by Mark Henwood
Emerging markets, EAFA, and the US market (S&P 500) were again little changed on the week, commodities (DJP) fell 1.7%.
Sustainable energy stocks have exhibited significant volatility in past weeks but were relatively unchanged this week. The exception was the fuel cell sector.
Fuel Cells were off for the week with the decline primarily driven by FuelCell Energy’s (FCEL) quarterly numbers. The company reported increased revenue and increased losses. The company has proven that if you sell more product at a loss you lose even more. That said, management believes they are making progress in improving their cost/revenue ratio down to 1.5 in the next quarter and toward gross margin breakeven in the later half of 2009. This means the earliest possible date for the company to show a profit is in 2010.
Investors reacted by driving the stock down 18% for the week. It’s hard to see an earnings growth tragectory starting in 2010 that justifies a USD 500 million market cap when current backlog is USD 100 million and production capacity is just 30 MW per year.
Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks.