As growth stocks sell off, investors have the opportunity to gain exposure to the secular narrative around clean energy, which is destined for leadership in the market over the coming decade as trillions of dollars in investments flow toward sustainable technologies aligned with the ESG investing theme.
The Environment, Social, and Governance (ESG) investment theme is thought to drive as much as $67 trillion in investment flows over the next decade, according to research from Morgan Stanley.
This estimate is driven by what may be the most powerful long-term force driving finance over the next ten years: inheritance. Capital will be passed from baby boomers to millennials, with an associated shift in sensibilities and thematic focus.
That dynamic is poised to act as a powerful tailwind for stocks associated with the clean energy narrative, potentially driving strong outperformance for stocks in the space.
With that in mind, we take a close look at a handful of the most interesting stories in the space finding different paths to leadership for what stands to be the number one investment opportunity over the next decade.
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 that Lorraine Paskett, vice president of AES Corporation, has been appointed to the Board of Directors effective immediately.
“Lorraine is an esteemed industry leader with more than 25 years of experience in the energy and environmental sectors,” said Clean Energy Board of Directors Chairman Stephen Scully. “With her background in climate change reform and the renewable energy market, I’m confident that she will bring a great perspective to our board, and we’re proud to have her join us.”
Even in light of this news, CLNE has had a rough past week of trading action, with shares sinking something like -5% 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.
Clean Energy Fuels Corp. (Nasdaq:CLNE) managed to rope in revenues totaling $85.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 21.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($260.1M against $95.4M).
Viking Energy Group Inc. (OTC US:VKIN), while an OTC stock, may be one of the most interesting emerging players in the space because it has strong exposure to the oil space through operating energy assets located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi.
But it also has key exposure to the clean energy theme through a recent 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) further expanded its claim to a future potential leadership role in the clean energy space with 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.
According to its release, the purchase price for the acquired interest was $5,000,000 worth of shares of Viking common stock payable as follows: (i) $2,000,000 at closing; (ii) $2,000,000 after product revenues reach $10,000,000; and (iii) $1,000,000 after product revenues reach $20,000,000.
James Doris, President and Chief Executive Officer of Viking, commented, “We are extremely pleased to continue our strategy to acquire ready-to-market products that demonstrate our commitment to innovation, sustainable technologies and carbon footprint reduction. The medical waste treatment industry is more than $20 billion annually and growing rapidly. Proper treatment and disposal, however, of medical and bio-hazard waste has come under heightened scrutiny during these globally trying times. The industry has had limited innovation for decades. Treating biohazardous waste using ozone is the safest, most environmentally sustainable, and cost-effective technology for medical waste compared to all existing alternatives. Ozone has been in use as a sterilizing agent for over 100 years with a proven operational safety and efficacy record. And finally, we are in discussions with customers in the United States and abroad with regarding the potential utilization of the technology at several locations.”
Viking Energy Group Inc. (OTC US:VKIN) also highlighted in its release that this advancement in waste treatment technology is a sustainable alternative to incineration, chemical, autoclave and heat treatment of bio-hazardous waste. The OZONE technology fine shreds the raw waste in a controlled ozone environment as the first step in the waste processing treatment. The waste is reduced in volume by up to 90% and is no longer recognizable or retrievable, eliminating HIPPA violations. The treated waste is classified as renewable fuel for waste-to-energy (WTE) facilities in many locations around the world. OZONE is effective to kill all known pathogens including bacteria, fungi, and viruses.
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 senior leadership appointments, effective March 1, 2022, aimed at paving the way for the next generation of company leadership.
John Ketchum, a 19-year veteran of NextEra Energy, is named president and chief executive officer (CEO), NextEra Energy. He will report directly to the NextEra Energy, Inc. Board of Directors. Jim Robo, the current chairman and CEO, will become executive chairman for a transition period, and it is anticipated that Mr. Ketchum will also be appointed to the company’s board of directors effective March 1.
“It is an honor to be selected to lead the absolute best team in the energy sector,” said Mr. Ketchum. “Over the last two decades, I’ve had the privilege of working closely with and learning from Jim as he led NextEra Energy through a period of unprecedented growth. Our NextEra Energy team, starting with Eric, Rebecca and Kirk, is full of talented and experienced executives who are passionate about leading the U.S. energy transition. As CEO, I intend to remain intensely focused on delivering value for our shareholders and building upon our long track record of success. I believe there is no company better positioned to lead our country’s energy transformation than NextEra Energy, and I am humbled by the opportunity to lead this team through such an exciting period for our company.”
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 -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
NextEra Energy Inc. (NYSE:NEE) pulled in revenues of $6.8B to drive top line growth of nearly 30%. 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).
Other key tickers involved in the sustainable energy theme include First Solar Inc. (Nasdaq:FSLR), Enphase Energy Inc. (Nasdaq:ENPH), Brookfield Renewable Partners L.P. (NYSE:BEP), and Bloom Energy Corp. (NYSE:BE).