10 Alternative Energy Stock Speculations for 2008: Performance Update

This is the first of a short series of articles where I plan on reviewing how my stock recommendations have been doing this year.  I started the year bringing you 10 Alternative Energy Stocks I thought were worth speculating on for 2008, and I'll start this review with those articles, and also give you updates on what's been happening (or not) with the stocks.  Click on the company name a link to the original article where I wrote about the stock.

Overall, a portfolio with equal dollar positions in these ten stocks is up 11.4% for the year, compared to the S&P 500 which is down 4.2% and the NASDAQ Clean Edge US Index, which is down approximately 14.3% (I took the number from CELS, the ETF which tracks the index, since I could not find up-to-date index values) since the start of the year.

#10  Cree, Inc. (CREE) Dec 27, 2007: $23.50; June 9, 2008: $25.85 (up 10%).

Cree shot up as high as $35 early in the year, on buy-out speculation.  There was also a quick bump when its transistors were used as part of a record breaking solar inverter. While a quick profit on a buy-out might be nice, the fundamentals and growing consumer interest in LEDs mean that I'm happy I didn't sell at the peak.  

#9  Lighting Science Group (LSCG.OB) Dec 27, 2007: $6.40 (split-adjusted), June 9, 2008: $5.90 (down 7.8%).

Another LED stock, Lighting Science saw a spectacular rise right after I recommended it, but was badly hurt by a patent infringement suit from Philips (PHG) in February.   I found this personally very annoying, since I'm long both companies.  I have no idea how the lawsuit will turn out, but I'm holding both stocks for now.

#8  Maxwell Technologies (MXWL) Dec 27, 2007: $8.10, June 9, 2008: $13.26 (up 64%)

Ultracapacitors have been much in the news this year as an enabling technology for hybrid vehicles.  Since that's one of the reasons I picked the company, I'm naturally very pleased.

#7 Electro Energy, Inc. (EEEI) Dec 30, 2007: $0.68, June 9, 2008: $.65 (down 4.4%)

Electro-Energy has been up and down since I wrote about it, but still has not caught the attention of the investors piling in to battery stocks.  I'm waiting patiently.

#6 Capstone Microturbine (CPST) Dec 30, 2007: $1.62, June 9, 2008: $3.41 (up 110%)

Although I recommended this one, I've been totally shocked at how quickly it has run up.  Mostly, this seems to be due to a large, high-profile sale into the hybrid bus market.  I've taken the opportunity to take some profits (see my selling rule of thumb #2), but I'm still long.

#5 FuelCell Energy Inc. (FCEL) Dec 30, 2007: $10.30, June 9, 2008: $8.66 (down 16%)

Although this one is down, I still like it for the same reasons.  The out of the money puts I wrote on it look likely to expire unexercised, and I just wrote some more today. 

#4 Composite Technology Corp. [CPTC.OB] Dec 30, 2007: $1.37, June 9, 2008: $0.99 (down 28%)

Like Electro Energy, Composite Technology still has not caught the attention of investors.  I bought some more when I revisited the stock in March, and it's starting to look cheap again.

#3 Nevada Geothermal Power (NGLPF.OB) Dec 31, 2007: $1.29, June 9, 2008: $1.25 (down 3.1%)

Another one requiring patience.  I expect the big gains for this stock to come before their Pumpernickel project begins to produce electricity (assuming there aren't any unforeseen hitches), similar to what happened with US Geothermal (HTM) last year.

#2 Finavera Renewables [FNVRF.PK]  Dec 31, 2007: $0.3371, June 9, 2008: $0.19 (down 43%)

I sold my position at a loss when I heard its wave energy license was subject to rehearing in late January.  Since then, Finavera was issued a preliminary 3 year permit, but I've continued to stay away.  My hopes for this one had been based on an expectation of investor euphoria for wave energy, not fundamentals, and given the down-trending markets, I don't expect that sort of irrational exuberance again in 2008.

