The great transition away from fossil fuels is now well and truly underway following this year’s climate conference at COP26, which established stepped-up objectives for the developed world. That means trillions in added investment flows into clean energy plays.
This is on top of the ESG movement, which has been driving new capital flows into the clean energy space for the past two years. Morgan Stanley sees this continuing on the back of inheritance transfers of wealth from Boomers to Zoomers over the next 5 years.
With the market correcting a bit over recent weeks and the Fed shifting toward a more hawkish paradigm, growth stocks are on sale. With that in mind, we take a look below at some of the most interesting opportunities in the clean energy theme.
NextEra Energy Inc. (NYSE:NEE) is an electric power and energy infrastructure company. It operates through the following segments: FPL & NEER.
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 that a subsidiary of NextEra Energy Resources, LLC has entered into an agreement to sell a 50% non-controlling interest in an approximately 2,520 megawatt (MW) portfolio of long-term contracted renewables assets (the portfolio) to the Ontario Teachers’ Pension Plan Board (Ontario Teachers’ or the investor), one of the world’s largest pension plans and a leading infrastructure investor, with approximately C$227.7 billion in net assets. The remaining 50% interest in the portfolio is under an agreement to be sold by NextEra Energy Resources to NextEra Energy Partners, LP (NYSE: NEP) pursuant to a purchase and sale agreement executed on Oct. 21, 2021 between a subsidiary of NEP and a subsidiary of NextEra Energy Resources.
“This transaction is expected to generate significant value for NextEra Energy shareholders,” said Jim Robo, NextEra Energy chairman and CEO. “In addition to generating attractive ongoing fee income, the sale of 50% of the portfolio to NextEra Energy Partners and 50% to a high-quality partner like Ontario Teachers’ provides an opportunity to take advantage of the robust demand for high-quality, long-term contracted renewable energy assets and efficiently recycle nearly $3.4 billion in total capital that is expected to be redeployed into new renewables growth opportunities. The transactions highlight the value of NextEra Energy Resources’ best-in-class development platform and position us well to continue to capitalize on the robust renewables development environment that is driving the clean energy transformation reshaping our industry.”
And the stock has been acting well over recent days, up something like 2% in that time. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action.
NextEra Energy Inc. (NYSE:NEE) managed to rope in revenues totaling $6.8B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 29.3%, 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 ($1B against $20.5B, respectively).
Camber Energy Inc (NYSE American:CEI) has a rapidly growing exposure profile as a producer in the oil and gas space, which may seem to make it an odd choice for a green energy piece. But the company’s recent moves – as discussed below – should make it plain why it’s in here.
More broadly, the company has exposure to oil and gas assets through its majority-owned subsidiary, Viking Energy Group Inc (OTC US:VKIN), which has energy assets located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi.
Camber Energy Inc. (NYSE American:CEI) most recently announced that, on November 18, Viking entered into a Membership Interest Purchase Agreement to acquire a 100% interest in a group of companies that are in the process of engineering, developing, constructing and bringing into commercial operations a processing plant located in Reno, Nevada, which is designed to produce renewable diesel.
According to the release, the estimated production capacity of the Plant once operational is ⁓ 43,000,000 Gallons per year. The main part of the Plant is ⁓ 95% complete and there is a pre-treatment unit under construction within the Plant that is ⁓ 30% complete. Renewable diesel fuel, sometimes called green diesel, is a biofuel that is chemically the same as petroleum diesel fuel, and is produced through various thermochemical processes such as hydrotreating, gasification, and pyrolysis. Renewable diesel is made from renewable feedstocks instead of crude oil.
This follows the company’s announcement this fall of the Exclusive Intellectual Property License Agreement with ESG Clean Energy regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide.
Camber Energy Inc. (NYSE American:CEI) has been heavily shorted. The stock appears to be finding some support in recent action after the correction. Its recent moves place it in position to benefit not only from the oil bull market but also from the emerging clean energy theme, offering investors a cheap highly shorted stock trading on sale that has built-in diversification in the energy space.
First Solar Inc. (Nasdaq:FSLR) engages in designing, manufacturing, marketing, and distribution of photovoltaic solar power systems and solar modules. It operates through the Modules and Systems segments.
The Modules segment involves in the design, manufacture, and sale of cadmium telluride solar modules, which convert sunlight into electricity. The Systems segment offers development, construction, operation, and maintenance of photovoltaic solar power systems.
First Solar Inc. (Nasdaq:FSLR) recently announced that global solar leader Lightsource bp and integrated energy company bp have placed multi-year orders for up to 5.4 gigawatts (GW) combined of First Solar’s advanced, ultra-low carbon thin film photovoltaic (PV) solar modules. As part of the deal, Lightsource bp and bp have placed firm orders for approximately 4.4GWDC of modules, with options for an additional 1GWDC.
“This landmark solar industry procurement deal is a testimony to Lightsource bp’s exponential growth in the United States, and our confidence in First Solar’s technology,” said Kevin Smith, chief executive officer, Americas, Lightsource bp. “As we continue to grow and progress our 10GW development pipeline across America, in addition to our partner bp’s 9GWs, executing significant long-term procurement agreements with bankable, world class suppliers like First Solar enables us to deliver on our growth plans and industry-leading global target of 25GW of solar by 2025. It also translates into competitively priced electricity for our customers.”
Even in light of this news, FSLR has had a rough past week of trading action, with shares sinking something like -6% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -13%.
First Solar Inc. (Nasdaq:FSLR) managed to rope in revenues totaling $583.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -37.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($1.9B against $715.2M).
Other key players in the clean energy space include Clean Energy Fuels Corp. (Nasdaq:CLNE), Enphase Energy Inc. (Nasdaq:ENPH), Brookfield Renewable Partners L.P. (NYSE:BEP), and Bloom Energy Corp. (NYSE:BE).