The Week in Sustainable Energy Stocks (Week Ending 3/7)

Author: Mark Henwood
Continuing concerns with economic conditions drove all the broad stock indicators into negative territory for the week. With one expectation our sustainable energy indices followed suit with three indices retreating and one, Renewable Electricity, advancing.

The Solar index suffered another large drop of 5.9% bringing the YTD decline for the sector to –42.5%. In perspective, even with this large YTD decline the index has 46% to give up before it loses all of the huge gains in 2007. LDK Solar Co. LTD (LDK) led the move downward falling 21.3% and closing below its IPO price. Apparently there remains some lingering angst over inventory issues. Overall the sector had 4 stocks climbing and 29 stocks falling.

Biofuels suffered a significant 12.5% decline with all 16 stocks falling and 5 falling more than 20%. It looks like concerns about rising corn prices and reduced margins affected the ethanol producers. Gushan (GU) reported a Q4 loss and, despite management explaining the loss was due to a large non-cash charge, the stock declined 24.9%

In the Renewable Electricity sector our index advanced 0.9% with 10 stocks climbing and 9 retreating. Suzlon [SUZLON.NS] is a big component of the index and was down 13.1% percent after reporting a turbine blade replacement program for 1,251 blades. This represents a market cap decline of more than USD 1 million per blade against management’s estimated cost of USD 24,000 per blade.

Fuel Cells had a down week with the index decreasing 6.3% on 1 stock advancing and 6 stocks declining. FuelCell Energy Inc. (FCEL) led the movement downward with its stock price falling 14.3% for the week. Most of the loss came after their earnings call on March 6.

What did I learn this week? Oil prices hit record highs and sustainable stocks fall sharply with the broader market. Given the relatively high beta of the Solar, Fuel Cell, and Biofuels indices, their stock performance seems to be weakly correlated to oil prices and much more strongly influenced by broad market trends. Renewable Electricity, with its lower beta, may offer some portfolio diversification benefit.


Mark is the founder of Camino Energy, a information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks. Mark doesn't hold a position in any of the specifically mentioned stocks.

Comments

[aquakid]

Why don't you track the 5 or 6 geothermal stock?. The new Calpine(just out of bankruptcy) has the largest geothermal assets in North America The others: Nevada Geothermal, Western Geopower, Polaris Geothermal, U.S. Geothermal and Sierra Geothermal are all small cap almost penny stocks. They will be producing electricty very soon.

[Mark Henwood]

We track 13 geothermal stocks including all the names you mentioned. We include Calpine in the geothermal search but we don't consider it to be a sustainable energy company - the last time I looked it had 25,000 MW of gas fired combined cycle generation and about 1,000 MW of geothermal. Two of the companies, Ormat and Geodynamics, are included in our Renewable Electricity index.