they expect to do again in 2014.  In 2014, the stock increased only 3.2% for a 9.9% total return for the year.  With the dividend yield now even higher than it was a year ago and more dividend increases likely, I expect even better results in 2015.

2. General Cable Corp. (NYSE:BGC)
Current Price: $14.90.  Annual Dividend: $0.72 (4.8%).  Beta: 1.54.  Low Target: $10.  High Target: $30. 
Insider Sentiment: Mildly Positive. No trades in last 3 months, but insiders are not selling incentive awards. One officer was buying at much higher prices ($21+) in August.
Why it’s Green: The geographically dispersed nature of renewable energy resources means they require more wire/connections. Improving the interconnection of our grid also allows utilities to use existing generation more efficiently.

General Cable Corp. is a leading international manufacturer for electrical and fiber optic cable.  In 2014, the company disappointed investors because of weak demand for electricity infrastructure, especially in Europe.  The company is undertaking a restructuring to focus on its core markets in the Americas and Europe.  The company is also searching for a new CEO and expanding its board to include more members with operational experience. 

With the company trading near book value with healthy cash per share and in the process of selling its Asia Pacific operations, only a reduction in uncertainty should be needed to bring investors back to the stock.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
Current Price: C$3.20.  Annual Dividend C$0.30 (9.4%).  Low Target: C$3.  High Target: C$5.  
Insider Sentiment:  Strongly Positive; 200,150 shares bought by 8 insiders over 3 months. Only sale was of preferred stock by an insider also buying common.
Why it’s green: Capstone’s energy division sells electricity and heat from gas cogeneration, wind, solar, and hydropower.  I consider its utilities climate-neutral.

Capstone was included in the 2014 list because I expected the worst possible result in its negotiations with the Ontario Power Authority over the future of its Cardinal gas cogeneration plant had already been priced in. That thesis initially paid off, with the stock rising significantly during the first half of the year.  Unfortunately, Britain’s water regulator OfWat issued a final determination for rates at its Bristol Water subsidiary which fell considerably short of what the utility had proposed and vetted with consultants.  Bristol Water is considering appealing the ruling, but will operate under the determination beginning April 1st until at least August 2015, when the final appeal (if it takes place) will be resolved.

A previous appeal by Bristol water in 2010 resulted in a “significantly improved” business plan from the utility’s perspective.

Even without an appeal, Capstone’s management is confident that they can maintain the current C$0.075 quarterly dividend and increase funds from operations enough to bring that dividend back into line with its 80% target payout ratio by 2017.  I expect the stock to appreciate when investors regain confidence that the dividend and very attractive 9.4% current annual yield is safe.  Company insiders seem to share my confidence, with eight of them buying over half a million dollars worth of stock in the week since December 23rd, after a conference call discussing the OfWat ruling and management’s outlook for 2015.

4. TransAlta Renewables Inc. (TSX:RNW, OTC:TRSWF)
Current Price: C$11.48.  Annual Dividend: C$0.77 (6.7%).   Low Target: C$10.  High Target: C$15. 
Insider Sentiment: Positive. One recent purchase, no selling.
Why it’s green: All financed projects reduce greenhouse gas emissions.

Tran
sAlta Renewables is the yieldco created by TransAlta Corporation (NYSE:TAC),Canada’s largest Independent Power Producer with facilities in the Canada, the US, and Australia.  TAC is the sponsor majority owner of TransAlta Renewables and has stated that it intends to retain a majority stake because the dividend cash flows help it maintain its credit rating.

I believe that TransAlta Renewables trades at a discount to most other yieldcos because it is not listed in the US, and because it has not provided clear guidance regarding future dividend growth through the drop-down of additional renewable facilities.

