Thursday, March 13, 2014

Ten Clean Energy Stocks for 2014: March Update

Thursday, March 13, 2014
After a rough January, the stock market recovered in February, while clean energy stocks partied like it was 2013.

My annual Ten Clean Energy Stocks model portfolio also had a good month, rising 6.0 percent, and is now up 4.7 percent for the year in dollar terms, and up % in local currency terms. My broad market benchmark (the iShares Russell 2000 index) is up 7.5 percent for the period and 1.5 percent for the year. Clean energy stocks soared higher, with the Powershares WilderHill Clean Energy ETF (NYSE:PBW) up 16.3 percent for the period and 15.7 percent for the year.

Turning to individual stocks in the model portfolio, several companies have reported 2013 results. I cover this and other significant news below.

Individual Stock Notes

(Current prices as of February 3rd, 2014. The "High Target" and "Low Target" represent the ranges within which I predicted these stocks would end the year, although I expect a minority will stray beyond these bands due to unanticipated events.)

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
Current Price: $14.05. 12/26/2013 Price: $13.85. Annual Yield: 6.3%. Low Target: $13. High Target: $16.
YTD Total US$ Return: 1.4%

Sustainable Infrastructure REIT Hannon Armstrong announced full year results. While management reaffirmed their 13 percent to 15 percent target for core earnings and dividend growth, the company took a provision of $0.69 per share on investment in a geothermal loan, which was a larger write-down than I had anticipated. Some of this may be recovered in future quarters.

Because of the loss, management presented significant details about the credit quality of its other assets in the conference call, 96 percent of which is investment grade. This seems to have reassured investors, as the stock has been rising to bring its yield more in-line with other clean energy income stocks.

2. PFB Corporation (TSX:PFB, OTC:PFBOF).
Current Price: C$5.30. 12/26/2013 Price: C$4.85. Annual Yield: 4.5%. Low Target: C$4. High Target: C$6.
YTD Total C$ Return: 10.5%. YTD Total US$ Return: 6.8%

Green Building company PFB scaled back its stock repurchase program in February, but board member and large shareholder, Edward Kernaghan has continued his purchases, buying 3,700 shares since the last update. The company paid its regular C$0.06 dividend in February.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).
Current Price: C$3.84. 12/26/2013 Price: C$3.55. Annual Yield: 7.8%. Low Target: C$3. High Target: C$5.
YTD Total C$ Return: 10.3% . YTD Total US$ Return: 6.6%

Independent power producer Capstone will hold its annual results conference call on March 7th.

4. Primary Energy Recycling Corp (TSX:PRI, OTC:PENGF).
Current Price: C$5.44. 12/26/2013 Price: C$4.93. Annual Yield: 4.1%. Low Target: C$4. High Target: C$7.
YTD Total C$ Return: 11.5% . YTD Total US$ Return: 7.8%

Waste heat recovery firm Primary Energy announced the long-anticipated recontacting of its largest facility on Friday. In the two trading days since, only 920 shares have traded, compared to a three month average daily trading volume of over 20,000 shares. This reflects a lack of willing sellers as shareholders await the company's annual results, to be released on March 18th.

5. Accell Group (Amsterdam:ACCEL, OTC:ACGPF).
Current Price: €14.27. 12/26/2013 Price: €13.59. Annual Yield: 3.9%. Low Target:€11.5. High Target: €18.
YTD Total € Return: 5.0% . YTD Total US$ Return: 5.0%

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