Ten Clean Energy Stocks For 2014: Spooky October

 October was a spooky month for clean energy stocks.  My benchmark Powershares Wilderhill Clean Energy Index (PBW) cringed down 2.9% like the young Supergirl who jumped when a mechanical ghost startled her at my door Haloween night.  

Halloween

My 10 Clean Energy Stocks for 2014 model portfolio was more like Supergirl's slightly older brother, who was dressed as a SWAT team member and insisted that he wasn't scared: It rose a slim 0.9% since the last update on October 3rd.  For the ten months since I launched the portfolio on December 26th, PBW is down 2.6% while the model portfolio is up 2.4%

Meanwhile, the broader market of small cap stocks clawed its way out of a premature grave, digging its way up 6.3% for the month to end up 2.1% (as measured by the Russell 2000 index ETF, IWM.) 

Individual Stock Notes

The chart and discussion detail the performance of individual stocks in the 10 Clean Energy Stocks for 2014 model portfolio, along with relevant news items since the last update.

performance chart

 

(Current prices as of October 31st, 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: $1.04.
Current Price: $13.98.  YTD Total US$ Return: 5.7

Last month I predicted Sustainable Infrastructure REIT Hannon Armstrong would raise its fourth quarter dividend to 24¢ from 22¢.  I was too conservative.  In conjunction with the announcement of a $144 million investment in ten operating wind projects, President and CEO Jeffrey Eckel stated: "This investment should enable us to achieve core earnings of $0.25 in the fourth quarter and, in anticipation of further 2015 earnings growth, to support the declaration of an increase in our December dividend to $0.26 per share."

The stock rally from the increased dividend was cut short a week later when the company announced a secondary equity offering of 4.6 million shares at $13.60, for gross proceeds of $63.56 million.  The company has a target leverage ratio of 2:1 debt to equity, and since the company has not raised equity since $70 million (at $13.00/share) in April, this smaller offering should have come as no surprise. 

The stock pull-back in response to the equity offering should be seen as a buying opportunity.  At $13.89, the company's forward yield is 7.4%, and this dividend was achieved by investing the roughly $10/share raised in the IPO and April offering. Any money raised at $13.60 a share should increase both book value per share and per share dividend once it is invested.

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$3.98. YTD Total C$ Return: -14.2%.  YTD Total US$ Return:
-18.5%

Green building company PFB continued to decline until October 30th, when the company announced its third quarter results.  Earnings per share increased to C$0.23 from C$0.14 in the third quarter of 2013, along with a 7% increase in revenue and an increase in gross margin.  Full financial statements for the quarter will be filed on or before November 14th.

The company announced its regular 6¢ dividend, payable to shareholders of record on November 14th.  This amounts to a 6% annual dividend at the $4 current price.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).

12/26/2013 Price: C$3.55.   Low Target: C$3.  High Target: C$5.  
Annualized Dividend: C$0.30.
Current Price: C$4.27.  YTD Total C$ Return: 30.8%.  YTD Total US$ Return: 24.4%

Independent power producer Capstone Infrastructure will release third quarter results after the close on November 11th.

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 (suspended pending buyout.)
Current Price: C$5.82.  YTD Total C$ Return: 22.3% .  YTD Total US$ Return: 16.3%

1 2 3 4
View single page >> |

Long HASI, PFBOF, MCQPF, ACGPF, NFYEF, PENGF, AMRC, MIXT, PW, MGMXY

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Moon Kil Woong 5 years ago Contributor's comment

Good choices but the clean energy stocks are getting their whistle cleaned by dropping oil and energy prices. We will see how much more they can stand if oil prices drop further. The good news is that pump prices and oil distillate prices remain artificially high as oil companies refuse to pass off the price declines to consumers.

Last time oil prices were at this price gas was under $2.50 a gallon in California and around $2 nationally.

Tom Konrad 5 years ago Author's comment

You make a good point that I should have mentioned oil prices in my discussion of PBW's recent decline.

On the other hand, what's happening to clean energy stocks in general is less relevant to my list, which is designed to invest in clean energy without the same level of risk you would get with ETFs like PBW. You'll note that my list is beating both its clean energy benchmark *and* small cap stocks in general.