I do not consider the lack of guidance a serious problem because the market seems to be overvaluing dividend growth compared to the current dividend.  Since yieldcos return most of their cash to shareholders, they can only increase their dividends by issuing stock or raising debt to buy new facilities.  While many yieldcos have a “Right of First Offer” (ROFO) on the renewable facilities developed/owned by their sponsor companies, these ROFOs do not confer the right to buy these facilities at below market prices.  This competitive market means that no yieldco will be able to acquire new renewable facilities at prices substantially below the others, and so their cash flow and dividend per invested dollar will be capped.  Hence, the current 10-15% annual growth in dividends that investors expect from yieldcos can continue only as long as investors are willing to provide yieldcos with cheap capital by accepting the low 3-4% dividends currently on offer from many yieldcos.  When the music stops, all yieldcos will be revalued based on more reasonable future dividend growth.  This should have little effect on today’s high yield yieldcos (such as TransAlta, Capstone, and Hannon Armstrong) but could cause the stock prices of yieldcos with high expected dividend growth (NYLD, NEP, and TERP, for instance) to fall substantially.

5. New Flyer Industries (TSX:NFI, OTC:NFYEF).
Current Price: C$13.48.  Annual Dividend: C$0.585 (4.3%)  Low Target: C$10.  High Target: C$20. 
Insider Sentiment:  Positive.  81,000 shares bought by a 10% owner and no selling over last 3 months.
Why it’s green: Buses produce far fewer emissions, require less parking and road space, and have fewer accidents per person-mile than cars.

Leading North American bus manufacturer New Flyer took advantage of the industry downturn over the last few years to consolidate its lead in the North American bus market as well as expand its product offerings, especially in the fragmented parts and service market.  Aging bus fleets are leading to a market revival, and New Flyer is in an excellent position to benefit from this rebound.  New Flyer was one of the strongest performers in the 2014 list, but improving margins and the possibility of expanded production could drive even larger gains in 2015.

6. Accell Group (Amsterdam:ACCEL, OTC:ACGPF).
Current Price: €13.60.  Annual Dividend: Varies: at least 40% of net profits. €0.55 in 2014 (4.0%).  Low Target: €12.  High Target: €20.
Insider Sentiment:  Mixed buying (7000 shares) and selling (10,000 shares) over 3 months.
Why it’s green: Bikes and e-bikes are among the greenest forms of transportation. 

International bicycle manufacturer Accell remains in the portfolio for the third year in a row.  Over the last couple years,  the stock has appreciated slightly and paid €1.30 worth of dividends, while the business has improved substantially due to the acquisition of additional brands (Such as Raleigh and Currie) and distributors.  Business rationalization and increasing adoption of e-Bikes are also driving sales growth.  I expect the strength of Accell’s business to drive some price appreciation and another healthy dividend in 2015.

Value Stocks

7. Future Fuel Corp. (NYSE:FF)
Current Price: $13.02.  Annual Dividend: C$0.24 (1.8%).   Beta 0.36.  Low Target: $10.  High Target: $20. 
Insider Sentiment: Mildly positive.  No trades in last 3 months. Previous buying in last year above current price ($14-$16), selling at much higher price ($20+)
Why it’s green: Biodiesel has the lowest environmental impact per mile driven (roughly 1/3 of that of gasoline) of any conventional biofuel.

FutureFuel is a combined specialty chemicals and biodiesel producer which has been suffering from the expiration of the blender’s tax credit for biodiesel and the uncertainty surrounding the EPA’s decision to delay the release of cellusoic biofuel targets for 2014.  In November, the agency announced that it would not finalize the requirements until next year, when it is expected to announce the targets for 2014, 2015, and 2016 together.

FutureFuel’s specialty chemicals business had also been suffering from some problems with ramp-up of a new product over the summer, but those problems seem to have been largely dealt with.  With the biodiesel market in flux, FutureFuel cut its dividend from and annual $0.48 to $0.24.  This will free up cash and could potentially finance acquisitions of weaker biodiesel producers if the industry downturn continues.

Over the last few years, the prices for biofuel feedstocks have been set by what biofuel producers can profitably pay for them.  This means that, even without government support, biofuel and feedstock prices will reach eventually an equilibrium where the most efficient producers can be profitable.  I expect FutureFuel to be one of those, and the current uncertainty is providing an attractive buying opportunity.

I wrote a more in depth article on FutureFuel in October.

8. Power REIT (NYSE:PW).
Current Price: $8.35.  Annual Dividend: $0.  Beta: 0.52.  Low Target: $5.  High Target: $20.
Insider Sentiment: Mildly poitive. One small buy over last 3 months, no sales.
Why it’s green: Owns land under solar farms and rail lines (efficient transportation.)

