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Below is last week’s issue, written by me – managing editor Nick Hodge. Members are entitled to weekly insights, as well as instant alerts when it’s time to buy or sell a stock.
Read the latest update and decide if it’s the type of analysis you’d be interested in receiving. If so, there’s an opportunity to try The Speculator risk-free.
Happy Holidays,
Nick
Dear Green Investors,
If you’ve been paying attention, you know that the portfolio has been on a good run lately.
All things considered, I’d like to think this means we hit the bottom—though I know we’re still in for some rough patches ahead.
Here’s a six-month chart of some representative stocks from our portfolio:
After slipping badly from September through late November, at the height of the mortgage and credit crises, green energy and related infrastructure stocks now seem to be trending upward.
I’d have to say this is mostly due to the election of a new president who is highly in favor of renewable energy and isn’t afraid to show it.
He’s nominated several (renewable) energy-savvy people, instead of next-in-line bureaucrats, to man energy and environmental posts, people like:
James Jones for national security advisor — also the CEO of the Institute of the 21st Century, a group developed by the U.S. Chamber of Commerce to promote energy development and conservation
Lisa Jackson for head of the EPA — led the New Jersey Department of Environmental Protection and is credited with helping put New Jersey in a leadership role on the issue of climate change by encouraging the state to adopt a moratorium on building new coal plants, increasing renewable energy targets, and involving the state in the nation’s first cap-and-trade carbon scheme
Steven Chu for energy secretary — Nobel physics laureate and the head of the Lawrence Berkeley National Laboratory, where he’s been developing and promoting new alternative energy technologies
Carol Browner for energy czar — a former legislative director for Al Gore
Bill Richardson for commerce secretary — former energy secretary under Clinton and staunch supporter of renewable energy
I think we have more than an adequate supporting cast to push through legislation that is in our best financial interests.
They’re already putting together another bailout, reportedly topping $850 billion, as of this morning (Dec. 18th). It will primarily focus on energy and infrastructure spending, as well as on state aid for unemployment and health-care programs.
We need to be getting ready. In a moment, I’ll have some new trading instructions. For now, I want to cover a few more events that are helping to ignite a new alternative energy rally.
The Fed’s recent slashing of interest rates has sent the dollar plummeting against the euro. This is a boon for solar companies that trade in the U.S. but report sales in euros. A 2.30 EUR Yingli solar panel sold in Spain in 2009 is now worth $3.29. The price would’ve been just $2.88 a few weeks ago. For investors worried about declining average selling prices (ASPs), this should serve to eliminate some of those fears. Plus, a negative foreign exchange rate that hurt balance sheets in the last quarter will now add to the bottom line in the next quarter.
After recent climate talks, the European Union has now endorsed a 20% renewables target by 2020, along with a 20% cut in greenhouse gases. This is great news for any renewable company doing business in Europe, of which we have plenty in the portfolio. The impact will be most significant on the wind industry.
What to Do? What to do?
First off, let’s look to take half of our hard-earned profits from SunPower (NASDAQ: SPWRA). Sell half your position for up to 60% gains should the stock climb back up around $40.00. It’s trending downward today, so don’t do it just yet. Hold the other half for further upside. I will send a reminder, and the portfolio will reflect the change should our sell-half price be reached.
Let’s also buy into XXX (NYSE: XXX). In addition to offering hundreds of heavy products that will be fundamental in the build-out of infrastructure and renewable energy projects, they also finance renewable energy projects, are fundamental in the waste-to-energy market, are active users of renewable energy at their plants, and are aggressively pursuing green products in China’s booming market.
A dozen or so stocks in the portfolio have made nice runs over the past couple of days. Most notably, we’re now up 20% on Energy Recovery (NASDAQ: ERII), 13% on JA Solar (NASDAQ: JASO), and 10% on Insituform (NASDAQ: INSU).
If you’re ever comfortable taking gains, don’t hesitate to sell for profits. For the purposes of this service though, I’m going to recommend holding all other positions for more significant gains.
Be sure to continue to use the ‘buy under’ column of the interactive portfolio to make investment decisions.
Stocks on my radar include Fluor (NYSE: FLR), Tetra Tech (NASDAQ: TTEK), John Deere (NYSE: DE), and Itron (NASDAQ: ITRI); but, hold tight for now. I’ll send an alert when and if it’s time to buy in.
Call it like you see it,
Nick
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