Market Chatter: A Ray of Sunshine for Renewable Energy Stocks

It was another discouraging year for Canadians investing in clean technology companies -- but the companies that survived are giving the industry a glimmer of hope within the gloom, the Globe & Mail reported.

After a dismal 2011, the past year was supposed to see some of the beaten down public firms in the sector showing their stuff and gaining momentum. Instead, several players collapsed, and many of those that remain have seen their stock fall dramatically. Only a handful have managed strong returns over the course of the year.

Two companies that were once considered Canadian high fliers -- solar panel makers Arise Technologies Corp. and Day4 Energy Inc. -- are now gone. Arise went bankrupt and Day4 was delisted and sold off to its managers. Meanwhile, stocks of Canadian-traded geothermal companies are now at a fraction of the prices they changed hands for a couple of years ago, and several wind energy players -- such as Finavera Wind Energy Inc. and Western Wind Energy Corp. -- are selling off assets to bigger players.

Still, there are reasons for optimism. In mid-December, California-based SolarCity Corp., a company that leases solar panels to consumers and businesses, had a very successful initial public offering of shares. The stock jumped about 50% on the first day of trading, and is still well above its launch price.

The successful clean technology companies will be the ones that can take advantage of the shift in the market to commodity pricing, or can show they have proven technology that works on a commercial scale, said James Chepyha, vice-president of investments at Chrysalix, a venture capital firms based in Vancouver that specializes in energy. Essentially, investors should look for companies that "are addressing real market needs on a sustainable basis," he said.

As was the case in 2011, the most stable companies have tended to be dividend-paying utility-type firms that have portfolios of renewable power projects with long-term contracts. Some of these, such as Algonquin Power & Utilities Corp. (AQN.TO) and Northland Power Inc. (NPI.TO) have eked out small gains in 2012. Boralex Inc. (BLX.TO) -- although it doesn't yet pay a dividend -- has jumped around 25% over the course of the year, while Sprott Power Corp. is up by about 50%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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