After publishing Progressive Investor since 2002 - the first green investment newsletter - we are merging with our sister newsletter, The Green Investor.
Rona Fried, Ph.D., editor and publisher of Progressive Investor, and CEO of SustainableBusiness.com, will continue to be involved with the combined newsletter, which will change its name to The Green Investor.
After a strong October, November was an up and down affair for the markets. Investor concerns returned to a favorite destination, Europe and its sovereign debt issues. Ireland came to the brink of defaulting again but, as it now appears to be working a bailout agreement with the EU and the IMF, the focus is turning to the next targets of the contagion: Portugal and Spain. Geopolitical concerns added to the tension, with the two Koreas exchanging artillery fire, poisoned words and warnings that the Peninsula is on the "brink of war."
A most welcome bright spot came from a new Rasmussen Reports survey which finds that 63% of likely U.S. voters say renewable energy is a better long-term investment than fossil fuels such as oil, gas and coal. Some 27% feel that investing in fossil fuels is a better decision and 11% are not sure (Read the complete results here)
Speaking of long-term investments, Garrett Beauvais' article this month on "Tax Loss Harvesting" brings up the topic of long-term gains for those of you investing in taxable funds. He finds 9 positions in our portfolio which have been held over a year which would qualify for long-term gains. He also observes they are up an average of 31.15%, including the two losers we are dumping today!
While the broad stock market was essentially flat during the month of November, with the S&P 500 index losing a fractional 0.23%, the renewable energy sector was outright weak, with the S&P Global Clean Energy Index and our Green Portfolio dropping 12.32% and 5.71% respectively.
Most energy sectors have been volatile lately, but most renewable categories were down for the month. The biggest loser was the solar group which lost an average of 16.11%. All our solar stocks gave back some of their earlier gains, but none more than STR Holdings (STRI) which got punished when it beat estimates in their most recent quarterly report but said it expected lower margins down the road.
In a month in which the positives are hard to find, we value the strength Tata Motors (TTM) continues to demonstrate by gaining 16.32% during the month.
Since inception some 16 months ago, our portfolio is up 24.74% - stellar performance when compared to a disastrous drop of 36.72% for the benchmark S&P Global Clean Energy Index.
We would like to point out, to our new subscribers in particular, and to others who have maintained a wait and see posture, that this holiday shopping season is a perfect time to build out your portfolio. All the companies listed in our Green Portfolio are recommended "buys." In this issue we'll highlight some special situations which are at attractive buy points. If you need more green investing ideas or want to keep up with other green stocks, check the Stock Ratings page which Rona Fried compiles for your benefit.
Remember, the back issues are freely available to you as part of your subscription. Just log-in and read them.
Enjoy and Learn!
With all the hoopla and pizzazz of renewable energy sources like solar and wind, it is easy to forget that the most widely available and cheapest form of clean energy happens to be energy efficiency, or the energy that is not spent or that is recovered instead of wasted. Looking at the levelized cost of energy which takes into account all contributors to the cost/watt over the lifetime of an installation, efficiency has the lowest cost of any source of energy. In one word: efficiency is the proverbial low hanging fruit, and it is pervasive. With analysts projecting higher and more volatile energy prices down the road, efficiency improvements become a more urgent concern.
The U.S. Department of Energy has published reports showing that buildings account for nearly 70% of our national electricity demand and half of the natural gas consumption. The annual cost of wasted energy by inefficient incandescent lighting alone amounts to $18 billion.
It is estimated that less than 1.5% of the office space in the United States has undergone much needed energy evaluations and retrofits. Research firm McKinsey estimates the size of this retrofit market to be over $400 billion, enormous considering that the energy service companies as a group are projected to generate some $6 billion in sales this year.
McKinsey further reports that annual energy consumption in the U.S. could be cut by 23% over the next 10 years through various efficiency measures which equates to savings $1.2 trillion for the economy.
Let's review where such savings could be found and how investors can benefit from them. As we outline the surprisingly vast field of energy efficiency we take the opportunity to highlight some of the Green Portfolio holdings which are directly or indirectly involved. If they are not yet in your portfolios the companies we highlight below are good buys.
Read the complete article.
