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Strong Returns for Alternative Energy Portfolio

by Harris Roen, Editor
Roen Financial Report
January 30. 2014

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The Paradigm Portfolio is a carefully filtered list of alternative energy stocks chosen by the Roen Financial Report. This hand-picked collection of about 40 alternative energy companies has had extremely robust returns, up 37% since inception after accounting for additions, removals, and rebalancing*.



Returns

Of the companies currently in the portfolio, all but one are up since the portfolio was started in January 2013. 33 out of the 37 stocks, or 89%, are up in the double digits. The top ten gainers are up an average of 54%, with SolarCity (SCTY) having by far the greatest returns. Even the bottom 10 are up over 10%. The one company with a loss, Renewable Energy Group Inc (REGI), is a biodiesel company, an industry that may be facing hard times ahead.
 

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Portfolio Update

One company is being added to the Paradigm Portfolio, the container and packaging company Rock-Tenn Company (RKT). This Georgia-based manufacturer has over 25,000 employees and processes about 8 million tons of recycled material annually, making it one of the world’s largest recyclers. RKT is a profitable company with nicely growing sales, currently over $9 billion annually. This is more than triple revenues generated in 2010. Our positive conviction on Rock-Tenn is bolstered by a very positive earnings report released Tuesday. Even though the stock price jumped about 6% in one day on the report, we still believe that RKT is trading at below fair value. In short, we see low-risk upside potential from here.
 
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Portfolio Developments

Looking back to the last portfolio update, we announced that The Andersons, Inc. (ANDE) was being removed from the Paradigm Portfolio after gaining 58%. ANDE was removed because it was considered overvalued, and we thought it prudent to take profits in the biofuel industry. The removal was a good decision, as the stock has dropped 9% since that time.

Looking ahead, we have placed CLARCOR, Inc. (CLC) on a watch list for removal from the portfolio. It has not measured well under our stock screens, and is considered overvalued. CLARCOR will be monitored closely over the next few months.

 


*Hypothetical gain from portfolio recommendations. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on this list. For an explanation of how hypothetical returns are calculated, please see the Roen Financial Report User Guide.



IMPORTANT INFORMATION

Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is also possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

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