There’s reason to be heartened this week, as the market and Greentech continue to improve, extending on the hints of a turnaround we discussed in our issue last week. In fact, Greentech is looking better than the broader market right now, as it sits over the 20-day and 40-day moving averages (the S&P 500 and Nasdaq Tech 100 are below their 40-day) and we’re seeing Greentech’s 40-day line start to make a turn higher.
In part, the strength comes from the decision to lift tariffs on Chinese solar panel imports, which helps domestic installers and pushed the solar subsector over its 200-day moving average. Don’t get too bullish, however, because there is still chart resistance right above where Greentech (and the broader market) sit today. Coupled with some price activity that suggests the latest move is exhausting itself, we may have reached the peak of the latest move without any catalyst to bring in buyers. For Greentech – using PBW, the Wilderhill Clean Energy ETF, as our proxy – you can draw a line of resistance from December’s price peak touching April’s peak and see it sits just a couple of points above today’s prices. Taken all together, we could be seeing the start of a recovery in the sector – or we could be seeing a bear market rally running its course. Caution continues to be warranted.
We are shifting an Excelsior Portfolio warrant trade featured in our May 18 issue from Watch to Buy today. More below.
Real Money Portfolio
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
No news from our Greentech SPAC on the hunt for a merger. We’re profitable here given the shares’ 10.10 trust value plus our warrants and rights. Warrants are at 21 cents today, rights at 22 cents. Shares at 9.84 today offer a low-risk 3.66% yield through its search window, ending August 2023 if the SPAC exercises its option to extend its search until then (which would add another 10 cents to the trust value). HOLD
Clearway Energy (CWEN/A)
We’ll collect a dividend of $0.3536 per share next week, having gone ex-dividend on the U.S. clean energy producer on May 31. Shares have completed a double bottom formation this week of a particular type that suggests we could see a move toward 38, but also suggests we should likely seek to take profits at that target. We may also see a pullback to a convergence of support around 31 before that. Our sell-stop is ‘around 28.’ HOLD
Darling Ingredients (DAR)
DAR is pushing over the long-term range this week, but shares seem like they may be overextended and may need to ease back toward the moving averages a bit. There’s been little news. We’re raising our sell-stop from ‘below 62’ to ‘below 73,’ where the 200-day line sits today. HOLD
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
We’re also profitable on the ESG SPAC, given its trust value of 10 plus the value of warrants and rights, both trading at 11 cents today. At today’s price of 9.74, GFGD shares present a fine, low-risk 3.69% yield through the SPAC’s search window, ending September 2023 if the SPAC exercises its extension option, adding another 10 cents to the trust value as a result. HOLD
Natural Grocers by Vitamin Cottage (NGVC)
Shares are drifting down, with a test of support in the mid-15 area seemingly inevitable. That may present a set-up to enter the organic grocer, depending on circumstances at the time. WATCH
Vertex Energy (VTNR)
Our featured stock last issue is performing as expected, rallying to 18 – a 15-year high – Tuesday. The portfolio added shares last Wednesday at 13.88, the midpoint between the high and low for the day (the issue was in subscribers’ inboxes before the market opened on June 1). The rally puts shares close to one target – about 18.70 – based on chart projections from the May 9 breakout. That would be a logical place to take profits for a quick return and/or if you expect energy prices to ease because right now Vertex primarily depends on traditional oil prices as it converts its Alabama refinery to renewable diesel for 2023. We’re leaving our rating at ‘Buy’ because we feel VTNR continues to be cheap on an EV/EBITDA basis compared to oil and gas peers and the company should be quite profitable next year once it is producing renewable diesel. BUY
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
Very little volume in the warrants this week, and we’re a little lower. No news, but we are seeing signs long-term investors are buying the fast-EV charger company, with Invesco disclosing 2.4 million shares. HOLD
Altus Power (AMPS/WS)
We’re up about 56% on the trade, with warrants at 1.65 today. Our strategy is to see warrants continue to appreciate as (if) Altus shares improve to over 10, where management would then have a cashless redemption option at rates that would represent a significant profit to our buy price. Shares are in the 7 area of late. Little news. HOLD
Constellation Energy (CEG)
67 seems to have formed a bit of resistance for the nuclear power company, with support around 61. With shares in the mid-64 area, we’re basically at a wash right now. Little news. HOLD
ESS Technology (GWH.WS)
A featured trade in the May 18 issue, we had ESS Tech’s warrants on ‘Watch.’ The maker of iron-flow batteries has been sold down by investors because the business has been unable to recognize revenue for units shipped for a microgrid project, due to a contractual clause with a San Diego utility management hasn’t detailed. That microgrid, Cameron Corners, will be unveiled next month, according to a story in the San Diego Union Tribune newspaper Tuesday. Odds are once that occurs ESS will be closer to recognizing revenue. We also are heartened by management’s presentation to a brokerage conference yesterday that they are seeing more interest from Europe as a result of energy policy shifts with the Ukraine war, and confidence that supply chain issues shouldn’t delay their products any longer. Also, ESS Tech expects to start seeing predictable revenue recognition from new contracts next year. Our goal with the ESS warrants is to take advantage of the inherent value warrants would have if/when shares hit a company option for mandatory cashless warrant redemption (when shares trade over 10 for 20 days of any 30-day period). Essentially, at recent prices in the 59 cents area the conversion would represent a deep discount to their value at such time. This is potentially a long-term wait to see pay-off (the warrants expire October 2026). BUY
FuelCell Energy (FCEL)
The company has a memorandum of understanding with TuNur, an independent green energy company in Tunisia, to pursue green hydrogen creation and transport to Europe. TuNur was formed to pursue export of clean electricity from North Africa to Europe. Right now it is developing a government-awarded 10 megawatt solar plant in Tunisia and is also pursuing a transmission line to Italy. There are no financial details between FuelCell and TurNur to hang our hat on. Earnings will be announced before the open tomorrow (June 9). Consensus is for a loss of 5 cents per share on sales of about $33 million. HOLD
Origin Materials (ORGNW)
Origin earned the U.S. Department of Agriculture ‘Certified Biobased Product’ label for multiple products. The certification means Origin’s furandicarboxylic acid, purified terephthalic acid, and para-xylene, when produced at full commercial capacity, are expected to be 100% biobased, allowing Origin to display a unique USDA label highlighting this designation. That’ll be a strong selling point for the alternative plastics maker. Warrants are a little softer at 1.44 today. HOLD
Ree Automotive (REEAW)
Little news and warrants remain weak, at 19 cents this week, little changed from last week. HOLD
ReNew Energy Global (RNWWW)
ReNew will report fourth-quarter and fiscal-year results next Tuesday after the market close. That obviously will influence how the warrants move. In the meantime, they are unchanged over the week at 1.50. HOLD
Volta Inc (VLTA.WS)
Volta is partnering Catalina, a shopper intelligence business, to measure incremental price gains at retailers sitting near Volta’s EV chargers, which carry display ads similar to a bus shelter. If Volta can demonstrate sales lift, it benefits their business pitch. For now warrants remains on the weaker side, at 42 cents. HOLD.
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, June 15. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabotwealth.com.