Top Sustainability & Cleantech Best Ideas for 2012 (ITRI, AYI)

2011 has not been kind to the alternative energy and cleantech sector.  Perhaps 2012 will be nicer.  It seems hardly possible that the percentage drop could be repeated in 2012 seen at many solar and other alternative energy companies.  Canaccord Genuity has its “Best Ideas” list for the CleanTech sector in 2012 and the focus is more around those companies which adopt trends for technologies that optimize energy creation and consumption.  In short, companies that make sense without a hard sell or those with unbelievable power ambitions.

Among the picks, two stand-out names were Itron, Inc. (NASDAQ: ITRI) and Acuity Brands, Inc. (NYSE: AYI).  RuggedCom is another pick, although it is a Canadian company.

Itron, Inc. (NASDAQ: ITRI) was maintained as Buy: “…we remain decidedly contrarian as shares continue to trough, yet the multi-year Smart Grid product cycle continues to unfold through mid-decade. We favor the company’s strong market share and FCF generation capabilities (10%+ FCF yield), ongoing restructuring efforts, share buyback and active M&A program against current investor concerns about ’12 & ’13 EPS power and European exposure. We find recently reinstalled CEO LeRoy Nosbaum acting with an appropriate degree of urgency to catalyze value creation at the current share price.”

Acuity Brands, Inc. (NYSE: AYI) was maintained as Buy: “We believe that LEDs will help accelerate Acuity’s traditional sales over time while growing to become accretive to the business model. As such, we see the potential for $3.50 to $4.00 in earnings power per share in 2013/2014 as the secular trend starts to manifest. We remain aggressive buyers on pullbacks from the fits and starts in the non-residential construction markets, and we view 2012 as the right time to build a meaningful position in the shares.”

RuggedCom is a Canadian company which trades as “RCM” in Toronto and Canaccord Genuity noted, “We find management execution impressive, as RuggedCom continues to generate above-market growth with industry-leading profitability. The core industrial switch/router business continues on its growth trajectory, while the achievement of profitability within the wireless business is a notable milestone… we find risk/reward attractive here.”

JON C. OGG