Best stock to invest in
Tom Konrad, Ph.D., CFA
June was another good month (and capped a strong first half of
the year) for my Ten
Clean Energy Stocks for 2016 model portfolio.
This update’s going to be a short one, but here are the basic stats:
|June Total Return||June Benchmark Return||YTD Total Return||YTD Benchmark Return|
|10 Clean Energy Stocks||3.3%||0.6%||6.8%||-2.8%|
|7 Clean Energy Income Stocks||7.1%||1.9%||12.3%||5.7%|
|3 Clean Energy Growth Stocks||-5.7%||-2.3%||-5.8%||-19.2%|
See the previous
update for a description of the benchmarks.
The strong performance of the portfolio was driven mostly by the
flight to quality and lower interest rate expectations caused by the
Brexit vote and weaker than expected growth indicators in the
US. Lower growth expectations and the more uncertain global
economy mean that the Federal Reserve will be raising US interest
rates later than previously expected, or even begin to reduce rates
again if another recession is on the horizon.
Lower bond interest rates make my high yield clean energy stock much
more attractive, hence the great performance for the income stocks,
while the growth stocks, which are sensitive to a slowing economy
fared relatively badly.
The chart above (larger
version here) gives detailed performance for the individual
stocks. Selected news driving individual stocks is discussed
Pattern Energy Group
12/31/15 Price: $20.91. Dec 31st Annual Dividend: $1.488
(7.1%). Beta: 1.22. Low Target: $18. High
6/30/16 Price: $22.97. YTD Dividend: $0.671. Expected
2016 Dividend:$1.56 (6.8%) YTD Total Return: 16.0%
Wind Yieldco Pattern Energy paid its first $0.39 quarterly
dividend. On June 30, it agreed to buy another 324 MW wind
farm from its sponsor, an accretive deal which can be financed using
available cash and borrowing. That said, the recent stock
price strength makes me believe that at least part of this deal will
be financed by selling some stock as well.
Enviva Partners, LP
12/31/15 Price: $18.15. Dec 31st Annual Dividend:
$1.76 (9.7%). Low Target: $13. High Target: $26.
6/30/16 Price: $22.76. YTD Dividend:
$0.97 Expected 2016 Dividend: $2.10 (9.2%)
YTD Total Return: 31.2%
Wood pellet focused Master Limited Partnership (MLP) and Yieldco
Enviva Partners sold off sharply but then recovered on the Brexit
vote. Traders were probably worried because most of Enviva’s
pellet sales are to European and British utilities. The stock
then recovered when they realized that that most of these sales are
under long term contracts and wood pellet demand is growing
rapidly. Both of these facts should significantly insulate
Enviva from any European turmoil.
Plains Partners, LP (NYSE:GPP)
12/31/15 Price: $16.25. Dec 31st Annual
Dividend: $1.60 (9.8%). Low Target: $12. High
6/30/16 Price: $15.55. YTD Dividend:
$0.8075. Expected 2016 Dividend: $1.62 (10.4%) YTD Total
Ethanol production Yieldco Green Plains Partners entered
a joint venture to build an import/export terminal on the Gulf
Yield, A shares (NYSE:NYLD/A)
12/31/15 Price: $13.91. Dec 31st Annual Dividend:
$0.86 (6.2%). Beta: 1.02. Low Target: $11. High
6/30/16 Price: $15.22. YTD Dividend: $0.455.
Expected 2016 Dividend: $0.94 (6.2%) YTD Total Return: 13.2%
Yieldco NRG Yield (NYLD
did not report significant news.
Terraform Global (NASD: GLBL)
12/31/15 Price: $5.59. Dec 31st Annual Dividend:
$1.10 (19.7%). Beta: 1.22. Low Target: $4. High
6/30/16 Price: $3.26. YTD
Dividend: $0.275. Expected 2016 Dividend: $0.60 (18.4%).
