Ten Clean Energy Stocks for 2014: September Swoon

My 10 Clean Energy Stocks for 2014 model portfolio weathered the storm relatively well because of its emphasis on defensive and income stocks.  

Since the last update, the model portfolio was down 4.8 percent, compared to 5.5 percent for small cap stocks (as measured by the Russell 2000 index ETF, IWM) and a 9.8 percent decline for clean energy stocks, as measured by PBW, the Powershares Wilderhill Clean Energy Index.  The relative strength of the model portfolio was in spite of significant weakness in foreign currencies.  The Canadian Dollar, Euro, and South African Rand fell 3.3 percent, 3.4 percent, and 5.8 percent for the month, dragging the model portfolio down 2.8 percent more in US Dollar terms than in local currency terms.

Since portfolio inception on December 26th, 2013, the model portfolio is up 1.5 percent in dollar terms, and 3.8 percent in local currency terms.  The small cap stock index was down 3.9 percent, while the clean energy stock index eked out a tiny gain of 0.3 percent.

Stock market trends down in September. Image source Yahoo! Finance.

Individual Stock Notes

The chart and discussion detail the performance of individual stocks in the 10 Clean Energy Stocks for 2014 model portfolio, along with relevant news items since the last update.

(Current prices as of August 5th, 2014.  The «High Target» and «Low Target» represent my December predictions of the ranges within which these stocks would end the year, barring extraordinary events.)

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI)
12/26/2013 Price: $13.85.     Low Target: $13.  High Target: $16.  Annualized Dividend: $0.88.
Current Price: $13.77.  YTD Total US$ Return: 4.2

Sustainable Infrastructure REIT Hannon Armstrong paid its regular $0.22 dividend for the third quarter.  The REIT has a goal of paying dividends equal to 100 percent of distributable income, which were $0.20 in the first quarter, and $0.22 in the second quarter.  I expect third and fourth quarter distributable income to be sequentially higher as the company deploys capital from its $75 million April secondary offering.  This implies that we can expect a small increase in December’s fourth quarter dividend, which I expect to be approximately $0.24.

2. PFB Corporation (TSX:PFB, OTC:PFBOF)
12/26/2013 Price: C$4.85.   Low Target: C$4.  High Target: C$6.  
Annualized Dividend: C$0.24. 
Current Price: C$4.32. YTD Total C$ Return: -7.2%.  YTD Total US$ Return: -11.7% 

Green building company PFB re-authorized its normal course issuer bid to purchase up to 50,000 shares of its own stock over the next year.  Over the past year, the company repurchased 19,500 of its shares at an average price of C$4.92.  Given the current price of C$4.32, I would expect it to step up these purchases.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF)
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12/26/2013 Price: C$4.44.   Low Target: C$3.  High Target: C$5.   
Annualized Dividend: C$0.30. 
Current Price: C$4.21.  YTD Total C$ Return: 27.0%.  YTD Total US$ Return: 20.9%

Independent power producer Capstone Infrastructure announced strong second quarter operating results based on higher wind production and increased income from its British water utility, Bristol Water. The results were generally in line with analysts’ forecasts, but Scotiabank increased its price target for the company to C$4.50 from C$4.00 while keeping its «Market Perform» rating.  

Last week, Capstone closed C$76 million financing for its 25-MW Goulais wind farm, which is under construction in Northern Ontario.

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