By Jeff Siegel
In as soon as five years, you could be living right next door to
a power plant.
Actually, even closer. The power plant could be operating from
right inside your home.
I’m serious. Take a look…
This is a backup battery system installed in a home that’s
powered by domestically generated electrons, courtesy of the
biggest nuclear reactor known to humans: the sun.
Musk’s cousin and SolarCity CEO Lyndon Rive recently spoke at a
private meeting in New York, where he announced that due to the
economies of scale that will soon come from Tesla’s (NASDAQ: TSLA)
new battery manufacturing complex, SolarCity’s solar power
systems, with the new battery system installed, will be able to
produce energy cheaper than the local utility company.
This means powering your home with solar day and night, and at a
price lower than what your utility charges.
That’s a pretty bold claim, but it’s one I wouldn’t sleep on.
Musk and his ilk are not the type to fall short, nor are they the
type of folks you should bet against.
The truth is, beyond the battery system, SolarCity is taking the
appropriate steps to drastically slash the cost of solar
A few months ago, I told you about the company’s acquisition of
solar manufacturer Silevo. This deal will allow the company to
lock in a steady supply of low-cost, high-efficiency panels
that’ll enable it to stay competitive against a rise in new U.S.
start-ups as well as low-cost producers from China.
Then, just last week, the company unveiled a new solar mounting
product called ZS Peak. It basically allows installers to install
systems on flat roofs in half the time it takes today. And
according to company reps, this new product can increase
generation capacity on flat-roof buildings by 20% to 50% per
This technology now makes it possible for far more businesses,
schools, and other organizations to install solar power on their
buildings and immediately pay less for solar electricity than they
pay for utility power. It will also help the company expand its
reach into the commercial solar market.
The Best Part
Now here’s the best part…
been getting knocked down a few pegs over the past week or so.
Some believe the new Vivint
Solar IPO, which is a competitor to SCTY, is luring SCTY
investors away with a cheaper share price.
But while I’m also looking forward to picking up a few shares of
Vivint, this isn’t a reliable comparison. If anything, I would
caution investors against picking one over the other and instead
recommend maintaining positions in both — especially now that
SolarCity fell below the $60 mark. That’s a bargain compared to
Deutsche Bank’s $90 price target and Credit Suisse’ $97 price
Point is, there’s plenty of room for more than one company to
grow and profit. And there’s no reason you can’t ride both.
Full Disclosure: I currently own shares of SCTY.
To a new way of life and a new generation of wealth…
Analysis of material’s molecular structure leads to a new formula that could cut greenhouse-gas emissions.
Keep plant waste from decaying to remove CO2 from the air. Make something with that carbon to build new industries.
The new capacity was obtained through the New York State Energy Research and Development Authority’s Competitive PV program, which has been working to stimulate the market for systems larger than 200 kilowatts for four years. A total of $94 million in renewable funding for these projects leverages private investment of $375 million in new PV power infrastructure projects.
by Debra Fiakas CFA
Covanta Holding Corp. (CVA:
NYSE) is among the largest waste-to-energy developers and producers
in the U.S. The company couples waste collection services for
local government and industry with power generation for local
municipal or commercial customers. Covanta’s waste handling
and ‘mass-burn’ process also allows for metal recovery and
sales. The company operates forty-six waste-to-energy
facilities mostly in North America supported by eighteen waste
transfer stations and four ash landfills.
Covanta is a big player in the waste-to-energy industry, but what
kind of yield does it’s stock offer investors?
Covanta’s management team knows the pain of failure as well as the
pride of success. A decade ago Covanta was struggling to
emerge from bankruptcy, but in the most recently reported twelve
months the company reported a net profit of $47.0 million on $1.7
billion in total sales. Granted Covanta is highly leveraged,
carrying $2.3 billion in debt on its balance sheet that generates a
265.0 debt-to-equity ratio. However, the debt-laden balance
sheet is supported by strong cash flow generation. Covanta
turned 21.6% of sales in the last twelve month period into operating
cash flow. That helped bring cash on the balance sheet to $175
million at the end of June 2014. Additionally, a new cost
saving program initiated in June 2014, is expected to bring an
incremental $30 million to the profit line.
One of the reasons Covanta has been able to crank up cash flow
generation is by offering a mix of business models for its municipal
partners. Most of its projects follow a design-build-operate
model wherein Covanta gets paid for waste collection and then shares
in revenue from the sales of power. Covanta is even gets
guarantees of minimum waste streams by its municipal partner.
Alternatively, Covanta assumes ownership of the waste-to-energy
plant and keeps all power revenue for itself.
Besides the municipal waste-to-energy model Covanta has interests in
seven wood-fired generation facilities in California and
Maine. The company also has partial interests in two
hydroelectric power plants in Washington and is the owner/operator
of a landfill gas to energy plant in Massachusetts.
The Company projects its portfolio of power plants could generate
6.5 megawatt hours of electricity in 2014. The waste-to-energy
group represents 88% of the total.
As mentioned above the portfolio generates fairly strong cash flows
that can be used reinvested or used for debt-pay down. Covanta
recently announced an increase in its dividend to $1.00 per
year. At the current stock price near $21.00 that dividend
represents a yield of 4.8%. Even with this payout to common
stockholders, analysts watching the company are expecting about 13%
earnings growth over the next five years.
