What's Happening in Cleantech?

Brittney Barrett |

The cleantech sector has endured a series of blows since the start of the recession in 2008. Brief periods of brightness, like President Obama’s pledge to have green options account for a larger portion of domestically expended energy, and IPOs for companies like Tesla and A123 have been tempered by declining valuations and sagging share prices overall. With gas prices appearing firmly planted at over $100; however, and an increasing distrust toward nuclear options, negative pronouncements regarding the sector seem premature.

A reputation as capital-intensive investments with a long time-line to profitability and success that impinges heavily on political decisions and follow through, have all weighed heavily on the cleantech sector in recent months. Compounding this, several bellwethers of the industry have failed to perform. After their IPO, electric vehicle battery company A123 (NASDAQ: AONE) has been consistently losing money. Tesla Motors (NASDAQ: TSLA), developer of luxury green vehicles went for an IPO prior to the release of its product and has flailed as well. A second version of the car is expected to be released next year, but so far the number of vehicles sold has failed to impress.  Biocatalyst optimization company, Codexis (NASDAQ: CDXS), which concentrated on more efficient industrial processes and has allegiances to Shell, has also struggled. Reports for the quarter, released May 5; however, indicate a positive trajectory for the company, with revenue up 21 percent for the same quarter last year.

Similarly, a report released today by Ernst & Young and DownJones VentureSource, noted that American venture capitalists invested 54 percent more, in terms of dollars, in cleantech companies last quarter, compared to Q1 of 2010. The sector saw $1.14 billion in investments for the quarter, significantly higher than the $743.3 million for the same period last year. The number of companies that received funding fell by 13 percent, from 79 to 69, indicating investors are being more cautious in terms of the sort of cleantech developments they believe to be bankable.

Over the last 52-weeks, NASDAQ Clean Edge Green Energy (INDEXNASDAQ: CELS) has traded between $167.82 and $240.73, with the most recent month averaging around $217.00. Last week, much of the index fell, with a few companies like Amtech Systems, Inc. (NASDAQ: ASYS), making minor gains. Active Power (NASDAQ: ACPW) was heading toward its 52-week high of $3.03, but slipped backwards recently, down 3.52 percent shortly before close on Monday.  Advanced Battery Technologies (NASDAQ: ABAT) was $0.20 from its 52-week low. PowerSecure International, Inc. (NASDAQ: POWR), a provider of Energy and Smart Grid Solutions to electric utilities, commercial, institutional and industrial customers also slipped today, down 2.05 percent. Other companies in a similar vein, like Tetra Technologies (NASDAQ: TTI), McDermott International (NASDAQ: MDR) and Matrix Service Company (NASDAQ: MTRZ) also fell two-plus percent in Monday trading.

Maxwell Technologies (NASDAQ: MXWL) was among the few companies to make gains today, up 0.48 percent to $15.78, but still a distance from its 52-week high of $19.65. National Semiconductor Corporation (NYSE: NSM) also tacked on points and has been among the more talked about stocks on the index. The company was up 0.12 percent, nearing its 52-week high of $24.46. National Semiconductor is an exception to the overall rule among publicly traded cleantech companies right now, many of which are trading significantly beneath annual highs. Of the companies that seem nearest to their highs; however, semi-conductors are popular among them.  Fairchild Semiconductor (NADDAQ: FCS) and On Semiconductor Corp. (NASDAQ: ONNN) are both close to their highest levels of the year.

Solar companies on the other hand have been encountering considerable difficulty. Even Sunpower (NASDAQ: SPWRA), a pioneer in the industry, which sold a controlling stake of its shares to Oil and Gas company Total S.A. (NYSE: TOT) last week is on the decline. First Solar Inc. (NASDAQ: FSLR) fell 6.43 percent on Friday, and continued to slump more moderately on Monday.  JA Solar Holdings Co., Ltd (NASDAQ: JASO) is also trading somewhere around the middle of its 52-week high and trending negatively in recent trading. Suntech Power Holdings (NYSE: STP) is trending downward as well, falling 2.58 percent today to $8.30. The negative trend in solar is likely the result of analysts declaring that the strategic advantages of solar power are essentially kaput. The price of voltaic has also remained higher than predicted, making it difficult for it to compete with oil and even other renewables.

For the most part, the greatest challenge to the sector right not appears to be a general failure to be financially competitive with fossil fuels. The recent losses could be attributed in part to the lower energy prices, which prompt people to dismiss the urgency of the fossil fuel emergency, and by proxy, the potential profitability of cleanteach. Should the price of oil continue to stay over $100 for an extended period of time and the negative attitudes toward nuclear persist, the cleantech sector may reap the benefits. Additionally, should one of the early and well-publicized ventures that launched IPOs take-off, investors may b more convinced of the opportunity of major margins, reigniting interest in the field.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
KMI27A Kinder Morgan Inc. 2.250% Senior Notes 2027 n/a n/a n/a 0

Comments

Emerging Growth

GSV Capital Corp

GSV Capital Corp is an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company.

Private Markets

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…

Uber

Uber connects riders with safe, reliable, convenient transportation providers at a variety of price-points in cities around the world. Uber makes money from charging their drivers 20% of the fare…