Independent Investment
Advice Since 1970
Update
Cabot Green Investor Update 6/26/08
A survey released today indicates that 78% of Americans expect gasoline to reach $5 a gallon by Labor Day. Given that OPEC ministers today are also saying they see oil hitting $170 a barrel by then, the consumer deserves credit for being pretty good at predictions -- at $170 a barrel, a gallon of gasoline would cost a portrait of Abe Lincoln suitable for framing. The same survey, by the Civil Society Institute, a D.C. think-tank inclined toward clean energy, says 83% of the 1,005 Americans polled (and evenly split among Republicans, Democrats and Independents) agree with the statement: "The effects of global warming require that we take timely and decisive steps for renewable, safe and clean energy sources. We need transitional technologies on our path to energy independence. There are tough choices to be made and tradeoffs. We cannot afford to postpone decisions since there are no perfect options."
Pretty compelling stuff, especially considering that the government seems to feel so differently from those it represents. The newspapers earlier this week noted that the White House wouldn't even open emails at the start of the year from the EPA discussing global warming and carbon emissions.
If we could discuss the long-term picture itself, we would, but there is no ignoring the market. The S&P 500 seems to have used June to solidify itself into a downtrend after recovering a bit in April and May. In times of trouble, growth stocks like Green aren't viewed as a safe harbor, so it's no surprise to see our portfolio sold down across the board today. Technicals, for the most part, still seem strong and while the tide of the broader market may slow the rise for Green, the situation doesn't seem terribly dire for those with a little bit of patience to ride out today's troubles. Make no mistake though, now is a time to be on defense.
A-Power Energy Generation Systems (APWR)
Bought at 23.36. Recent price: 27. Recommended June 5.
Shares have worked down the past week but still volume has been light and the trend is still fairly strong, well over the moving averages. We think the correction is nearly over. BUY
American Superconductor (AMSC)
Bought at 25.80. Recent price: 38. Recommended May 1. [Half of holdings were sold June 13 for a 60% profit.]
AMSC celebrated the first commercial use of its superconducting wire (by the Long Island Power Autority) this week, but investors apparently didn't feel like partying. Shares continued to back off, and now suggest that the 44 mark presents fairly significant resistance, with a number of closes under that high water mark. HOLD.
Clean Harbors Environmental Services (CLHB)
Bought at 62.09. Recent Price: 74. Recommended March 6.
Clean Harbors pushed to an all-time high of just under 77 this week, and remains positive technically. Short-term market travails don't affect Clean Harbors' business of disposing of hazardous waste, so shares should also show less downside in a negative market. BUY.
Energy Conversion Devices (ENER)
Bought at 64.90. Recent Price: 76. Recommended June 5.
ENER has been very strong since we recommended it, and this week's slight pullback is nothing to be greatly concerned about. The 70 mark looks to provide good support, and provided the broader market cooperates, we'd expect shares to test the recent high of 81. Given the strong momentum ENER has had, we're keeping shares on a cautious BUY.
Gushan Environmental Energy (GU)
Bought at 11.49. Recent price: 12. Recommended February 7.
Gushan may be suffering from being lumped in investors' minds with ethanol companies, whose shares and prospects grow dimmer by the day. Gushan is volatile, but its business of making diesel from waste oil in China seems well secured. Technical action is less positive, with shares below their 50-day moving average and testing strong support at these levels. Fundamentally, Gushan should be benefiting from stronger prices in China and on a price-to-earnings view, the stock appears to be a relative bargain. We continue to believe that Gushan has major upside, though caution is advised with these shares at present. BUY.
JA Solar Holdings (JASO)
Bought at 22.20. Recent Price: 18. Recommended May 1.
JA Solar is looking a little oversold, but continues to lack much of an argument for its upside, chart-wise. Today's breakdown through the prior low of 19, combined with our small loss, are reason enough to sell. SELL.
Sims Group, Ltd (SMS)
Bought at 31. Recent price: 39. Recommended April 3.
Sims is up on the week and its chart is looking very nice. The Australian-based firm announced this morning it is selling its Australia steel distribution business for an unannounced sum to focus on its global recycling business. This isn't huge news, but a company like Sims isn't one to watch for drama. It is good for fundamentally sound growth, though. BUY.
The next issue of Cabot Green Investor will be out after the market closes next Thursday, July 3.