Sell Montauk Renewables (MNTK), Keep Centrus Energy (LEU)
Montauk Renewables (MNTK) reported third-quarter earnings after the bell on Wednesday and they weren’t good – at least not compared to estimates. The renewable energy company posted earnings per share of $0.10, shy of the $0.14 analysts were looking for. Though that EPS figure was up from the $0.06 it earned in the same quarter a year ago, investors have nevertheless punished the stock thoroughly for its miss, pushing shares down more than 14% this morning. At 11 per share, MNTK is well off its mid-September highs above 20, the stock has been in freefall for the last three weeks, and is now down about 38-39% from our entry price around 18. That’s too big a loss, and it’s time to sell – even if the company’s earnings are actually growing. SELL
Another of our renewable energy names, Centrus Energy (LEU), had an even bigger blow-up yesterday, falling 31% (!) on Wednesday after a much wider earnings miss. However, we’re going to hang on to that one, for a couple of reasons: First, it’s back up 10% this morning; second, at 34 per share we are still sitting on about a 17% gain, having recommended the stock at 29 a share back in July. Until yesterday, LEU had been our single best performer in 2022, so it’s earned the benefit of the doubt. Let’s keep holding and see if it can claw back some of yesterday’s losses in what looks like a classic (albeit quite extreme) earnings overreaction. HOLD