Quick, Easy Way to Increase Gas Mileage, Reduce Emissions
by Rona Fried
In October, Maxwell Technologies (Nasdaq: MXWL) announced it had begun volume deliveries of Boostcap ultracapacitors to Continental AG to be incorporated into their new Stop-Start system for diesel passenger cars. Peugeot- Citroën plans to sell about a million cars equipped with this technology over the next three years.
Why is Stop-Start important? Because it's a very inexpensive way to significantly reduce emissions and increase gas mileage in conventional vehicles. The technology comes standard in hybrids - it's now being adapted to work in all vehicles. It could be standard equipment for all new cars by 2020.
Stop-Start systems eliminate idling. When you put your foot on the brake to stop a car, the system turns the engine off. When your foot touches the accelerator, the engine starts again. This simple technology reduces gas consumption by 10% in average city/highway driving to almost 20% in congested city traffic.
Although various energy storage technologies are being developed for advanced vehicles, Stop-Start systems are widely viewed as an affordable, effective technology that's available now, and will therefore be one of the first to gain mass acceptance for all vehicles.
That's important because although advanced vehicles - hybrids, plug-ins and all-electric - will slowly gain market share, the vast majority of vehicles sold over the next 10-20 years will be conventional vehicles.
Market research firm J.D. Power and Associates projects about 5.2 million advanced vehicles will be sold in 2020, just 7.3% of the forecasted 70.9 million passenger vehicles sold worldwide that year. PRTM, another market research firm, is much more optimistic: they see hybrids grabbing a 20% share of the market by 2020, with plug-ins at 5-6% and electric vehicles at 4-5% of the total.
Stop-Start technology took up an entire day at this year's European Lead Battery Conference in Istanbul. Automakers are working on how best to integrate it into conventional cars. The engine has to be able to start and stop on demand and the battery has to support accessory loads (such as air conditioning) when the engine is turned off. The system works well when batteries are new, but quickly degrades as they age.
There are two main choices: either add a premium lead acid battery (which costs only a couple hundred dollars) along with other improvements, or install a bank of ultra-capacitor energy storage devices, which have the ability to cheaply and quickly charge and discharge energy.
Maxwell (MXWL) is the world's leading ultra-capacitor manufacturer. Its products are used in regenerative braking devices in hybrids and electric vehicles, wind turbines, and consumer devices like uninterruptible power supplies. They can also play a significant role in grid storage, where their ability to discharge rapidly could be used to smooth electricity transmission.
Under new EU standards, fleet-wide carbon emissions for passenger cars have to be reduced to an average of 130 grams per kilometer by 2015 - that's equivalent to 42 miles per gallon for gasoline-powered cars. In the United States, the fleet average fuel economy for passenger cars and light trucks combined must be 32.6 miles per gallon by 2015 and 34.1 by 2016.
While Stop-Start technology can't satisfy all the new regulatory requirements, it is the lowest hanging fruit for vehicle efficiency. Auto industry experts predict that Stop-Start will be used in 20 million cars a year by 2015. If, as planned, China mandates Stop-Start on all internal combustion vehicles, the number could be closer to 40 million cars per year.
Large-scale fleet demonstrations for competing energy storage products are expected in 2011, followed by commercial rollout in 2013 model-year vehicles. In addition to Maxwell, leading contenders in the space include lead-acid battery manufacturers like Exide Technologies (XIDE), Johnson Controls (JCI) and Enersys (ENS). They see it as a way to boost sales and margins by selling a more advanced battery. Axion Power (AXPW.OB) has completed over a year of testing with BMW, and is developing a lead-carbon battery-supercapacitor hybrid to compete with the Maxwell-Continental system for a share of the Stop-Start market.
There will be room for several variants of Stop-Start technology and for a number of successful companies. The biggest challenge will probably be to ramp up production capacity fast enough to satisfy demand.
The Green Investor Recommendation Update
We continue to recommend buying Maxwell Technologies (MXWL) for all the reasons listed here and in our initial recommendation. After strong gains in 2009, MXWL shares paused during most of 2010 and didn't deliver on our expectations. Despite healthy sales growth from its ultracapacitor business. Maxwell has struggled to achieve profitability this year and the stock has been punished for it. We believe that after the adjustments made by management the company is now poised to execute its plan. If it does, the company and its shares should reflect significantly higher multiples.
