Investors looking for a theme showing relative strength over multiple time frames need look no further than clean energy infrastructure plays.
A quick survey of the top 5 clean energy ETFs will establish that all of them are trading well above their spring and summer lows, while the broad market indices are all faring much worse on a relative basis.
Within the group, there’s a great deal of diversity to choose among, with momentum, growth, value, and even distressed ideas in play.
On a thematic basis, the clean energy infrastructure group is interesting because it has strong structural tailwinds, including government subsidies, ESG guardrails, non-dilutive funding options to augment shareholder positioning, and geopolitical help as nationalism misprices traditional energy sources above market levels creating more urgency for new sources of power.
With all of that in mind, we take a look below at some of the most interesting opportunities in the clean energy infrastructure space.
NextEra Energy Inc. (NYSE:NEE) is an electric power and energy infrastructure company. It operates through its FPL & NEER segments.
The FPL segment engages primarily in the generation, transmission, distribution, and sale of electric energy in Florida. The NEER segment produces electricity from clean and renewable sources, including wind and solar. It provides full energy and capacity requirements services; engages in power and gas marketing and trading activities; participates in natural gas production and pipeline infrastructure development; and owns a retail electricity provider.
NextEra Energy Inc. (NYSE:NEE) recently announced, along with Portland General Electric (PGE), the commissioning of the first utility-scale energy facilities in North America to co-locate wind, solar and battery storage, generating renewable power for customers. Near Lexington in Morrow County, Oregon, Wheatridge Renewable Energy Facilities includes 300 megawatts of wind, 50 megawatts of solar and 30 megawatts of battery storage. Together, these technologies provide reliable power from renewable, carbon-free resources.
“Bringing wind, solar and energy storage together at one site is quite a significant moment for renewable technologies. We’re pleased to work with Portland General Electric and help them achieve their decarbonization goals,” said Rebecca Kujawa, president and CEO of NextEra Energy Resources, the world’s largest generator of renewable energy from the wind and sun, and a world leader in battery storage. “These facilities generate low-cost, homegrown energy and will provide millions of dollars in additional tax revenue to Morrow County over the life of the project.”
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action NEE shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -5% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -9%.
NextEra Energy Inc. (NYSE:NEE) managed to rope in revenues totaling $7.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 32.8%, 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 ($2.9B against $26.8B, respectively).
Viking Energy Group Inc. (OTC US:VKIN) is a majority-owned subsidiary of Camber Energy Inc (NYSE American:CEI) and a growing oil and gas producer. When you have a world increasingly defined by energy shortages and everything riding on defensible smart grid IP, a dirt-cheap under-the-radar OTC stock with real smart-grid IP and significant exposure to returns on energy production could be awfully compelling, especially since VKIN also has exposure to the carbon capture theme through Camber’s recent Exclusive Intellectual Property License Agreement 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.
VKIN is perhaps the deep discount opportunity in this list right now given the stock’s recent performance. The company has been flying under the radar at this point in the power grid narrative, but that could change dramatically given its 51% interest in two entities that own the intellectual property rights to fully developed, patent pending, ready-for-market proprietary Electric Transmission and Distribution Open Conductor Detection Systems.
Viking Energy Group Inc. (OTC US:VKIN) most recently announced that it filed on August 23, 2022 a new patent application in the United States Patent & Trademark Office relating to its electric transmission line protection technology.
The patent application is a continuation of previous filings and covers systems for preventing ground faults in existing three phase electric transmission lines caused by line breakage (open conductor). Fires caused by line breaks have caused injury, death and billions of dollars in damage to public and private property, to forests and to wildlife. Existing systems shut down the power on broken lines after the broken lines have contacted the ground (structures or natural earth) and therefore do not always prevent faults that can cause disastrous damage.
Viking’s rapid pro-active systems are designed to terminate (shut-off) the power before the broken line(s) makes any contact with the ground (structures or natural earth), the aim being to prevent an incendiary event or other disaster. This new patent application is specific to systems that utilize Viking’s high sensitivity parameter detection that reacts within fractions of a second to shut down broken lines before ground contact can occur.
Viking Energy Group Inc. (OTC US:VKIN) President and CEO, James Doris recently put out a video update on the Company’s website to give investors some in-depth perspective through a detailed and highly technical discussion with the founding brain trust behind its new technology, which can be summed up as a potentially revolutionary new way to prevent ground faults in existing three phase electric transmission lines caused by line breakage (open conductor).
Clean Energy Fuels Corp. (Nasdaq:CLNE) engages in the provision of natural gas as an alternative fuel for vehicle fleets in the United States and Canada.
The company also builds and operates compressed natural gas (CNG) and liquefied natural gas (LNG) vehicle fueling stations; manufacture CNG and LNG equipment and technologies; and deliver more CNG and LNG vehicle fuel.
Clean Energy Fuels Corp. (Nasdaq:CLNE) recently announced the opening of its new renewable natural gas (RNG) station in Groveport, OH. Amazon (Nasdaq: AMZN) trucks will fuel at the station, which also will provide public access for local fleets seeking access to RNG, a sustainable fuel produced from organic waste. Clean Energy’s new station in Groveport, OH will provide renewable natural gas, a fuel produced from organic waste, to Amazon trucks and other fleets. (Photo: Business Wire)
“Large fleets fueling with RNG have the ability to realize immediate and significant carbon reduction, especially in the heavy-duty truck sector which could be many years away from meaningful electrification,” said Andrew J. Littlefair, president and CEO, Clean Energy. “The opening of our station in Ohio is exciting because it’s the first of many more to come throughout the U.S. and will help efforts to reduce greenhouse gas emissions and reduce climate change.”
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 -13%.
Clean Energy Fuels Corp. (Nasdaq:CLNE) has a significant war chest ($187.5M) of cash on the books, which must be weighed relative to about $126M in total current liabilities. One should also note that debt has been growing over recent quarters. CLNE is pulling in trailing 12-month revenues of $365M. In addition, the company is seeing enormous top-line growth, with y/y quarterly revenues growing at 10,335%.
Other key names involved in the clean energy infrastructure space include First Solar Inc. (Nasdaq:FSLR), Enphase Energy Inc. (Nasdaq:ENPH), Brookfield Renewable Partners L.P. (NYSE:BEP), and Bloom Energy Corp. (NYSE:BE).
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