Decarbonisation was all the talk at the start of last year, but after 18 months, it has been pushed to the fringes of financial discourse.
Inflation and interest rates have taken over as topics de jour, and many investors have fled ASX shares involved in the zero carbon transition.
One prime example of this is carbon capture technology provider Calix Ltd (ASX: CXL).
Its share price has plunged 32.2% since the end of February and 37% over the past 12 months.
Yikes.
Meanwhile, coal and gas shares have rocketed.
So is this the buying opportunity of a lifetime for a green tech stock like Calix?
The business is not doing anything badly
Firstly, Calix’s business internally has not had any significant developments that would cause its valuation to plunge.
In fact, it had to make a specific announcement to the ASX last month to clarify it knew of no specific reason why its share price was freefalling.
Shaw and Partners portfolio manager James Gerrish’s theory is that Calix has been caught up in the market’s general movement away from cash-burning businesses.
“Calix is a company that is losing money as they develop new ways around decarbonisation of industries,” he said in a recent Market Matters Q&A.
“Calix has been under pressure, alongside the aversion to green energy technology assets, a lack of catalysts and a shift towards more tangible near term earnings from companies.”
The stock has now retreated back to similar levels where Gerrish’s team had bought it.
Keep the faith
But the portfolio manager still has faith in the contribution Calix’s technology will make in the long-term transition to net zero.
“Overall, the story remains compelling with a number of deals for their cement and lime solution, Leilac, in the works alongside progress across partnerships with steel and hydrogen projects.”
In fact, his team is willing to buy more Calix shares during the current dip.
“We like Calix long term and would look to add to our position into further weakness.”
While the small-cap stock has sparse coverage, at least Bell Potter agrees with Gerrish. It rates Calix as a strong buy, according to CMC Markets.
