Money and Investing Thoughts

Each week I recap the results of the WilderHill New Energy Global Innovation Index, symbol NEX, and published by New Energy Finance Ltd. The index consists of approximately 90 stocks from 22 countries. The NEX is the tracking index for the PowerShares Global Clean Energy Portfolio ETF (PBD: 9.26 +0.14 +1.54%). For reference, the NEX has a 52 week high of 436.21 and closed 2008 at 177.99.

For the week ending at market close on Monday the NEX dropped 11.3%, finishing at 148.42. The NASDAQ and S&P 500 were off big for the week declining 9.6% and 10.1% for the same period. All sectors in the index were in negative territory for the week.

The solar energy sector had the dubious distinction of holding the 5 worst performing stocks for the week in the index. The sector has a whole dropped 12.1%. Yet, solar was not the worst performing sector; ‘energy conversion’ takes that honor, shedding 18.8% of its value. U.S. based Fuel Energy dropped 26.4% and Capstone Turbine fell 25.4% to drag down the sector.

The best any sector could do was ‘renewable-other’ which fell only 5.8%. This sector consists mainly of geothermal and mini-hydro energy producers.

Here are the best and worst performing stocks from the NEX for the week:

NEX top gainers since 17/02/09
Energy Development EDC + 11.1%
Xinjiang Goldwind 2202 + 10.7%
Iberdrola Renovables IBR + 5.0%
EnerNOC ENOC + 3.9%
Babcock & Brown Wind BBW + 3.4%

NEX top losers since 17/02/09
LDk Solar LDK - 48.4%
Renewable Energy Corp REC - 35.9%
Yingli Green Energy YGE - 35.2%
Suntech Power STP - 29.8%
Evergreen Solar ESLR – 28.3%

Copa Holdings, S.A. – Copa Holdings Reports Net Income of US$51.9 Million for the Fourth Quarter of 2008 and US$152.2 Million for Full Year 2008.

Panama based airline holding company Copa Holdings, S.A. (CPA: 67.08 +1.75 +2.68%) has proven once again that a airline can actually make money. Copa is the holding company for Copa Airlines and Aero Republica. The two airlines now serve 45 destinations in 24 countries including several in the U.S.

As an airline here are some of the things I think Copa does right. I have flown the airline several times and have first hand experience with their service.

• A fleet of only two models of modern, fuel efficient aircraft.
• Excellent customer service and on-time flights.
• Controlled expansion into a growing regional market.
• An easy to understand and consistent fare system.

On the financial side, Copa had an excellent 4th quarter. During the 2nd and 3rd quarters the company had sub par results (but still profitable) due to a massive increase in fuel costs. For Q4 of 2008, CPA had net income of $1.20 per share, a 46% increase from the same quarter of 2007. Excluding special items, the net was $1.48 per share. For all of 2008 Copa earned $3.50 per share compared to $3.72 in 2007. Excluding non-cash, mark-to-market fuel hedge adjustments the net for the year was $3.97. At the end of 2008 Copa had $408 million in cash or 32% of annual revenues.

The global economic slow down does not seem to be affecting Copa. Traffic growth in January was 15%. The company generates approximately 50% of their business out of Panama, which is projected to have GDP growth of 4% to 6% for 2009. Company management is forecasting business growth of 13% for 2009. Consensus estimates have CPA earning $4.21 for 2009 however, I see the company easily making $4.50 based on the 4th quarter results, low energy costs and projected growth factors.

In normal times, CPA would be a $50 stock. I hope at some point in the near future the market realizes that there still are companies that can grow their businesses and profits.

Note: CPA is a component of this site’s Opportunities Portfolio.

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I have been believing that the market hit its lows for the current bear market in November, the week before Thanksgiving. It now looks like the market will be testing those lows again 3 months later. Here are the current values of the major market indices and their 52 week lows:

• Dow Jones Industrials: 7,365.67….7,226.29
• S&P 500: 770.05….741.02
• Nasdaq: 1,441.23….1,295.48

The DJI is less than 2% above the recent low but the Nasdaq has another 10% to fall before cracking the recent low. In November, we were in the midst of all of the 4th quarter economic turmoil that is resulting the bad results we are seeing now. I think the market is reacting again to the same stimuli. With more government stimulus money coming, leading economic indicators turning positive and my favorite, the Baltic Dry Index continuing to climb, I see at least a 50% possibility of the economy turning to positive growth as early as the 2nd quarter of 2009. Too many pundits are pushing their predictions of the recovery dates further out based on news that is really from the last quarter of 2008.

