The market remains in a bearish posture, with a number of technical signals suggesting the move downward isn’t done yet. Greentech is below its 20-day and 40-day moving averages, which are downtrending, meeting our definition of bearish and there remains a well-defined downtrend line in the broad market and Greentech. That said, we’re above the lows of May, which in itself is a sign the market may be working its way toward a turnaround.
Subsector-wise, EV stocks remain highly volatile – they populate the extremes of both our daily percentage gainers and percentage losers in Greentech and we’ve seen one, Electric Last Mile Solutions (ELMSQ – not in our portfolios) declare bankruptcy and seek to liquidate. New EV registrations surged 60% in the first quarter in the U.S., even as total new car registrations fell 16% – that works out to EVs being about 5% of new car sales in the country in that time, according to Experian data. Most of those are from Tesla (TSLA), but we’re encouraged (long-term) by the progress made by some upstarts. One is Ree (REE), which we hold warrants in. It announced today it will show off a new van model that’s been undergoing testing in Detroit.
Solar, meanwhile, continues to look the best, though another challenge of resistance at its 200-day failed yesterday and it’s testing support at its 40-day today. Wind, water and nuclear all are bearish.
Real Money Portfolio
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
No news from our Greentech SPAC holdings, which is normal for a SPAC on the hunt for a merger target. Shares at 9.88 today are a notable discount to their 10.10 trust value. warrants and rights look fine. HOLD
Clearway Energy (CWEN/A)
Clearway has made a bullish move over its 200-day average and we’re about to have a Golden Cross, when the 40-day moving average cross above the 200-day average. That’s a signal of potentially good things to come, technically. It’s bolstered by positive news today. Clearway will acquire 413 megawatts (MW) of wind properties for $415 million ($160 million of which is assumed debt) from Capistrano Partners. The turbines are in Texas, Nebraska and Wyoming. Long-term capital commitment (so aside from using cash now) for the purchase will be about $120 million, which means the company has allocated 55% of $750 million from prior asset sales it has promised to invest in new holdings. Management says plans to grow the dividend 5% to 8% a year won’t be affected. Because of the broader market conditions, we’re leaving our recommendation here. HOLD
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
The ESG SPAC remains on the search for a merger target, with no news this week. Shares at 9.80 today mean a built-in profit of more than 2% for those who wanted to buy, given the trust amount is $10 per share. We own warrants and rights from our original unit purchase. They are weaker this week on the SPAC market. HOLD
Montauk Resources (MNTK)
Renewable fuel makers including Montauk all dropped on high volume last week after the E.U. dropped its biofuels standards in response to surging crop prices. That could mean more supply on the market, but likely reflects fears something similar could be announced stateside, which would be a big negative for the renewable fuels market. WATCH
Natural Grocers by Vitamin Cottage (NGVC)
NGVC is in a tightening pattern between resistance at the 200-day average at 17.39 today and the 40-day at 15.47. The strategy in such formations is to simply wait to see where shares end up breaking out – higher or lower. WATCH
Vertex Energy (VTNR)
VTNR wasn’t really affected by the market’s biodiesel fears, in part because it makes product from recovered waste oil and has a pretty solid business refining oil traditionally at a plant it acquired to turn into a renewable diesel factory by next year. As we noted last week, the refinery will continue to make a type of pre-gasoline from oil even after the retooling, a dilemma we’ll need to evaluate as data becomes clearer. BUY
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
No news for the super-fast EV charger. We remain bullish on the business. Warrants are stronger over the past week, to around 0.51 today. HOLD
Altus Power (AMPS/WS)
The warrants keep easing after touching 1.92 after we bought them at 1.05. At 1.42 today, one can collect a nice return if you didn’t want to potentially hold the warrants for a long period and allow our original thesis to play out – to benefit from the price gains in the warrants as shares improve, given the exchange values placed on them by a company option to convert warrants to shares when shares, at 6.32 recently, trade over 10. HOLD
Constellation Energy (CEG)
The owner/operator of nuclear plants also wants to get into wind and solar and eventually mothball the few coal plants it holds. As with so many Greentech companies, pro-environmental legislation, such as Build Back Better, would be the catalyst we need to get bullish again, but that is unlikely given Congress’ swing vote is a senator with financial interests in coal companies. Nevertheless, we like CEG for the long run. HOLD
ESS Technology (GWH.WS)
We own the warrants of the iron-flow storage maker as part of a long-term trade on the current price of warrants and the conversion ratio if and when shares trade more than 10 – the same strategy we’re following with AMPS/WS, above. The warrants are at 36 today, weaker over last week. ESS is riskier, in that the company needs to book revenue on some shipped storage units and hasn’t be clear on what conditions will trigger the recognition. It did deliver a unit to a project in Sycamore, Pennsylvania, which management has indicated should be a revenue-recognition delivery. We’re holding our recommendation – there is risk, but it’s a high potential reward at this price. BUY
FuelCell Energy (FCEL)
No news from the fuel cell maker. As we’ve noted before, it will outpace Greentech to the downside and to the upside. We’re waiting for the upside to appear – our original belief is we’d be holding FCEL for about a year, from our January buy. HOLD
Origin Materials (ORGNW)
Origin will be added to the Russell 2000 and 3000 indexes – always a positive development to be put into widely tracked indexes. Warrants have dropped below a buck again this week. Once the company’s Ontario carbon-negative plastics plant is running by year’s end, expect more interest in the business from traders. HOLD
Ree Automotive (REEAW)
Ree, this morning, invited investors and analysts to check out its first EV van on July 28 in Michigan. The van, the EAVX, uses Ree’s skateboard chassis (all the electronics are in the wheel wells). It’s a walk-in van developed with JB Poindexter, a large truck maker (Morgan Olson is also mentioned as a partner – it is a subsidiary of Poindexter). Warrants are little changed so far at 19 cents, but positive news has been sparse for Ree, and this could be a spark to begin a rebound. HOLD
ReNew Energy Global (RNWWW)
Little news again this week other than paperwork around the SPAC merger, allowing shares and warrants to be sold by pre-public investors, which is normal. Warrants are holding over a buck, at 1.12. Renew is India’s largest renewable energy operator/owner. HOLD
Volta Inc (VLTA.WS)
Volta is aiming to hit a revenue target of $70-$80 million, according to an SEC filing of a recent presentation. It will begin charging for use of its EV chargers in the second half of this year. Warrants are basically unchanged over the week, at 35 cents. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, July 6. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabotwealth.com.