4 stocks to invest in the future of energy


The energy industry is changing rapidly as once dominant fuels like coal and petroleum are supplanted by cheaper renewable energy sources. We can also anticipate a significant shift in demand due to the rise of technological innovations such as electric vehicles. And the disruption is far from over, given that renewables and electric vehicles now account for less than 5% of the electricity and vehicle markets sold, respectively.

As this shift away from fossil fuels continues, investors will want to bet on the energy technologies that will shine the most. In the current state of things, Flowering energy (NYSE: BE), SunPower (NASDAQ: SPWR), Star Peak Energy Transition Corp. (NYSE: STPK), and General Motors (NYSE: GM) looks like they will be leaders in the future of renewable energy.

The emerging hydrogen economy

The hydrogen economy is closer than ever to reality, thanks to companies like Bloom Energy. The company is developing technology to turn renewable energy into hydrogen that can be stored or transported, then used to generate electricity where and when it’s needed.

Bloom’s business has steadily improved over the past three years, with revenue growth and improved margins as the cost of its fuel cells declines. The company is still making losses as it invests in growth, but its operations are on the right track, and if the hydrogen economy takes off, it will be well positioned to capitalize.

Income BE (TTM) given by YCharts

One product Bloom Energy is currently focusing on could be a game-changer for the company: it is developing an electrolyzer that will use wind or solar electricity to produce hydrogen for use in its fuel cells. Management says this clean hydrogen will be competitive with fossil fuels, opening up a $ 2 trillion energy market for the company. The electrolyser is still in a prototype phase, but commercial operations are expected to begin on a small scale later this year.

There is a lot of uncertainty as to what role hydrogen will play in the energy market of the future, but as an industrial-scale hydrogen leader, Bloom Energy will likely be one of the winners of the segment.

Take advantage of solar energy

The number of solar power systems deployed around the world continues to grow rapidly, but the industry has been tough on investors for the past two decades. However, as the industry enters a more mature phase, I think SunPower has a strategy that can deliver both profit and growth.

Basically, SunPower is a service company for the residential and solar market. She has developed tools for selling, quoting and installing solar panels and energy storage systems, but she does not do most of the installations herself. Instead, he works with partner resellers who provide the boots on the ground for his products.

This gives SunPower a lean business model that can generate ROI on plant growth. And the business will play an even more critical role as energy storage rolls out, as it will be able to aggregate the electricity held in tens of thousands of individual storage systems and offer those assets. in competitive electricity markets as a virtual power plants.

A unique energy storage game

Star Peak Energy Transition Corp. is a SAVS which has agreed to merge with Pure-play energy storage stem. Stem was an early leader in commercial energy storage and will use the $ 383 million in cash added to its books by Star Peak Energy to fund growth in markets like the United States, Japan and Canada. .

Stem is trying to take what she’s learned from building energy storage systems and use that to shift to a software-as-a-service business model. This will allow the business to be an energy management business, rather than just a battery business.

The real value of energy storage isn’t making or installing batteries – it’s managing when and where stored energy is deployed. Stem is a leader in this niche, and that’s why it’s a great way to bet on the future of energy storage.

Cruise Origin concept vehicle on a busy street.

Image source: Cruise.

The next electric vehicle giant

We all know You’re here Currently leading the electric vehicle space, but I think GM offers the greatest electric vehicle opportunity for investors today. Management just announced that the automaker will switch its product line entirely to electric vehicles by 2035, and it has already announced convincing electric vehicles like the Hummers, Bolts and Cadillac Lyriqs.

GM also owns a controlling stake in Cruise, which is developing autonomous vehicle technology. Cruise and GM are working on a fully autonomous ridesharing vehicle that GM will produce and that Cruise will manage. This could be an important new growth market.

The historic automaker’s shares are relatively cheap, trading for just 26 times the earnings lagging behind – and that doesn’t take into account the potential value of its stake in Cruise, which in itself may be worth it. over $ 23 billion. GM isn’t the biggest name in electric vehicles today, but it could be a decade from now.

The future of energy will be here before you know it

There is no longer any debate on the viability of electric vehicles or renewable energies. They are already profitable and their prices continue to fall, which will allow them to increase their market share. As they do, the companies with the best technology and the strongest business models – companies like Bloom Energy, SunPower, Stem and GM – could be big winners for investors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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