Welcome to the Green Chip Stocks' Weekend Edition — our insights from the week in everything renewable energy and cleantech, as well as links to our most-read Green Chip Stocks and sister publication articles.
Everything we've been telling you has been coming true.
Here are four major points we've been hammering home:
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Chinese solar dominance amid European tariff reductions
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An emerging market for natural gas vehicles
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Strong push for smart grid and efficiency
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Major consolidation as the industry grows
And here's what we've seen just in the past week or so:
Chinese solar
Every Chinese solar company has met or exceeded earnings expectations.
Well, it's only been two... But the rest are coming up and will do just as well.
On Tuesday, Solarfun (NASDAQ: SOLF) reported earnings per share of $0.59. That was more than double analysts' expectations of $0.25 — and the stock surged as much as 15%.
The stock was quickly upgraded by multiple banks.
Then on Thursday, GT Solar (NASDAQ: SOLR) reported earnings of $0.11 per share — almost three times consensus of $0.04 per share. It also nearly doubled its profit forecast for the year.
That stock opened up 15% higher than its previous close.
These high earnings are being driven as a result of the end or reduction of subsidies in major European markets, including Germany, Spain, Italy, and the Czech Republic.
We beat that drum here, here, and here.
Natural gas vehicles
The ports of California have been cleaning up for years by converting the thousands of diesel trucks that operate there to run on natural gas.
The fuel is cheaper, burns cleaner, and offers the same power. Plus, it can be sourced domestically.
Win, win, win, big win. And politicians love it.
So it was no surprise to learn that even though a full energy bill has been shelved for the year — which means no renewable energy standard (RES) or carbon cap — Congress may still muster the bipartisan strength to pass a reduced version that would:
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Establish a Nat Gas Vehicle and Infrastructure Development Program at the DoE;
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Offer $4 billion in nat gas vehicle rebates and tax credits;
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And allocate an additional $2.5 billion for grants for infrastructure and R&D.
Anticipated that here, here, and here.
The smart grid arrives
I may have hit this theme the hardest over the past few weeks.
It all boils down to the fact that the cheapest energy to produce is the energy you don't have to consume.
Economics heavily favor reducing demand over increasing supply. Thus, we're seeing a major shift toward these types of projects — and nice returns from the companies providing the technology.
And the evidence keeps piling up...
Just this week we learned that:
Needham & Company upgraded Comverge (NASDAQ: COMV) to Buy with a price target of $14 because it's “strategically well aligned with many utility preferences to take ownership of [smart grid] assets.”
Wells Fargo upgraded EnerNoc (NASDAQ: ENOC), which is also in the demand response business, to Outperform.
PowerSecure (NASDAQ: POWR) earned $10 million in new business to install distributed generation and smart grid systems at a number of retailers, hospitals, data centers, and municipal buildings. And then beat earnings estimates on Thursday.
Echelon (NASDAQ: ELON) beat earnings estimates.
EnerNOC (NASDAQ: ENOC) beat earnings estimates and raised sales guidance.
Esco (NYSE: ESE) jumped 20% when it was selected by Sempra Energy (NYSE: SRE) as the vendor for a $400 million advanced meter project.
A bit of foreshadowing here, here, and here.
Major consolidation
I gave about two dozen examples here. But there have been even more announcements in the last week, some of which could be placed in other categories above.
GT Solar announced it was getting into the LED business when it acquired Crystal Systems, a maker of sapphire substrates that are used to make the lights.
Hanwha Chem said it was buying a 50% stake in Solarfun for $370 million, which is a premium to the current share price.
And I've been telling you the majors were looking to enter the cleantech business in a big way by highlighting recent acquisitions from Cisco (NASDAQ: CSCO), GE (NYSE: GE), and others.
But here's the best example of all that cleantech is the future and the big boys are looking to play ball...
The newest rumor on the Street, floated by Briefing.com, is that Siemens (NYSE: SI) is going to make a bid for First Solar (NASDAQ: FSLR).
Chew on that.
And then chew on ways to profit from these happenings below.
Call it like you see it,
Nick
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