Ten clean energy stocks: A rocky start To 2015

2015 got off to a rocky start for both the broad market in general, as well as clean energy. My Ten Clean Energy Stocks for 2015 model portfolio dd not fare any better, since the main bright spots for the portfolio were its three Canadian stocks, but these were dragged down by the 9 percent decline in the Canadian dollar for the month.

For the month, the model portfolio was down 3.6 percent in local currency terms, but fell 7.2 percent in dollar terms.  For comparison the broad universe of US small cap stocks was down 3.3 percent (as measured by IWM, the Russell 2000 index ETF), and the most widely held clean energy ETF, PBW, was down 6.6 percent.

This year I split the model portfolio into two sub-portfolios of six income stocks (NYSE:HASI, NYSE:BGC, TSX: RNW, TSX: CSE, TSX:NFI, and XAMS:ACCEL) four value and growth stocks (NYSE:FF, NYSE:PW, NASD: AMRC, and NASD:MIXT).  

PBW (-6.6 percent) is a good benchmark for the value and growth stocks, which fell 6.6 percent in local currency terms and 6.8 percent in dollar terms.  The six income stocks fell 1.6 percent in local currency terms and 7.4 percent in dollar terms.  

All three of the Canadian stocks mentioned above are income stocks, as is the lone European stock, which was hurt by the 6.8 percent decline in the Euro compared to the dollar.  I have searched in vain for good benchmarks for equity income portfolios, but have not found any that do not contain some aspect of active management, making them poor benchmarks for differentiating between category performance and stock picking skill.  The best I could come up with are JXI, the iShares Global Utilities index, since many income stocks are also global utilities.  Global utilities are a very defensive sector, with JXI rising 1% for the month.  

To date, there are no income oriented clean energy ETFs or mutual funds, so I instead settled on the Green Alpha Global Enhanced Equity Income Portfolio (GAGEEIP), a fossil-free equity income strategy which I co-manage.  GAGEEIP fails several tests of a good benchmark.  Most importantly, it is actively managed in large part by me, meaning I'm simply comparing one of my strategies to another. It also is not a pure equity strategy, in that covered call options are used to reduce risk and increase income.  The best benchmarks are easily investable, and GAGEEIP is not yet available to investors except as separately managed accounts through Green Alpha Advisors.  For January, GAGEEIP fell 0.7 percent.  The large difference between its performance and the income stocks in the model portfolio is mostly due to better diversification, and the advantage of the covered call strategy in a down market. The chart below gives details of individual stock performance, followed by a discussion of January company news for each stock.

The low and high targets given below are my estimates of the range within which I expect each stock to finish the year.

Income Stocks

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI).
12/31/2014 Price: $14.23.  Annual Dividend: $1.04.  Beta: 0.81.  Low Target: $13.50.  High Target: $17. 
1/31/2015 Price: $13.70. YTD Dividend: $0.  YTD Total Return: -3.7%.

Sustainable infrastructure financier and Real Estate Investment Trust Hannon Armstrong did not announce any significant news for the quarter.  Analysts at Roth Capital initiated the stock with a very bullish "buy" rating and a $19 price target.  Zacks upgraded the stock from "underperform" to "neutral," and now has a $14.60 price target on HASI.

2. General Cable Corp. (NYSE:BGC)12/31/2014 Price: $14.90.  Annual Dividend: $0.72 (4.8%).  Beta: 1.54.  Low Target: $10.  High Target: $30.  
1/31/2015 Price: $11.44. YTD Dividend: $0.  YTD Total Return: -23%.

International manufacturer of electrical and fiber optic cable, General Cable Corp. was already cheap as the month began, and sold off by more than a quarter in mid-January before staging a slight recovery to a loss of 23% at $11.44 at the end of the month.  The decline seemed to halt when S&P removed its negative credit watch for the company's bonds.  Stock analysts were more bearish.  Analysts and Longbow Research downgraded BGC from buy to neutral, those at DA Davidson dropped their price target from $14 to $12, while Stifel Nicolaus cut its price target to $13 from $17.

http://www.renewableenergyworld.com/rea/news/article/2015/02/ten-clean-energy-stocks-a-rocky-start-to-2015