The week in sustainable energy stocks
Continuing concerns with economic conditions drove all the broad stock indicators into negative territory for the week.
Continuing concerns with economic conditions drove all the broad stock indicators into negative territory for the week. With one expectation our sustainable energy indices followed suit with three indices declining and one, Renewable Electricity, advancing.
The Solar index suffered another large decline dropping 5.9% bringing the YTD decline for the sector to -42.5%. In perspective, even with this large decline the index has some distance to go before it gives up the huge gains we saw in 2007. LDK Solar Co. LTD (LDK) led the declines down 21.3%, closing below its IPO price. Apparently there remains some lingering angst over inventory issues. Overall the sector had 4 advances and 29 stocks declining.
Biofuels suffered a significant 12.5% decline with all 16 stocks falling and 5 falling more than 20%. It looks like concerns about rising corn prices and declining margins affected the ethanol producers. Gushon (GU) reported a Q4 loss and, despite management explaining the loss was due to a large non-cash charge, the stock declined 24.9%
In the Renewable Electricity sector our index advanced 0.9% with 10 stocks advancing and 9 declining. Suzlon (SUZON.NS) is a big component of the index and was down 13.1% percent after reporting turbine blade replacement program for 1,251 blades. This represents a market cap decline of more than USD 1 million per blade against management's estimated cost of USD 24,000 per . blade.
Fuel Cells had a down week with the index decreasing 6.3% on 1 stock advancing and 6 stocks declining. FuelCell Energy Inc. (FCEL) led the movement downward with its stock price falling 14.3% for the week after their earnings call on March 6.
What did I learn this week? Oil prices hit record highs and sustainable stocks declined with the broader market. Given the relatively high beta of the Solar, Fuel Cell, and Biofuels indices, their stock performance seems to be weakly correlated to oil prices and much more strongly influenced by broad market trendsRenewable Electricity, with its lower beta, may offer some portfolio diversification benefit.
Mark is the founder of Camino Energy, a information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks. Mark doen't hold a position in any of the specifically mentioned stocks.