The ongoing civil action between rail and solar investment trust Power REIT and its lessee Norfolk Southern Corporation (NYSE:NSC) and sub-lessee Wheeling & Lake Erie Railway (WLE) looks likely to go to trial in early 2015.  The case grew out of Power REIT’s attempt to foreclose on the lease due to WLE’s refusal to pay a legal bill which Power REIT believes it is entitled to under a clause of the lease which states
that the lessee is responsible for any of Power REIT’s expenses which are “necessary or desirable” for maintaining its interest in the track.  NSC and WLE commenced the action to prevent the foreclosure on a lease which favors them greatly.

The two sides are very far apart in their interpretations of the lease.  Power REIT’s interpretation seems is mostly supported by the lease itself, which the lessees say should be ignored in favor of how the parties have actually behaved under the lease over the last 50 years.  I find it impossible to predict how the judge will rule, but the downside for Power REIT is limited to a return to the status quo, while the upside could easily double the value of Power REIT’s shares.  Even Power REIT’s legal expanses could be reimbursed under the very broad “necessary or desirable” language of the lease discussed above.

At the current price, I see significant upside and limited downside potential from the civil action, and I am optimistic that potential will be realized in 2015.

9. Ameresco, Inc. (NASD:AMRC).
Current Price: $7.00.  Annual Dividend: $0.  Beta: 1.36.  Low Target: $6.  High Target: $16. 
Insider Sentiment:  Mildly positive.  One director bought 2,500 shares with no selling over 3 months.
Why it’s green: Provides energy efficiency and renewable energy solutions with a service model.

Energy service contractor Ameresco has been suffering for the last two years because its clients, mostly government entities, have been slow to finalize contracts.  Over the last two quarters, however, management has indicated that they see signs of improvement in certain markets.  They have also worked to diversify Ameresco’s business into renewable energy development.

Despite these positive signs, the market has failed to reward the stock, which is now trading near book value.  Another quarter or two of improving market conditions should be enough to produce a strong price rebound.

Growth Stock

10. MiX Telematics Limited (NASD:MIXT).
Current Price: $6.50.  Annual Dividend: $0.  Beta:  0.78.  Low Target: $5.  High Target: $20.
Insider Sentiment:  Neutral.  No trades in last 3 months. Previous trades mixed, but at higher prices.
Why it’s green: MiX’s fleet management solutions reduce fuel use and accidents.

MiX provides vehicle and fleet management solutions customers in 112 countries. The company’s customers benefit from increased safety, efficiency and security.  Based in South Africa, Mix’s stock price has suffered from the general decline of emerging market stocks over the last few months.  The falling oil price may also have hurt the stock, since many of its fleet management customers are in the oil and gas industry.

I don’t expect the oil price to stay this low for all of 2015, and MiX’s emerging market home belies the global nature of its revenues.  Considering that MiX delivered 15% subscriber growth in 2014 but the stock fell by almost half from what I considered an already undervalued level, this stock is poised for a massive rebound with any shift of market sentiment.

Benchmarks

As I have in previous years, I will compare the performance of a model equal-weighted portfolio of these ten stocks against the Powershares Wilderhill Clean Energy ETF (PBW), which is the most widely-held clean energy ETF.  For a broad market benchmark, I will continue to use the Russell 2000 index ETF (IWM).

Given the heavy income focus of my picks, I am adding income-oriented benchmarks for the six income picks.  The first is a fossil free income oriented portfolio I co-manage with Green Alpha Advisors of Boulder Colorado called the Green Alpha Global Enhanced Equity Income Portfolio (GAGEEIP.)  This strategy combines high income green stocks with option selling to provide a high level of current income with a secondary objective of capital preservation.  We now have a full year’s track record managing the strategy: The option strategy complicates return calculations, so I cannot give a precise return yet, but my back of the envelope calculation shows that it has returned approximately 5% after management fees over the past year, most of that in the form of income.

With this record, we will be looking for a mutual company to launch the portfolio as a fund in 2015.  If we succeed, it will be the first green (in fact, fossil fuel free) mutual fund that produces a significant level of current income, and will provide a natural complement to Green Alpha’s fossil fuel free growth fund, the Shelton Green Alpha Next Economy fund (NEXTX.)