#1 SHORT First Solar (FSLR) Dec 31, 2007: $267, June 9, 2008: $245 (8.3% profit)

Since I wrote the article, a reader challenged my math on the impact of the prices on their bottom line.  Although I've made a profit on this one, I question my original analysis, but have not re-run the numbers.  The slight decline can be completely attributed to the declining overall market, and FSLR has outperformed the clean energy sector as a whole.  I am still short a June $300 call, but do not plan to write another when it expires in a week and a half.

DISCLOSURE: Tom Konrad and/or his clients have long positions in CREE, LSGP, MXWL, EEEI, CPST, FCEL, CPTC, NGLPF, PHG and a short position in FSLR.

Comments

[Mark Anthony:]

Hey Tom:

Long time no see!

Regarding FSLR you need to read some of my recent writtings regarding their tellurium woe and cadmium risk:

seekingalpha.com/autho...

Curiously the street is only NOW beginning to catch up with what I have been talking about for more than half a year:
www.bloomberg.com/apps...

The street have yet to catch up with one situation I see so clearly, the South African electricity crisis, and the related PGM (platinum group metal, platinum and palladium) super bull. I insist that PAL and SWC will be the best commodity stock play of 2008. The street just hasn't catch up to it yet. But the bullish case can not be disputed:

seekingalpha.com/artic...

I did catch the best stock of 2007/2008. Loaded JRCC up at $4. I just did not ride it all the way up to recent $45+, which is unfortunate.

Your YTD return of 11% is lame. US dollar dropped that much during the same period. Could have done better. The problem with your portfolio is it's based partly on facts and reasoning, and part on speculation. When there is component of speculation, the rality may or may not catch up.

On the PGM metal situation, there is no need for speculation, the electricity crisis is a fact for all to see. The PGM metal production fall is also a fact documented by SA statistics, the PGM demand inelasticity is also well documented, as evidenced by the stella raise of rhodium from $300 to almost $10000 per ounce, more than 30 fold increase.

PAL and SWC, being the only primary PGM producers outside Africa and Russia, are absolute buys to any one willing to dig out the facts.

2008 Jun 11 05:06 AM

[chrisbax:]

you know you did not hold FSLR when it was up over 300..you would have crapped your pants and covered..hillarious to act like you held thta for a gain..give me a break

2008 Jun 11 07:07 AM

[terryhallinan:]

Re: Nevada Geothermal Power

"I expect the big gains for this stock to come before their Pumpernickel project begins to produce electricity"

Doesn't Blue Mountain count for anything? :-)

Just nudging you a little. Blue Mountain is the first and most advanced. Sierra Geothermal has earned a share of Pumpernickel by by doing some work on the project. FWIW the Crump Geyser is likely a huge resource in Oregon that has been sitting idle for nearly half a century. Oregon was very hostile to geothermal development until very recently.

Thanks for an interesting list.

Best, Terry
[e-mail]...

2008 Jun 11 08:25 AM

[oilsands:]

Thanks for the follow-up. Look forward to your next one.

2008 Jun 11 09:49 AM

[User 210954:]

Terry.. thanks for catching the Blue Mtn thing. I've updated the original article on my site.

209208: Read what I say about shorting in the original article about FSLR before you decide what I did when FSLR went over $300. Shorting is not for cowards.

Mark: I'll take a look.

2008 Jun 16 12:44 AM

[H.J. Huneycutt:]

Hi Tom:

I find EEEI to be an interesting play. They seem to have some good contracts and there appears to be a lot of demand and a lot of potential for their products. However, they also have some huge problems. It would appear they are having liquidity issues and they would greatly benefit by being able to raise more capital. However, that issue is somewhat complicated by another factor; NASDAQ is threatening to delist them since they trade below $1. Despite the fact that they could seemingly remedy the problem with a reverse stock-split, the company seems to be resistant to this idea. How big of an issue do you think the liquidity/delisting could be for EEEI?

(Theoretically, they should have already been delisted, but I haven't seen anything about the current status of that.)

2008 Jun 19 09:33 AM