With the market crapping on everything it is difficult to try to write in depth analysis of interesting stocks. Their fortunes will not turn until market sentiment does, no matter how compelling their story. So here are a few brief notes on stocks that released earnings this week:

Bladex, the  Banco Latinoamerico de Exportaciones (BLX: 18.24 -0.05 -0.27%) reported earnings for the year of $1.51 per share compared to $1.98 in 2007. During the 4th quarter the bank called in aboout 20% of their outstanding loans, those that they considered the most risky. They currently have 0% non-performing loans. Bladex is in excellent financial shape and their niche of providing trade credit in Latin America has lost most of its competition. Bladex is now in a strong defensive position and is ready to resume growth when regional trade recovers. BLX historically has traded within a few percent of its book value, currently $15.77 per share.

Silver Wheaton (SLW: 35.72 +1.10 +3.18%) reported a paper loss for the 4th quarter on a $64 million non-cash write down on long term investments. Silver prices averaged less than $11 per oz. during the quarter compared to $14 in the previous quarter. Silver is again trading around $14. SLW sold 11.1 million oz. of silver in 2008, a drop of 2 million oz. from 2007 and is projecting sales of 15 to 17 million for 2009. Silver Wheaton has been in the potential is in the future quarters camp for the  2 years I have been watching the stock. Hopefully, someday that future will get here. Rising silver prices and silver sales could at some point make this a hugely profitable company. I keep the stock in this site’s portfolio because I still believe it is an excellent way to have precious metal exposure. SLW is the only stock in positive return territory for my Opportunities Portfolio, which kicked off on October 1, 2008.

Note: SLW and BLX are components of this site’s Opportunities Portfolio. I also hold a personal small position in SLW.

At this rate, starts would fall to zero by the end of the year.

via Housing starts plunge nearly 17% to record-low 466,000 rate – MarketWatch.

It is entertaining to see extrapolation taken to such a stupid level. Homebuilders do not want to sell houses at current price levels so they have stopped building. They have all written down their land inventories and the good ones are sitting on piles of cash until the housing and mortgage markets get straightened out.

Remember it will take homebuilders 18 months to 2 years to ramp up production to anywhere near the 1 million new homes per year the economy has absorbed for the last 30 years. It will be interesting to see the results when this (new home construction & prices) market starts to turn upward.

Each week I recap the results of the WilderHill New Energy Global Innovation Index, symbol NEX, and published by New Energy Finance Ltd. The index consists of approximately 90 stocks from 22 countries. The NEX is the tracking index for the PowerShares Global Clean Energy Portfolio ETF (PBD: 9.26 +0.14 +1.54%). For reference, the NEX has a 52 week high of 436.21 and closed 2008 at 177.99.

For the week ending at market close on Monday the NEX dropped 5.2%, finishing at 167.36. The NASDAQ and S&P 500 were off 3.6% and 4.9% for the same period. All sectors in the index were in negative territory for the week.

The two largest sectors in the index, solar energy and wind energy, were down 4.5% and 6%. Wind energy includes carbon fiber manufacturer Zoltek which shed over 22%. The sector with the biggest loss was ‘energy conversion’  which lost 11.8%. Top loser Capstone Turbines is in this sector. The best of bad news was from the power storage companies, which as a group were off 1.4% held up by the nice gain in plug-in hybrid car manufacturer BYD.

Here are the best and worst performing stocks from the NEX for the week:

NEX top gainers since 10/02/09
Zhejiang Yankon 600261 + 13.2%
Byd Co 1211 + 11.3%
Maxwell Technologies MXWL + 11.3%
5N Plus VNP + 9.3%
Boralex BLX + 5.7%

NEX top losers since 10/02/09
Capstone Turbine CPST - 23.6%
Zoltek ZOLT – 22.7%
Kingspan Group KSP – 22.1%
Climate Exchange CLE - 21.1%
Ener1 HEV - 19.4%