Stocks are down this week after hitting resistance at their major moving averages and trendlines. So far the recent move back seems very normal after enjoying a good rally. Where it goes from here will determine if the recent summer rally has run its course or if we’ll see the re-establishment of a bullish move higher.
For Greentech, the sector is more bullish than the market as a whole as we continue to learn more details about what companies benefit from the recent climate bill. Technically, Greentech continues to look like it has some space still to move higher before more serious resistance kicks in. But as we saw earlier this year with the tech retreat in the face of inflation, it’s difficult for our sector to swim against the broader market. So some caution is warranted here. We have some good trades we can stick with while considering cutting bad trades and taking profits on the ones that seem particularly reliant on broad market sentiment.
To the last point, we’re going to take profits on our Altus Power warrants. More below.
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)|
How down is sentiment on SPACs? One of the leading data providers, SpacAlpha, appears to have unceremoniously closed up shop. That’s a reflection of lack of market interest, which means we’re less likely to get a huge bump in prices when this Greentech SPAC finds a merger, but when we entered the trade (and the Good For Growth trade) we knew the worst-case scenario for this trade is a Treasury bill-like return on our investment. Shares are at a 10-cent discount to their trust value, while warrants are the same as last week, at 12 cents, with rights at 14 cents. HOLD
Clearway Energy (CWEN/A)
CWEN/A has pulled back to initial moving average support, just under 36. They appear like they’ll soften a touch more before improving. Overall, they look nicely bullish still. Little news. The next ex-dividend date is August 31. BUY
Energy Recovery (ERII)
We set ERII as a ‘buy at 25 or higher’ with last week’s issue. We’ll stick with that, since it will be confirmation that shares are breaking out of a long consolidation. BUY at 25 or higher
Enovix (ENVX)
A featured ‘buy’ in last week’s issue, the portfolio added a full-sized position at 20.49 on Thursday, the midpoint of the trading range for the day. Shares continue to look very strong with good buying volume on dips that has already put us up 18% on the trade. There appears to be a fairly clear path for shares to go higher. BUY
Enphase Energy (ENPH)
Meraki Solar, a large Florida-based installer, is expanding its use of Enphase’s IQ8 microinverter – the kind that creates a microgrid for the house so solar provides electricity even when the utility grid is offline. Shares continue to look good, around 294 today. BUY
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
No news from the ESG SPAC, which is searching for a merger. Like Clean Earth, our downside is a small return on our capital. Shares are at a 17-cent discount to their trust value today; warrants are at 12 cents, unchanged from last week. HOLD
Li Auto (LI)
LI of late has made a straight line down to test support at its 200-day moving average, where it is seeing buying today. In China, the pandemic continues to affect manufacturing, but demand for Li’s EVs appears strong. HOLD
Montauk Renewables (MNTK)
The renewable fuels maker looks great, making a new all-time high today in the 18 area. Normal volatility could throw shares back to our buy price area, which makes setting a sell-stop more difficult. We’re up about 19% now on the trade, and we’re going to hold off on setting a firm stop to avoid getting stopped out too soon. BUY
Onsemi (ON)|
Next generation chip makers like Onsemi, which has a growing business in silicon carbide semiconductors, are seeing favor in the market. ON looks like it has little impediment to working higher here. We’re up about 6% on the trade; like with MNTK, we’re not putting on a stop to avoid getting out of the trade too soon. BUY
Ormat Technologies (ORA)
Ormat signed deals in New Zealand and Indonesia that will generate $100 million in revenue, while facing some wildlife protection issues in Nevada that could slow a development there. Shares are on initial support and appear fine. We’re raising our sell-stop from ‘around 83.50’ to ‘around 85.30.’ BUY
Sunrun (RUN)
We set the solar installer as a ‘Watch’ last week. Shares look good and appear to be setting up for a move higher. We’re not quite there yet, so remain on Watch. WATCH
Vertex Energy (VTNR)
VTNR is holding up after bottoming out on disappointing earnings. Renewable diesel is expected to be in demand in coming years, especially with diesel prices not easing anywhere close to the way gasoline prices have in the past month. Recovery from a big bear move like what we’ve had in VTNR will take time. HOLD
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
Our warrants are basically unchanged from last week around 1.09. The company’s shares are holding up. HOLD
Altus Power (AMPS/WS)
We’re recommending taking profits on our Altus warrants. We bought them at 1.06, and at 3.30 today we’re over 200% profitable. Our trade was driven by the valuation of the warrants in potential conversion management can execute when shares trade over 10 for the better part of a month. Based on the conversion table (which you can find in our initial discussion of the company, in our May 18, 2022 issue), nine months after the close of Altus’ going-public merger with a SPAC, four warrants are needed to get one share of Altus (specifically, 0.279 with AMPS at 11 today, but fractions don’t count.) That means AMPS/WS trading today at 3.30 should reflect a 13.20 price for AMPS. That anticipates better share growth ahead, but leaves warrant holders in the position of surrendering value if shares trade over 10 for the next couple of weeks and management exercises its right to convert the warrants. For a variety of accounting reasons, they almost certainly will. SELL
Constellation Energy (CEG)
Constellation is consolidating around 80 and continues to look good as it works off an overbought condition. HOLD
ESS Technology (GWH.WS)
The warrants at a recent price of 64 cents continue to fit our trade thesis which, like with Altus, is a value play if you believe shares can move over 10 in the next few years. Those shares are in the 4 area now, so it may be some time, but the company is moving in the right direction. BUY
FuelCell Energy (FCEL)
FCEL bounced off the 40-day line in the past week’s step back and is seeing good price action today. The 200-day line, at 5.23 now, is the major resistance ahead. HOLD
Origin Materials (ORGNW)
Our warrants are level with last week, around 1.27. No news. HOLD
Ree Automotive (REEAW)
Ree needs to get into production of its EV chassis, expected next year, to draw investor interest. For now, warrants are weak at 15 cents. HOLD
ReNew Energy Global (RNWWW)
ReNew beat expectations for its first quarter, reporting 9 cents net income versus consensus of 6 cents, and the market reaction has been positive. Warrants are at 1.44 recently, slightly better than last week. HOLD
Volta Inc (VLTA.WS)
Warrants are 20 cents weaker this week, at 50 cents. There’s no company-specific catalyst, so chalk it up to the recent market action. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue will be published Wednesday, September 7. Weekly updates are published every non-issue Wednesday, and any timely notices get distributed as needed. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabot.net.
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