Investors looking at Covanta’s cash flows and dividend yield might
be impressed until they look at the stock’s price/earnings ratio of
35.8 times projected 2015 earnings. The ‘PEG’ or
price-earnings to growth ratio is 2.75 ($21.50/$0.60). The
stock looks just ‘flat out expensive.’
In my view, the fundamental analysis should not stop there.
Since the stock pays a good dividend, the current yield should be
considered. The ratio of price-earnings to growth-plus-yield
or ‘PEGY’ is a bit more palatable at 2.01 [35.8/(13 + 4.8)].
Even this is not a full analysis of the investment picture for
Covanta. CVA shares represent a well-season security with deep
trading volumes, strong institutional ownership and low price
volatility. So I argue that the PEGY ratio should be adjusted
for risk as measured by beta, which for CVA is a relatively low
0.32. On a risk adjusted basis the price-earnings to
growth-plus-yield ratio or ‘PERGY’ is 0.64 (2.01 x 0.32)
- well below the 1.00 maximum for this popular
This is no argument for investors to run to their computers and
place buy orders for CVA. A review of historic trading
patterns in CVA suggests the stock is over-bought in the
near-term. The trend for CVA shares has been decidedly bullish
since early May 2014, when the stock formed a particularly bullish
trading pattern called a ‘double top breakout’ by stock chartists
using point and figure analysis. The chart suggests the stock
has developed sufficient momentum to rise to the $39.00 price
level. That is a price that is not being bandied about by any
of the fundamental analysts who watch CVA and have published price
targets. The highest published price target is $26.00 and the
mean target is $24.00.
At the mean price target, fundamental analysts suggest there is 14%
upside in the stock. Technical analysis says there is room for
86% upside. There is probably good reason to take note of both
Negative news could likely trigger a retreat in the stock price, but
there is a noticeable level of support at the $20.50 price
level. Of course, an extreme set back could send the stock
back to retrace levels in the price gap between $19.25 and $19.75,
which was formed in early June 2014, after the company announced its
cost saving plan and dividends increase.
The cost savings does not appear to have been registered analysts’
estimates for 2015 as the consensus estimate for next year has not
budged for over four months. If the cost saving program is at
all successful, it is more likely than not that Covanta could
meet or beat expectations for earnings in the coming quarters.
Short interest in CVA is near 13.7 million shares or about 14% of
the float. Under current present trading volumes, it
would take at least twelve days to liquidate short interests in
CVA. Strong fundamental news from Covanta could send traders
with short positions looking for an exit point and, that could push
the stock price higher.
With mixed signals coming from fundamental analysis and technical
analysis, investors would be well advised to watch both earnings and
the stock chart in taking any position in CVA.
Debra Fiakas is the Managing Director of Crystal Equity
Research, an alternative
research resource on small capitalization companies in selected
Neither the author of the Small Cap
Strategist web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.
On September 21, I was present at a piece of history…the People’s Climate March of 2014. It was a huge event, planned with precision, and broken down into six contingencies. The route covered two miles. My interviews began with people waiting for the bus, on their way to the west side of Manhattan.
Read more: Barbara Boxer, Climate Deniers, Uranium Contamination, Renewable Energy, Green, Peter Nightingdale, Letitia James, Punjab, Religion and Environment, Mary Robinson, Solar Energy, Big Oil, Bianca Jagger, Industrial Pollution, Green News, Scott Stringer, India, People’s Climate March, Bernie Snaders, Epw, Un, Green News
Today, the Earth got a little hotter, and a little more crowded.
Daily Climate Change: Global Map of Unusual Temperatures, Jan 16 2014
Read more: Wind Power, Natural Disasters, Rising Sea Levels, Congress, Fracking, Children, Pakistan, Epa, Agriculture, Oregon, Clean Energy, Animals, Business, Green Energy, Coal, Canada, Colorado, England, Indonesia, Transports, Greenhouse Gases, Freedom, Africa, Political Activism, Climate Change Denial, Human Health, Department of Energy, Business News, Asia, Massachusetts, Mississippi, Solar Power, Global Warming, Children’S Health, Natural Gas, Voting, Energy, Population Growth, Transport, California, Heat Waves, Carbon Emissions, Humor, Climate, Brazil, Crops, Keystone Pipeline, Climate-Change, Weather, Minnesota, Heinz, New York, Transportation, Barack Obama, Health, Fish, Noaa, Food, Sustainability, India, Oceans, Greenhouse Gas Emissions, China, Wildlife, Hawaii, Population, Gop, Nasa, United Kingdom, Washington, Economy, United Nations, Vermont, President Obama, Renewable Energy, Birds, Jobs, Obama, Pollution, Drought, Insurance, Kids, Activism, Fossil Fuels, Climate Science, Climate Change, Climate Change Solutions, Coca Cola, Cute Animals, Deforestation, Britain, Louisiana, Bill De Blasio, European Union, Science, Texas, Pennsylvania, Keystone XL, Democrats, Energy Efficiency, Wisconsin, Corporations, Keystone XL Pipeline, Water, Overpopulation, Jerry Brown, Nature, Environment, Oil, Illinois, Europe, Extreme Weather, Cities, Republicans, Green News