Among the dozen stocks picked by my panel of professional green money managers for 2014, most followed three themes: Solar stocks, IT stocks, and income stocks. Two didn’t, and they are included here.
This Cash-Rich Water Company Could Produce a Big Dividend
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The first is a Japanese water utility, picked by Rafael Coven, the Managing Director at the Cleantech Group, and manager of the Cleantech index (^CTIUS) which underlies the Powershares Cleantech ETF (NYSE:PZD.)
Coven likes Kurita Water Industries Ltd. (Japan:6370, OTC:KTWIF) which “On restructuring it has a ton of cash” and generates a lot of cash despite zero growth. He calls Kurita “Terribly managed and a great candidate for takeover, breakup, dividend, or LBO,” although that “Doesn’t happen easily in Japan.”
Kurita is like Companhia de Saneamento Basico do Estado de Sao Paolo (NYSE:SBS; Disclosure: I am long SBS.) picked by Jan Schalkwijk CFA, a portfolio manager with a focus on Green Economy investment strategies at JPS Global Investments, in that it is a water utility, but the forward dividend yield is only 2%, so I don’t see it as an income stock like SBS.
Investors betting on Kurita should be prepared to wait, as is Coven: he took pains to point out that he looks for stocks that should perform well over a longer time horizon than just one year.
This Waste Gasification Company’s Luck Has Changed
The other offbeat pick was from Schalkwijk. He likes Alter NRG Corp. (TSX:NRG, OTC:ANRGF), which he calls his “dark horse.”(The green hedge fund I co-manage with Schalkwijk is long Alter NRG.)
This Canadian waste-to-energy company had been a disappointment for years. Though its Westinghouse plasma gasification technology held great promise, large projects failed to materialize and the company lacked focus as it also tried to be a developer in the fragmented geothermal heating sector.
Recently, the company’s luck has changed: It won a big contract for a gasification plant in England from Air Products, a new CEO was brought in and Roman Abramovich (Russian billionaire and owner of Chelsea Football Club) made a strategic investment in the company. Subsequently, the company has won a 2nd big order from Air Products and various licensing deals.
One of my other panelists, Sam Healy, a portfolio manager at Lamassu Capital, chose not to make any picks at all this year because he feels most stocks are simply too expensive. In expensive stock markets, it often makes sense to look for value in offbeat themes. That, and the increased diversification, are good reasons for cleantech investors to give Alter NRG and Kurita their consideration.
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