A sizeable drop in the market indexes yesterday got all the headlines, as it leads to concerns the Federal Reserve will be more aggressive in raising interest rates to tamp down inflation that isn’t cooling as quickly as hoped. The drop plunked the markets on top of a zone of support – all the trading that happened below current levels in mid-June to mid-July – so there is no need to panic.
The good news is Greentech is holding up much better than the broad markets. The Nasdaq Clean Edge Green Energy Index (QCLN) is consolidating over its 40-day and 200-day averages and showing no technical damage at all, while the Wilderhill Clean Energy Index (PBW), which is more representative of the broad Greentech universe, is right around its 200-day and 40-day averages, which are converging. That means current prices are an area we really want to see held. In a positive sign around that, volumes were very good for the indexes the past two days and, while 90% of Greentech stocks fell yesterday, trading Tuesday showed a good response from bulls, who came in strong on many stocks to have them finish in the upper half of the day’s range. That means while stocks ended lower on the day compared to Monday, bears couldn’t push things further after their opening sell-off and we saw a lot of opportunistic buying. That said, Greentech stocks with more fossil fuel exposure (think alternative transportation fuels) had a worse day than everybody else.
There are no trades, with a couple of tweaks to our sell-stops and recommendations, below.
Real Money Portfolio
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
No news for the SPAC still on the hunt for a merger. Rights are a little stronger this week; warrants basically unchanged. HOLD
Clearway Energy (CWEN/A)
CWEN/A remains on top of support and looks fine. Technically there is still a path for a decent rise from here. Our sell-stop remains “around 28.” BUY
Energy Recovery (ERII)
We recommended buying ERII Friday, with a special bulletin sent to subscribers that morning. We had been watching 25.50 as a level that would confirm a break over prior resistance. The portfolio added a full-sized position at 25.57 Friday, the midpoint of the high and low of trading. Shares haven’t advanced since, but volume and trading look good and suggest shares should be able to work higher from here. BUY
Enovix (ENVX)
ENVX is still in a range of 18.50 to 25, with plenty of support at 18.50 down to 16. Shares suggest they are making a run to test near-term resistance at 25 soon. BUY
Enphase Energy (ENPH)
ENPH looks fine, consolidating in a range of 280-300, with action the past week showing shares may be readying a move higher. 305 is resistance. BUY
Growth for Good Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
No news from our ESG-focused SPAC seeking a merger. Trading in rights and warrants is extremely light, with few changes. HOLD
Li Auto (LI)
LI has been weak on mediocre August vehicle deliveries, falling to a three-month low during trading on Monday. Sentiment has improved since and shows shares may be working higher again from here. The outlook for the China EV market is great. HOLD
Montauk Renewables (MNTK)
MNTK fell 6% yesterday, but the drop largely confined itself inside Monday’s trading range, which is a sign little technical damage was done. They’ve perked up again early Wednesday. We’re going to put on a sell-stop of “near 15” since there is support right around our buy price of 15.51, and we want to give a little leeway for that to kick in if shares fall back. BUY
Onsemi (ON)
ON fell to support at the 40-day moving average and doesn’t look great on the daily chart. But the weekly and monthly charts show that overall, shares remain good, technically. Still, the semiconductor maker probably can’t swim against the larger tide if inflation continues to worry the broader technology sector. We’re shifting our rating from Buy. HOLD
Ormat Technologies (ORA)
ORA is consolidating in the 92-97 area, while recent trading signals suggest shares may ease to the bottom of that range in the near term. Support is around 91. Our sell-stop remains around 85.30. BUY
Shoals Technologies (SHLS)
The featured stock in last week’s issue, Shoals is a little weaker, slipping toward support at 24. Price internals (stochastics, for the technical analysis-minded) suggest it may not be a time to buy, however, with a near-term downtrend indicated. WATCH
Sunrun (RUN)
RUN is looking positive. There’s still a fair bit of short interest in the shares, which could juice any rally from here on short covering. We’re holding off on buying given the broader market issues this week and a desire to see PBW hold support. WATCH
Vertex Energy (VTNR)
Work at its Mobile, Alabama refinery to produce renewable has been delayed, so Vertex management says the year-end opening of production has been pushed to the second quarter of next year. It will benefit the bottom line this year by pushing off some costs but is another sign perhaps management doesn’t have its act together. Shares are holding the recent consolidation zone in the 7.75-8.75 area. HOLD
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
The German EV charger maker isn’t getting a lot of love in the market yet, but it continues to execute well on its business plan. Full-year 2022 revenue guidance was affirmed Monday at 90 to 100 million euros. In first-half results released Monday, the company generated 9.4 million euros revenue and a loss of 4.8 million. But in a sign of momentum, while first-half orders were good at 71 million euros, August alone brought in 152 million euros in orders. The business shows good momentum in expanding its base out of Germany, and we like the good relationship between it and Porsche as a general halo for ADS-Tec’s brand of superfast chargers. Warrants are unchanged over the week and shares are actually a tad softer. HOLD
Constellation Energy (CEG)
CEG is starting to work a little higher, benefitting from a spate of brokerage analyst upgrades the past week. There’s little news and, technically, shares may not blast higher off recent levels, but they continue to show well. HOLD
ESS Technology (GWH.WS)
The iron-flow battery maker warrants are around 68 cents, a little better over the week. No news or filings so far this month. BUY
FuelCell Energy (FCEL)
FuelCell Q3 revenue was up 61% to $43.1 million, with a net per-share loss of 8 cents, compared to expectations of a loss of 6 cents. The outlook was mixed – the bad news is that a U.S. Navy project in Connecticut will be operating at 80% contracted capacity while engineers work to perfect a system to get the cells to operate at higher throughput. The good news is management says that is unique to the Navy’s demands, not a problem with other fuel cells in deployment, and the Navy has adjusted the contract to allow FuelCell more time to work it out. The other positives are a generally optimistic outlook on customer interest in the cells and improvements in the supply chain (the vast majority of components are now U.S. sourced). There is not a lot of solid sales guidance, however, which keeps shares under resistance. HOLD
Origin Materials (ORGNW)
Warrants are basically unchanged over the week, at 1.25. Trading in shares is choppy with little news, but there’s nothing for concern we see. HOLD
Ree Automotive (REEAW)
Ree is offering to convert every five warrants to one share in a tender ending September 22. We recommend doing this conversion because it does remove some warrant-related risk in the future. This conversion must be done through your broker. There is a proposal for the company to forcibly convert warrants afterward at a less-advantageous ratio. CONVERT WARRANTS TO SHARES IN COMPANY TENDER.
ReNew Energy Global (RNWWW)
Warrants are a touch firmer at 1.36. HOLD
Volta Inc (VLTA.WS)
EV charging stocks are better today on the first climate bill funding coming through. Warrants are softer on the week at 55 cents. HOLD
Our next SX Greentech Advisor issue is published Wednesday, September 21. 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@cabotwealth.com. Thank you for subscribing.
The estimated carbon generated in the production and distribution of this newsletter is offset by CO2 removal with Climeworks at its plant in Iceland.