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When it comes to technology, clean-tech stocks are like a permanent third wheel. Several information technology stocks have soared this year and the lifescience sector is outperforming the broader sharemarket. Underneath that fuss are quiet gains in clean-tech stocks.

The ACT CleanTech Index’s 17.7 per cent return over six months to November 2013 compares with an 8 per cent gain in the S&P/ASX 200 index and a 2.1 per gain in the S&P/ASX Small Ordinaries index, which is the best benchmark to compare the listed clean-tech sector.

After years of heavy underperformance, who would have though the listed clean-tech sector would double the market return over six months? Over 12 months, the ACT CleanTech Index is up 21 per cent, or almost 4 per cent above the ASX 200, and it has outperformed the Small Ords by 24 per cent over one year.

Some context is needed before getting too carried away. Over three years, the ACT CleanTech Index is down almost 30 per cent. Moreover, the index, based on 68 stocks, is weighted for market capitalisation, meaning sharp moves in a few big stocks can influence results.

Also, the improvement is off a terribly low base. The combined market capitalisation of stocks in the ACT CleanTech Index peaked at $16.3 billion in 2007, before plunging to $6.2 billion in July 2012. Eighteen months later, the sector is worth $10.8 billion.

Although recent gains are impressive, they are substantially below the triple-digit share prices seen in IT stocks such as Freelancer, Xero and a host of micro-cap IT stocks this year. There have been suggestions that IT stocks, here and overseas, are approaching bubble territory, such has been the pace of price gains this year.

Lifescience stocks have also outperformed. The combined market capitalisation of ASX-listed lifescience companies rose 29 per cent over one year to September 2013, the PwC quarterly BioForum report shows. Smaller lifescience stocks have been especially strong this financial year.

The US Nasdaq Biotechnology Index has hit record highs, up 64 per cent from its low this year, and its bull run has unleased 41 biotech floats in 2013, collectively raising just under US$3 billion. The average share-price gain of US biotech floats since listing is more than 40 per cent.

The clean-tech sector’s 21 per cent gain over 12 months is tame by comparison. But credit where it is due. The ACT CleanTech index has outperformed the ASX 200 over three, six and 12 months in the strong period for the sharemarket. And it’s walloped the Small Ords, even though the Index has a high proportion of small and micro-cap stocks.

The ACT CleanTech Index report this week said: “The gains seem to be driven by a gradual strengthening and stabilising of the larger stocks in the Index, with reduced volatility across the smaller stocks. The Federal Government’s withdrawal of support programs for the sector does not appear to be having an effect on the listed companies, maybe because most of the beneficiaries were private companies.”

The Index’s 3.7 per cent gain in November was driven by 10 clean-tech gains with share-price rises of more than 20 per cent: EnviroMission, CBD Energy, Actinogen, Phoslock Water Solutions, Papryus Australia, Cardia Bioplastics, Vmoto, Greenearth Energy, Coffey, and Australian Ethical Investment.

A word of warning: some of these stocks have tiny market capitalisations, low share prices that amplify percentage price movements, and miniscule share liquidity. They are highly speculative and not for the risk averse. But there may be opportunities for traders who sense an emerging recovery in this beaten-down pocket of market activity.

I confess to being caught out on a few clean-tech stocks over the years. One I wrote up this year for The Bull – Algae.Tec – has slumped from 26 cents in July to 10 cents amid funding concerns that look like being resolved. Even so, the technology to extract energy from algae has great potential.

Two other clean-techs stocks I follow – Dyesol and BluGlass – have also disappointed over the last three years, although Dyesol spiked higher this month after securing up to $16 million from billion-dollar Saudi Arabian corporation Tasnee, in addition to the $4 million it invested in February. It was a great endorsement of Dyesol’s technology.

Bluglass, stgeloping semi-conductor materials for next-generation lighting technology, has fallen from a 52-week high of 29 cents to 16 cents after share-price losses over three years.

The optimist in me says these stocks look cheap and that the timing is much better as the clean-tech sector turns higher after horrendous losses. The pessimist says these stocks have disappointed too many times and that better opportunities are available in information and lifescience stocks.

Nevertheless, it’s worth watching the clean-tech sector. Don’t expect it to get anywhere near the attention of the high-profile IT or lifescience sectors. But the best opportunities often emerge when investors overlook sectors – or have given up on stocks – just when they are worth buying again.

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Tony Featherstone is a former managing editor of BRW and Shares magazines. This column does not imply any stock recommendations or offer financial advice. Readers should do further research of their own or talk to their adviser before acting on themes in this article. All prices and analysis are at Dec 4, 2013