GAGEEIP is a strange benchmark in that it is an active fund and I am deeply involved in its management, but it does differ from the model income portfolio in its use of options and exclusion of fossil fuels.  While it includes five of the six income picks, it excludes Capstone Infrastructure, because of Capstone’s natural gas fired cogeneration facility, discussed above.

For a more conventional income benchmark, I will also include the S&P Global 1200 Utilit
ies Index ETF (JXI), which is also a benchmark for GAGEEIP.

Summary

Once again, I have weighted the list heavily towards income and value companies.  These tend to be less risky than the growth companies which people generally think of when considering investment in clean energy.  This choice will likely serve the model portfolio well if we have another challenging year for clean energy, as we did in 2008 and 2010 to 2012.  If we have another blow-out year like we did in 2007, 2009, and 2013, the model portfolio will likely again underperform its industry benchmark. 

Rising oil prices and depressed stock prices could easily bring the sun back for clean energy stocks in 2015, but I much prefer to be prepared for a storm.

Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, FF, BGC. RNW/TRSWF.  Short NYLD.  Tom is the co-manager of the GAGEEIP strategy.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2015 appeared first on Alternative Energy Stocks.

Ten Clean Energy Stocks For 2014: June Update

Tom Konrad CFA

While the major market indexes were hitting new highs in May, small capitalization stocks and clean energy stocks (most of which are small cap) continued to lag.  The broad market benchmark IWM gained just 0.2% and is down 2.3% for the year, while my clean energy benchmark PBW fell 3.2% cutting its gains for the year to a slim 1.2%.  Meanwhile my 10 Clean Energy Stocks for 2014 model portfolio managed to eke out a 0.3% gain.  All of that gain was in the form of dividends paid, without which it would have been flat for the month.  For the year to date, the model portfolio has edged ahead of both benchmarks with a total return of 2.8%.

The key to this relative out-performance has been my focus on income and value stocks.  Growth stocks had a particularly painful two months in April and June, and growth stocks dominate the clean energy indexes and most clean energy mutual funds.  The trend can also be seen in my model portfolio, as I pointed out last month when I contrasted the first six income oriented stocks with the remaining four, which I lumped together as “growth.” 

I was a little too casual about calling Power REIT (PW) and Alterra Power (MGMXF, TSX:AXY), “growth” stocks, however.  While both do have expansion plans, the main reasons they are in the list are Alterra’s low valuation compared to the value of its assets, and Power REIT’s potential for a large legal windfall.  Hence, if I were to categorize the investment theses more precisely, I would call Power REIT a “special situation” and Alterra a value stock.  I make these distinctions because it re-emphazies the pummeling growth stocks have taken recently- Ameresco (AMRC) is down 33% and MiX Telematics (MIXT) is down 17% so far this year.  These two are the only stocks in the portfolio which are down at all.  The other eight picks are up an average of 10%, as you can see in the chart below:

Individual Stock Notes

(Current prices as of June 2nd, 2014.  The “High Target” and “Low Target” represent my December predictions of the ranges within which  these stocks would end the year, barring extraordinary events.)

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/26/2013 Price: $13.85.     Low Target: $13.  High Target: $16.  Annualized Dividend: $0.88.
Current Price: $14.03.  YTD Total US$ Return: 2.9% 

Sustainable Infrastructure REIT Hannon Armstrong announced first quarter normalized earnings of $0.20 a share, slightly lower than analyst expectations, but re-affirmed full year guidance.  The main cause of the temporarily lower earnings was the timing of maturing investments and the issuance of HASI’s first “Sustainable Yield Bond” (SYB) at the end of December.  By issuing the fixed-rate SYB, HASI reduced its exposure to the interest rate fluctuations on the balance of its bank line of credit, better matching the interest rate profile of its assets and liabilities.  This comes at the cost of higher interest payments and lower earnings in the short term.

HASI also announced the purchase of a $107 million portfolio of land under wind and solar farms, along with the associated leases to the renewable energy facilities. 