YTD Total Return: -34.9%
Yieldco Terraform Global got a boost when it was reported that
Brookfield Asset Management (NYSE: BAM) had taken a 12% stake in its
sister Yieldco, Terraform Power (NASD:TERP)
and had been in talks with bankrupt parent SunEdison (SUNEQ)
about possibly buying its controlling class B shares.
of confidence boosted Global because it implies that
Brookfield sees value in their assets, despite all the uncertainty
around the Terraforms. If BAM were to buy TERP, many of the
assets would likely be sold to Brookfield Renewable Partners (NYSE:BEP.)
Sustainable Infrastructure (NYSE:HASI).
12/31/15 Price: $18.92. Dec 31st Annual
Dividend: $1.20 (6.3%). Beta: 1.22. Low
Target: $17. High Target: $27.
6/30/16 Price: $21.60. YTD Dividend:
$0.30. Expected 2016 Dividend: $1.25 (5.8%). YTD
Total Return: 15.9%
Clean energy financier and REIT Hannon Armstrong
returned to the equity markets with a well-received secondary
equity offering of 4.6 million shares priced at $21 a share.
Investors were clearly eager for this offering: The
initial press release mentioned only 3.85 million shares on
June 15th, with an additional underwriters purchase option of 577
thousand shares, for potentially only 4.427 million shares.
Later that same day, the number of shares was revised
up to 4.6 million, including the underwriter’s option.
When the sale closed a week later, the underwriters had already
exercised their 30 day option.
Renewables Inc. (TSX:RNW,
12/31/15 Price: C$10.37. Dec 31st
Annual Dividend: C$0.84 (8.1%). Low Target:
C$10. High Target: C$15.
6/30/16 Price: C$13.36. YTD Dividend: C$0.545
Expected 2016 Dividend: C$0.88 (6.6%) YTD
Total Return (US$): 43.0%
Canadian listed Yieldco TransAlta Renewables hit a new 52-week
high, and the stock was also helped by the strengthening Canadian
Renewable Energy Group
12/31/15 Price: $9.29. Annual Dividend: $0.
Beta: 1.01. Low Target: $7. High Target: $25.
6/30/16 Price: $8.83. YTD Total
Advanced biofuel producer Renewable Energy Group fell a little
amid the global uncertainty, but the lower price only served to
make me more enthusiastic about this leading firm is the strongest
MiX Telematics Limited
12/31/15 Price: $4.22 / R2.80. Dec
31st Annual Dividend: R0.08 (2.9%). Beta:
-0.13. Low Target: $4. High Target: $15.
6/30/16 Price: $4.68 / R2.68. YTD Dividend: R0.04/$0.076
Expected 2016 Dividend: R0.08 (3.0%)
YTD Total Return: 12.7%
Software as a service fleet management provider MiX Telematics
received a well deserved upgrade
to Overweight from First Analysis, but the global uncertainty
dragged the stock down anyway.
Ameresco, Inc. (NASD:AMRC).
Current Price: $6.25. Annual Dividend:
$0. Beta: 1.1. Low Target: $5.
High Target: $15.
6/30/16 Price: $4.37. YTD Total Return: -25.2%
Energy service contractor Ameresco did not disclose significant
news, but the stock was also dragged down by market trends.
Given that the company operates mostly in North America on
contracts with government entities and other large domestic
institutions, the decline has little if anything to do with the
The first half of 2016 has been a great start to a strong year,
despite the generally unsettled nature of the stock market.
While broad clean energy ETFs like PBW
have fallen sharply, I hope the performance of my opportunistic
income investing approach shows that investing in clean energy does
not have to be risky.
Disclosure: Long HASI, AMRC, MIXT,, RNW/TRSWF, PEGI, EVA,
GPP, NYLD/A, REGI, GLBL, BEP, TERP
DISCLAIMER: Past performance is
not a guarantee or a reliable indicator of future results.
This article contains the current opinions of the author and
such opinions are subject to change without notice. This
article has been distributed for informational purposes only.
Forecasts, estimates, and certain information contained herein
should not be considered as investment advice or a
recommendation of any particular security, strategy or
investment product. Information contained herein has been
obtained from sources believed to be reliable, but not
– Best stock to invest in