Rona Fried, Ph.D. is CEO of SustainableBusiness.com.
The first point we want to make is that investing in individual stocks presents some inherent risks, which is why we like to maintain a diversified portfolio in which any single company only represents a small percentage (we like 8% maximum as a guideline). Since there are companies across the entire risk spectrum, we established our Risk Class rating from conservative to moderate, aggressive and finally speculative. Our speculative recommendations are fairly rare and they always come with a safety net, generally in the form of a 30% stop-loss.
As a small-cap Chinese stock, Rino International (RINO) always met several of our speculative criteria and accordingly we recommended setting stop-loss orders at $11.18. We never like a losing trade but when things go bad for a stock they can go bad quickly and nothing but a protective stop-loss order can protect you, and even those are no guarantee of a sell or of a sales price. In the case of RINO our stop orders worked as planned and protected us from larger losses.
Read the full article.
Garrett Beauvais, Contributing Editor
The Green Portfolio : Selling 2 positions this month!
The decision to sell Vestas Wind Systems (VWDRY.PK) and to sell the PowerShares Global Clean Energy ETF (PBD) has become easy at this point but not one we take lightly. No investor plans to lose money, however, it is clear to us that the outlook for these two holdings is not improving.
First Vestas has continued to disappoint us and most of their investors and Vestas' share price reflects this. Vestas' financial releases have simply been one disappointment after another with the most recent being the closure of more production facilities on the heels of last quarter's reduction in revenue guidance.
Vestas still has, in our opinion, what is most likely the strongest wind technology portfolio, however Siemens, and to a lesser extent, GE are really hurting them on the high end of the market while they are getting blitzed by a whole slew of low cost Chinese companies for projects in China on mid level and lower-end systems in China (we plan on writing about these in our January 2011 newsletter). Add to this the relative strength of the Euro until recently, the lack of a national U.S. energy policy, and the dramatic reduction of wind projects in Europe and the U.S. as both regions struggle to return to growth after recessions and it has been the perfect storm for Vestas.
Is this the time to get in you ask? Maybe, but we're going to step aside and focus on our other better performing wind investments until there is more clarity at Vestas.
With respect to the PowerShares Global Clean Energy ETF (PBD), we are slowly coming to the conclusion that many of the broad alternative/clean energy funds are simply mediocre, sticking to indexes that are poorly, even oddly constructed. While some of the more focused alternative energy ETFs such as TAN (solar) and FAN (wind) are a reasonable way to play those technology sectors, we are backing away from the broader funds and selling our PBD position given our success at building out our Green Portfolio which has far and away beat all of these funds since its inception.
While we don't doubt that when the global economy gets humming some years from now and fear about exhausting supplies of oil and gas (and almost all natural resources) takes center stage, the rising tide will lift all energy-related investments, it is frankly quite clear that we are not in this scenario now and these funds don't make a lot of sense at the moment.
Read the full article.
Ameresco, Inc. (AMRC) - December 3, 2010 - NEW BUY
Vestas Wind Systems (VWDRY.PK) - December 3, 2010 - POSITION CLOSED
Maxwell Technologies (MXWL) - December 3, 2010 - RENEWED BUY
Ameresco, Inc. (AMRC) - December 3, 2010 - NEW BUYAmeresco, Inc. will be added to the portfolio in the Energy Efficiency category, Moderate Risk Class, at the closing price on December 3, 2010.
Vestas Wind Systems (VWDRY.PK) - December 3, 2010 - POSITION CLOSEDVestas Wind Systems has not met our expectations and we recommend selling it. We will close the position on December 3, 2010.
PowerShares Global Clean Energy Portfolio (PBD) - December 3, 2010 - POSITION CLOSED
The PowerShares Global Clean Energy Portfolio fund has not met our expectations and we recommend selling it. We will close the position on December 3, 2010.
RINO International Corp. (RINO) - November 11, 2010 - POSITION CLOSED
RINO International Corp. hit the $11.18 stop order we recommended for downside protection. We closed the position with a 26.54% loss.
See our portfolio here.