2. PFB Corporation (TSX:PFB, OTC:PFBOF).
12/26/2013 Price: C$4.85.   Low Target: C$4.  High Target: C$6. 
Annualized Dividend: C$0.24.
Current Price: C$5.25. YTD Total C$ Return: 10.7%.  YTD Total US$ Return: 8.8%

Green building company PFB announced a loss of C$0.27 per share for the first quarter compared to an adjusted loss of $0.12 a year earlier.  The first quarter is always weak for the building industry, and the icy winter exacerbated that effect this year.  PFB operates mostly in the northern US and Canada, and all of the decline came from its Canadian operations. Nevertheless, the company’s backlog “remained robust” and it paid its regular C$0.06 quarterly dividend.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
12/26/2013 Price: C$4.05.   Low Target: C$3.  High Target: C$5.  
Annualized Dividend: C$0.30.
Current Price: C$4.46.  YTD Total C$ Return: 29.9% .  YTD Total US$ Return: 27.6%

Independent power producer Capstone Infrastructure reported very strong first quarter performance, with adjusted funds from operations up 46% from a year earlier due to the additions to its wind portfolio.  This and the financings for its Skyway 8 and Saint-Philémon wind power developments underline Capstone’s successful diversification away from reliance on its Cardinal gas cogeneration facility.  While Cardinal is currently immensely profitable, its copious cash flow will be greatly reduced under the recently finalized agreement with the Ontario Power Authority, which commences at the start of 2015.  Knowing this was coming, management has spent the last couple years investing the profits from Cardinal in renewable energy development.  That strategy is now beginning to pay off for investors.

Capstone insiders seem to think these investments will continue paying off.  Three of them bought a total of 15,300 shares in May, while another sold C$29,000 worth of (safer) preferred shares and bought $42,000 worth of (riskier but with higher potential for gain) common shares.

4. Primary Energy Recycling Corp (TSX:PRI, OTC:PENGF).
12/26/2013 Price: C$4.93.   Low Target: C$4.  High Target: C$7. 
Annualized Dividend: US$0.28. 
Current Price: C$5.17.  YTD Total C$ Return: 12.5% .  YTD Total US$ Return: 5.7%

Waste heat recovery firm Primary Energy fell back a bit after the initial enthusiasm last month over the recontacting of its Cok
energy facility and dividend increase to US$0.07 quarterly.  It paid its first 7¢ dividend on May 30.

5. Accell Group (Amsterdam:ACCEL, OTC:ACGPF).
  12/26/2013 Price: €13.59.  Annual Dividend €0.55 Low Target: €11.5.  High Target: €18.
Current Price: €13.70. YTD Total  € Return: 4.9% .  YTD Total US$ Return: 3.0% 

Bicycle manufacturer and distributor Accell Group went ex-dividend for its 2013 annual distribution of €0.55.  The dividend is set on an annual basis based on last year’s profits.  Since sales have been better so far this year, I expect next year’s distribution to be higher.

6. New Flyer Industries (TSX:NFI, OTC:NFYEF).
12/26/2013 Price: C$10.57.  Low Target: C$8.  High Target: C$16. 
Annualized Dividend: C$0.585.
Current Price: C$12.30.  YTD Total C$ Return: 18.7% .  YTD Total US$ Return: 16.6%.

Leading transit bus manufacturer New Flyer announced its first quarter results, with sales, cash flow, and earnings all increasing strongly from prior year numbers on both an absolute and per share basis.  The company continues to work through a backlog of lower-priced orders placed during the downturn, but sees prices for new contracts normalizing in many markets.

7. Ameresco, Inc. (NASD:AMRC).
12/26/2013 Price: $9.64.  Low Target: $8.  High Target: $16.  No Dividend.
Current Price: $6.43  YTD Total US$ Return: -33.3%.

The stock of energy performance contracting firm Ameresco stabilized after two months of bad performance following investors’ disappointment with management’s first quarter outlook.  Insiders maintain faith in the company’s long term prospects, and bought 48,000 shares in May.  One reason the company’s growth prospect may pick up will be the likely inclusion of energy efficiency as a compliance mechanism for the EPA’s proposed rules for new carbon pollution standards from existing power plants.

8. Power REIT (NYSE:PW).
12/26/2013 Price: $8.42.  Low Target: $7.  High Target: $20.  Dividend currently suspended.
Current Price: $9.23 YTD Total US$ Return: 9.6%

Solar and rail real estate investment trust Power REIT filed its first quarter results.  Legal expenses fell from the previous year to the point where the company declared a small profit of 3¢ per share.  The company also declared the first quarterly dividend on its preferred shares (NYSE:PW-PA), payable to holders as of June 7th.

