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Harris Roen
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Harris Roen is a financial writer with a passion for understanding the economic activity of our interconnected world. His previous experience of over 15 years as a professional portfolio manager helps him ground-truth the hype through independent research and analysis, providing valuable... More
My company:
Swiftwood Press LLC
My blog:
Roen Financial Report
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  • Portfolio Update: Two Upbeat Alternative Energy Investment Ideas

    The Roen Financial Report Paradigm Portfolio has moved off its record highs reached this summer, but is still smartly up. This select portfolio has gained 42.7% since inception after accounting for additions, removals, and rebalancing*.

    Two promising alternative energy stocks are being added to the portfolio this month, one a key solar and smart grid player, and the other working in wind and transportation. Also, two companies are being recommended for removal.

    (click to enlarge)

    Returns

    The Paradigm Portfolio fell 7.3% since the July update, at which time the portfolio reached an all-time high of 50.0% gains. Since inception, the portfolio is now up 42.7%, a 21% annualized returns. These gains are on par with the S&P 500 index, but lag the NASDAQ by about 7%.

    When looking at individual stocks in the Paradigm Portfolio, about 90% of the holdings are showing gains. Of the 33 companies that are up, 30 achieved double-digit growth, and 10 have gains greater than 50%.

    By far the best performing stock is the innovative solar installer SolarCity (NASDAQ:SCTY), up a spectacular 202% after rebalancing. Solar City was priced at $12.98/share when it entered the portfolio at the beginning of 2013, and is now trading at around $50/share.

    The poorest performing stock is the wind turbine and tower equipment company Broadwind Energy (NASDAQ:BWEN), down a disappointing 51.2%. The company has variable earnings, but exhibits improving cash flow, low debt and stable sales. We believe the long-term story is still positive for this company, however Broadwind has been put on a watch to monitor developments that could exasperate its losses.

    (click to enlarge)

    Portfolio Update

    Two companies are being added to the portfolio this month-one services the solar industry and one provides wind and rail products. Conversely, two companies are being removed, one due to its flagging financials, and the other because of a change in its business sector.

    Two Encouraging Investments

    Fairchild Semiconductor Intl. (NASDAQ:FCS) is a California-based company that manufactures a wide array of semiconductor products, including a strong line of solar inverters and power management equipment. Designed for consumer and industrial applications, its products range from diodes to voltage regulators to battery management devices. The company is considered undervalued at current trading prices, has excellent free cash flow, and exhibits good relative strength compared to other small cap companies. All this, combined with a very strong long-term outlook for the solar industry, makes this a perfect candidate to add to the portfolio.

    The diversified product and service company Trinity Industries Inc (NYSE:TRN) operates in several industrial sectors, including energy and transportation. Trinity is one of the leading manufacturers of structural wind towers, and provides logistical and transportation services for delivering wind towers to job sites. In addition to wind, Trinity manufacturers rail cars and rail car parts. This mid-cap company has solid sales and excellent annual earnings growth. We estimate Trinity to be trading at fair value, and believe there is steady upside potential from here.

    Portfolio Removals

    Waste-to energy company Covanta Holding Corp (NYSE:CVA) is being recommended for removal from the Paradigm Portfolio. The company has a high debt rank, and has seen a drop in its quarterly earnings. We consider the stock to be overvalued at current levels, so we believe it is a good time to realize the 27% gain that the company has achieved.

    Thor Industries Inc (NYSE:THO) is being removed from the portfolio because the company no longer has an alternative energy segment. When Thor Industries was added to the Paradigm Portfolio, it had three commercial bus divisions that offered a wide range of public transportation options. One of the divisions, Eldorado National, was a leading manufacturer of alternative fuel buses, including natural gas and hybrid diesel. These divisions have since been sold off, and the company is now exclusively in the RV business. The stock has performed well for the portfolio, up 40.3% since January 2013.

    Alternative Energy Investment Prospects - Bumpy Ride Ahead

    Though long-term prospects for alternative energy investments remain strong, it is likely that the recent pullback which began earlier this year will continue. As the chart shows, the Wilder Hill New Energy Global Index (NEX) has started a technical correction, having formed two lows since coming off its highs reached in March 2014. As a corollary to what happens in an up market, it is not unusual for an index to attain three or four lows beyond each previous low before it begins to turn around. The index also crossed its 200 day moving average in September, a condition which may hold for some time.

    Despite the bumpy ride alternative energy investors are likely to see in the near future, we still believe that the long-term prospects of solar, wind, smart grid and other green investments look very promising. The principal downward drag on the sector, persistently low natural gas prices, and now dropping oil prices, is liable to continue. However, the boom in alternative energy installations persists and huge growth is projected to continue. Investors willing to remain in green energy for the long-haul should be handsomely rewarded.

    *Hypothetical gain from portfolio recommendations. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on this list. For an explanation of how hypothetical returns are calculated, please see the Returns section under How Investments are Picked in the Roen Financial Report User Guide.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Nov 16 4:42 PM | Link | Comment!
  • Danger Ahead For Alternative Energy Mutual Funds And ETFs?

    (click to enlarge)Green Mutual Fund Returns Falter

    Returns for green mutual funds have slid as of late. Longer term, however, alternative energy MFs are still showing strong gains. All MFs are in positive territory for the past 12 months, and 6 out of 14 funds are up double digits. Three year returns have faired even better, showing an annualized return of 14.3% on average.

    Short term, however, almost all the funds have given up a significant amount of their recent gains. For example, Firsthand Alternative Energy (MUTF:ALTEX), the MF with the best one-year returns, gave up 6.1% of its gains in September. In fact all MFs are trading down in the past month, and 11 out of 14 funds are in the red for the past quarter... [Read More]

    (click to enlarge)

    Alternative Energy ETFs Lower Gains

    Alternative energy ETFs are down substantially from the levels they were at earlier this year. ETFs are up over 9% on average in 12 months, but this is much below the 28% average gains ETFs had in June, and the 65% average annual returns ETFs were seeing in November 2013. All ETFs are down for the month, and 15 out of 17 show losses for the quarter.

    The ETF with the best one-year return is Guggenheim Solar (NYSEARCA:TAN), up over 30% in the past 12 months. This is not surprising, considering TAN holds many high-flying solar stocks, including SolarCity (NASDAQ:SCTY), Enphase Energy (NASDAQ:ENPH) and SunPower (NASDAQ:SPWR)... [Read More]

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 09 7:15 AM | Link | Comment!
  • Stock Alert: STRI

    Today's Alert: STR Holdings, Inc (NYSE:STRI)

    A solar microcap stock gets a lift.

    STR Holdings, Inc (STRI)More Info
    Penny stock STR Holdings gets investor attention after an analyst upgrade. STRI gains 5% on extremely large one-day volume, and has gained 27% from its lows in July.WKRB News

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: STRI
    Sep 17 8:45 AM | Link | Comment!
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