As our planet's natural resources get stretched thinner and thinner, companies that can provide the technology to help power our future -- and help us adapt to new realities -- stand to gain a lot of cash. So, too, do the shareholders in those companies. That's why investing in green technology stocks has become so popular.
Source: Eyeliam, via Wikimedia Commons.
That being said, it's never a smooth and steady ride when you're investing in organizations that are trying to change the way we consume power. For the four green technology stocks covered here, the ride will likely be especially bumpy next week. That's because each is heavily shorted, and is reporting earnings.
Here's a look at what Wall Street is expecting from these companies, as well as a broader look into what each does:
|
Company |
% of Shares Short |
When |
Expected Revenue (Millions) |
Expected EPS |
|---|---|---|---|---|
|
First Solar (FSLR +3.09%) |
16% |
Tuesday |
$961 |
$0.98 |
|
SolarCity (SCTY +0.00%) |
18% |
Tuesday |
$43.1 |
($0.55) |
|
Solazyme (SZYM +0.00%) |
19% |
Thursday |
$12.1 |
($0.39) |
|
Clean Energy Fuels (CLNE 1.53%) |
28% |
Friday |
$92.6 |
($0.20) |
Sources: finviz.com, E*Trade.
First Solar
Investors in this manufacturer of solar components have enjoyed a great ride lately. Since June of last year, shares are up over 380%. That's thanks in large part to its preeminent position in large-scale solar projects.
But the company itself has been falling behind its peers when it comes to the efficiency of its components and overall capacity utilization. Couple that with a few vertically integrated solar-leasing companies (more on that in a second) that are starting to win over market share, and you have recipe for a stock that the market has no problem betting against.
SolarCity
This company represents one of those vertically integrated organizations I mentioned. If you, as a residential homeowner, want solar to power your house, SolarCity is one of the big names to help you get there.
The company will pay for all of the upfront and maintenance costs, in return for utility payments over the next 20 years. The benefit for homeowners, other than not having to front the infrastructure investment, is that the payments are usually less than what the standard utility provider would charge.
The problem with the business model is that it's hard to value. The company is spending tons of money right now in return for payments over the life of contracts, and it's assuming that most of those contracts will be re-signed after the 20-year term is up. It may take quite a while before Wall Street can get a handle on how much this upstart company is worth. In the meantime, investors should be prepared for some big moves.
Solazyme
Solazyme has a unique technology that centers on the ability of patented microalgae to digest different types of stock (sugars, corn, and the like) and spit out patented oils for use as fuel or chemicals, or even in the beauty and health industries.
Right now, the technology is just scaling up. Solazyme has yet to turn a profit and relies on cheap inputs, such as sugars from Brazil. Both of those factors give bears a reason to short the stock, particularly because as more biotechnology companies join the scene, commodity prices for such inputs could rise.
Clean Energy Fuels
Clean Energy is based on the principle that shifting our fuel consumption to natural gas will reduce emissions markedly over the years. The company's role in this paradigm shift is in building out fuel stations that make driving natural-gas-powered vehicles a practical option for today's trucking fleets.
But the conversion has been slower than some might like, and environmental organizations are beginning to question whether natural gas really is the best way to combat climate change. Such uncertainty, lack of critical business momentum, and a history that has yet to include a profitable fiscal year all make it easy for shorts to bet against the near-term success of Clean Energy's stock.