Hannon Armstrong’s purchase of land underlying solar and wind farms mentioned above validated Power REIT’s own business plan, but also introduces a larger and much better funded competitor.  That said, the value of land underlying wind and solar farms is an order of magnitude larger than either company’s enterprise value, so I expect the validation of the concept will be more helpful in allowing Power REIT to find investment opportunities than the competition will be in taking them away.

9. MiX Telematics Limited (NASD:MIXT).
12/26/2013 Price: $12.17.  Low Target: $8.  High Target: $25.
No Dividend.
Current Price: $10.09. YTD Total ZAR Return: -14.4%. YTD Total US$ Return: -17.1%

The stock of global provider of software as a service fleet and mobile asset management, MiX Telematics continued to decline along with the other stocks in the industry and growth stocks in general.  But unlike competitors such as Fleetmatics (NYSE:FLTX), most of MiX’s costs are denominated in South African Rand, while revenues are in a broad range of global currencies.  Where MIXT was already trading at a much more attractive valuation than FLTX, the recent currency movement should increase its relative attractiveness as its results are boosted by currency changes.  Results for the period ending March 31st will be announced on June 5th.

I added to my position when the stock fell to $9.95 during the month.

10. Alterra Power Corp. (TSX:AXY, OTC:MGMXF).
12/26/2013 Price: C$0.28. Low Target: C$0.20.  High Target: C$0.60. No Dividend.
Current Price: C$0.31   YTD Total C$ Return: 10.7% .  YTD Total US$ Return: 7.0%.

Renewable energy developer and operator Alterra Power announced first quarter results.  Revenue and EBITDA increased due to lower repair costs and currency fluctuations.  Construction continues on its Jimmie Creek run of river hydropower plant in British Colombia.

Two Speculative Clean Energy Penny Stocks for 2014

Ram Power Corp (TSX:RPG, OTC:RAMPF)
12/26/2013 Price: C$0.08.  Low Target: C$0.00.  High Target: C$0.22. No Dividend.
Current Price: C$0.035   YTD Total C$ Return: -56% .  YTD Total US$ Return: -57%.

Geothermal power developer Ram Power reported the results of the stabilization period and performance test of its marquee San Jacinto-Tizate project after an extensive remediation program. In the company’s words, the results “did not meet our expectations.” The company is “now in technical default of the… loan agreements for failure to achieve a minimum MW output.”

I included Ram as a speculative pick on this list because I hoped the remediation program would produce better results. Since it did not, I feel the best course of action is to cash in this lottery ticket rather than taking on a new gamble.

The new gamble in question is the hope that, as a reader put it, “potential suitors will bid gener
ously for the company.”

That’s not a gamble I’m interested in taking, although there is a case to be made for letting the much money ride.  At the current price of C$0.035, the market capitalization is only C$13 million (US $11.7 million).  The company recently received $6.4 in cash for its Geysers Project from US Geothermal (NYSE:HTM.)  Given the low valuation, it would not be hard to see the stock price multiply if management can capture any value from San Jacinto or Ram’s early stage projects.

Finavera Wind Energy (TSX-V:FVR, OTC:FNVRF). 
12/26/2013 Price: C$0.075.  Low Target: C$0.00.  High Target: C$0.22. No Dividend.
Current Price: C$0.09   YTD Total C$ Return: 20% .  YTD Total US$ Return: 17%.

Shares of wind project developer Finavera gave back some of their gains on a lack of news.  Now that the sale of its Meikle wind project to Pattern Energy Group (NASD:PEGI) has closed, investors expected an update on the company’s strategic plan last month.  This lottery ticket still seems to have a lot more upside than downside, so I continue to wait.  But given the repeated delays and disappointments, that business plan will have to be very attractive to persuade me to vote for anything other than a return of the company’s capital to shareholders.

Disclosure: Long HASI, PFB, CSE, ACCEL, NFI, PRI, AMRC, MIXT, PW, AXY, FVR, PEGI.  Short PEGI calls.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Growth Stocks Shrivel; Income Stocks Grow appeared first on Alternative Energy Stocks.