Monitoring changes in indices can be a winning investment strategy. Companies entering an index, especially some of the smaller company indices, have usually grown to a certain size which means the market is starting to notice them. Entry to an index means further exposure. And funds based on those indices will generally be required to buy the stock. It is all good for the share price.
On September 22nd, 2008, six new securities will enter the NASDAQ Clean Edge US Liquid Series Index (CELS), an index of companies involved in emerging clean-energy technologies, following its semi-annual evaluation.
The companies are: C&D Technologies (CHP), China Sunenergy (CSUN), Ener1 (HEV), GT Solar International (SOLR), ReneSola (SOL) and Rubicon Technology (RBCN). Here are brief introductions to each of the companies:
C&D Technologies manufactures power storage batteries and other equipment, with most being used as emergency back-up systems. In its July 2008 second quarter it reported an after-tax profit of $1.2 million on revenues of $92.5 million. This compared with a $3.1 million net loss in the July 2007 quarter, mainly from discontinued operations, on revenues of $82.9 million. Gross margins rose from 14.9% to 16.9%, and the company expects this figure to reach its target of 25% by the end of 2009. However, the market had been expecting a substantially better performance, and the shares this month have been weak.
China Sunenergy is one of a growing number of Chinese manufacturers of solar cells to list in the US. In its June 2008 quarter it reported net income of $3.1 million on sales of $111.6 million, compared to year-earlier figures of a $3.8 million loss from sales of $56.2 million. These numbers were generally above expectations, and analysts are positive on the company's outlook, though the shares have been sold down along with others in its sector.
Ener1, like C&D Technologies, is an alternative energy company, involved in power storage systems. It is developing a lithium-ion battery for use in electric cars and plug-in hybrid vehicles. It is also involved in fuel cell and nanotechnology research. However, sales are still minimal and it has been making big losses. Despite its promising technology, it has yet to announce many actual potential sales, and the shares have been volatile.
GT Solar International is a fast-growing supplier of solar cell production equipment. In its June 2008 second quarter it saw revenues soar 272% from a year earlier to $57.1 million, and it moved from loss to profit. It is forecasting further big gains, thanks especially to demand for its DSS450 furnace for growing multi-crystalline ingots.
ReneSola is another Chinese solar company, manufacturing wafers for the photovoltaic industry. June 2008 second-quarter revenues of $173.0 million were 289% up on the June 2007 quarter, with net income of $23.3 million, nearly a three-fold increase on a year earlier. It is forecasting continuing strong growth.
Rubicon Technology is a leader in the supply of wafers to the fast-growing light emitting diode sector. It has been reporting strong results, with sales up 40% YOY in the June 2008 second quarter, and it moved into profit, from a big loss a year earlier. However, a slowdown in orders, along with fears that rivals are catching up with Rubicon mean that the shares have not been performing well in recent months.
Disclosure: no positions