The sustainability movement is likely to be the most important investment theme over the next ten years.
The transition away from fossil fuels is going to be expensive, and it’s likely to drive further inflationary pressure. But it’s necessary, and the vast majority of Wall Street firms and younger investors are already aligned with this theme.
That means commodity prices sit at higher levels over coming years than we have seen in the recent past. And it means companies with proven technology able to find new pathways to a sustainable future are likely to trade at a premium.
According to a recent report from the IEA, by 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to over 4,800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined.
The report goes on to note that renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half. The amount of renewable capacity added over the period of 2021 to 2026 is expected to be 50% higher than from 2015 to 2020. This is driven by stronger support from government policies and more ambitious clean energy goals announced before and during the COP26 Climate Change Conference.
With that in mind, we take a closer look at some of the most interesting stocks in the sustainability theme, along with some of their recent catalysts.
Stem Inc. (NYSE:STEM) bills itself as a company that provides solutions that address the challenges of today’s dynamic energy market. By combining advanced energy storage solutions with Athena®, a world-class AI-powered analytics platform, Stem enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation, and grid power.
Stem’s solutions help enterprise customers benefit from a clean, adaptive energy infrastructure and achieve a wide variety of goals, including expense reduction, resilience, sustainability, environmental and corporate responsibility, and innovation. Stem also offers full support for solar partners interested in adding storage to standalone, community or commercial solar projects – both behind and in front of the meter.
Stem Inc. (NYSE:STEM) recently announced that it has completed its previously announced acquisition of Also Energy Holdings. Through this acquisition, Stem solidifies its position as a global leader in clean energy intelligence and optimization software, adding 32.85 gigawatts (GW) of solar assets under management in more than 50 countries.
John Carrington, Chief Executive Officer of Stem, commented, “We are very pleased to begin this new chapter of the combined company. The acquisition of AlsoEnergy is a significant milestone for Stem and represents accretive high margin software products, marquee customers, and a substantial increase of assets under management. Together, our employees will help accelerate the tremendous growth of renewable energy onto the power grid. Our market-leading software solutions will unlock significant value for our customers as they increasingly seek to manage and optimize integrated solar and energy storage assets. We expect the combination to be immediately accretive and will boost our growth, enhance our margins, and accelerate our expansion as a global provider of clean energy intelligent software solutions.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -23%.
Stem Inc. (NYSE:STEM) had no reported sales in its last quarterly financial data. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($1.8M against $0).
Viking Energy Group Inc. (OTC US:VKIN) could be the most interesting name in the space right now precisely because it’s an OTC stock that doesn’t get nearly as much media focus as other names in the group. While Viking, a majority-owned subsidiary of Camber Energy Inc (NYSE American:CEI), is an oil company, it has made a few moves recently that place it squarely in the sustainable energy theme.
For example, VKIN recently announced an Exclusive Intellectual Property License Agreement related to its parent company with ESG Clean Energy involving a deal for ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide.
Viking Energy Group Inc. (OTC US:VKIN) also recently announced a deal to drive waste-to-energy (WTE) exposure through acquiring a 51% interest in an entity that owns the intellectual property rights to a fully developed, patent-pending, ready-for-market proprietary Medical & Bio-Hazard Waste Treatment system using Ozone Technology.
The company announced further progress on this deal this month when it reported that, on February 2, 2022, Viking’s Ozone Technology entered into a Manufacturing and License Agreement with Simson-Maxwell, Viking’s majority-owned subsidiary, pursuant to which Simson-Maxwell was granted exclusive worldwide rights to manufacture, market and sell the Ozone System.
Daryl Kruper, Chairman of Simon-Maxwell, commented “Entering into this license arrangement provides Simson-Maxwell with a significant, high-margin revenue opportunity. We will be able to manufacture the Ozone System using existing infrastructure and personnel, with nominal, if any, capex investment. Simson-Maxwell has been in business for over 80 years and is a respected designer and manufacturer of custom energy systems. Manufacturing the Ozone System is a perfect fit for our experienced team of engineers and other professionals, and this venture will be prioritized to meet anticipated demand. We are grateful for the opportunities our relationship with Viking has provided thus far and are excited to enter this market.”
VKIN shares have shown strong resilience over the past two months in holding support at $0.50 per share. The stock suffered a one-day dip under the level, which was quickly recouped on high volume to re-establish the support zone. That could be a sign of potential strong-handed accumulation in this zone, which would match up with the company’s recent moves to gain traction in the sustainable resources marketplace.
Viking Energy Group Inc. (OTC US:VKIN) President and Chief Executive Officer James A. Doris further commented, “We are extremely pleased to be able to leverage the expertise within Simson-Maxwell to introduce this industry-leading Medical and Bio-hazard waste-treatment technology to the market. This initiative is an integral part of our overall strategy to pursue proven, innovative, sustainable and environmentally-friendly products and technologies.”
Bloom Energy Corp. (NYSE:BE) engages in the manufacture and installation of on-site distributed power generators. The stock has become a key name in the group given its leading-edge technology and the buzz that has earned the company during the past two years.
Its product, Bloom Energy Server, converts standard low-pressure natural gas or biogas into electricity through an electrochemical process without combustion.
Bloom Energy Corp. (NYSE:BE) recently announced the appointment of Rick Beuttel as vice president, hydrogen business. In this newly created role, Beuttel will spearhead the company’s commercial hydrogen strategy and will forge key partnerships to advance and scale Bloom’s efforts to enable the global hydrogen economy.
“On behalf of the entire leadership team, we are thrilled to welcome Rick to Bloom Energy, especially as we enter 2022 with such strong momentum,” said Sharelynn Moore, executive vice president and CMO, Bloom Energy. “With an impressive track record as a global energy leader, Rick will help us actualize our vision for the future of energy, driving new collaborations and scaling technologies that make a hydrogen-fueled economy a reality.”
And the stock has been acting well over recent days, up something like 8% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -18%.
Bloom Energy Corp. (NYSE:BE) managed to rope in revenues totaling $207.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 3.5%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($187.2M against $311.9M, respectively).
Other key names in the sustainability space include NextEra Energy Inc. (NYSE:NEE, QuantumScape Corp. (NYSE:QS), First Solar Inc. (Nasdaq:FSLR), First Trust Global Wind Energy ETF (NYSEArca:FAN), and Invesco Solar ETF (NYSEArca:TAN).
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