The Week In Cleantech: March 13-19, 2012
Posted: 19 Mar 2012 08:14 PM PDT
March 13: Do Tesla (NASDAQ:TSLA) Shorts Get Burned?
§ LED-maker Energy Focus, Inc. (OTCBB:EFOI) announced this morning that it entered into a 5-year cooperation agreement with Communal International, Inc. Under the terms of the deal, Communal will introduce Energy Focus to new potential customers in Asia and assist in reducing manufacturing cost. This is a stock we played a few years ago for massive gains after the company landed a number of deals with the U.S. Military. Not sure how today’s news will impact the stock, but it could be good for a quick pop. We’ll find out shortly.
§ Last month, I reported in our Modern Energy Roundup that there was a lot of short action on Tesla Motors (NASDAQ:TSLA), but I wasn’t willing to take the short bet, writing: “Tesla has a way of burning those who bet against it too much.” Well, yesterday the stock hit a 52-week high of $36.29. Will it keep heading north? Probably. Morgan Stanley actually has a $44 price target on this one. But I wouldn’t be in a rush to pick some up now. I’d let it cool off a bit and look to pick some up on dips.
March 14: First Solar (NASDAQ:FSLR) Lands Major Deal With FirstEnergy Corp. (NYSE:FE)
§ ABB (NYSE:ABB) announced today that it signed a deal with ECOtality (NASDAQ:ECTY) to utilize ECOtality’s exclusive network for ABB’s electric vehicle charging systems. This isn’t really much of a surprise as ABB ponied up $14 million for a piece of ECTY last year.
ECTY has been on a downtrend since last summer and continues to attract bears like honey, salmon and oblivious campers who want to befriend grizzlies. Although the company does seem to regularly land installation deals, the fact that much of its earlier momentum was facilitated by the government makes it a target. All in all, it’s not a bad company. But it is battling the growing pains that come with any new disruptive market. Just something to keep in mind even if today’s news gives the stock a boost.
§ First Solar (NASDAQ:FSLR) announced this morning that it landed a deal to build a 20 MW solar project in Hagerstown, MD. The electricity generated will be sold to a unit of FirstEnergy Corporation (NYSE:FE). The stock was up about a two percent in premarket, but don’t count on this deal to pop the stock too much. First Solar still has a bit of stink on it right now. That being said, it’s nice to see today’s announcement. The new project is expected to provide 125 jobs. It’s also a reminder to the solar haters that First Solar isn’t going gently into that good night.
March 15: ABB (NYSE:ABB) Lands $100 Million Contract
§ ABB (NYSE:ABB) has announced that it landed a $100 million substation deal from Rio Tinto. Rio Tinto is actually undergoing a multi-stage Electrical Infrastructure Replacement project right now. It’s expected to be competed in 2013.
I’m actually a big fan of ABB. The company is involved in nearly every major transmission and grid project across the globe. It also offers exposure to the growing demand for offshore wind in Germany and China – which, despite the naysayers, is proving to be a massive growth opportunity. And of course, the 3.4% dividend is a nice bonus. The stock should cross $21 today. By the end of the year, I expect to see ABB trading at no less than $26.
§ According to unconfirmed rumors, Alstom (PINK SHEETS:AOMFF) may be looking to acquire a couple of wind turbine manufacturers, including Gamesa (PINK SHEETS:GCTAF) and Vestas (PINK SHEETS:VWDRY). And the Financial Times Deutschland reported today that India-based Suzlon Energy was looking to sell its wind business, which has been valued at $1.5 billion. Apparently, the company recently opened its books to Alstom.
Of course, these are still just rumors. But if Alstom ends up facilitating a major consolidation of wind turbine manufacturers, it could certainly strengthen the non-Chinese wind turbine manufacturing sector. Which of course, is an absolute necessity if these companies have any shot at competing against the low-cost Chinese producers.
The fact is, China is getting very aggressive in this space. In fact, just recently China’s Sinovel Wind Group landed a wind turbine deal in Sweden. This was the first time a European country has purchased and installed Chinese-made wind turbines.
The Chinese are also aggressively moving into the U.S. space, too. Earlier this week it was announced that China’s Ming Yang Wind Power Group had just opened its first North American R&D center in North Carolina. And last month, we learned that Xinjiang Goldwind (the second largest Chinese wind turbine producer) had landed 14 North American wind power contracts. The most recent in Shawmut, Montana.
March 16: Solar Stocks Impress on Guidance
§ Real Goods Solar (NASDAQ:RSOL) announced earnings yesterday. For Q4, 2011, net revenue nearly doubled to $40.3 million. It should be noted that most of the revenue growth can be connected to the company’s acquisition of Alteris Renewables. And ReneSola (NYSE:SOL) announced Q4 and FY, 2011 this morning. Guidance was exceeded for FY revenues and shipments. The stock was up about 7 percent in premarket. Certainly happy to see some positive guidance, but the sector still remains a bit shaky. If you proceed, do so with extreme caution.
March 19: Uncertainty Weighs On Solar Stocks
§ LDK Solar (NYSE:LDK) announced this morning that it lowered the top end of its Q4 revenue guidance, noting that gross margins would be negatively affected by falling market prices for wafers and modules. Q4 revenues are expected to come in at around $440 million to $450 million. Previous forecast was $440 million to $520 million. Analysts are expecting about $432 million. LDK is down about 3.6% in premarket. If pressure continues throughout the day, it may also weigh heavily on other key solar players today.
§ India’s renewable energy ministry announced that it’s seeking to extend a tax break for wind farms. India is currently the third largest market for wind turbines. If approved, Vestas (PINK SHEETS:VWDRY) and GE (NYSE:GE) will likely benefit as both have some decent skin in India’s wind game. And of course, India-based Suzlon will benefit as well.
Jeff Siegel is Editor of Energy and Capital, where these notes were first published.