Please ensure Javascript is enabled for purposes of website accessibility

Why Bloom Energy, Enphase Energy, and SunPower Stocks Are Rocking Today

By Rich Smith – Jun 19, 2020 at 1:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Oil prices are going up. That should be good news for alternatives to oil.

What happened

It's Friday, and alternative energy stocks are red hot (for some reason). At 12:15 p.m. EDT, shares of electricity-in-a-box fuel cell company Bloom Energy (BE -6.56%) are up 5.7% (after scoring 9% gains this morning). Enphase Energy (ENPH -1.46%), which makes microinverters for the solar power industry and was up nearly as much as Bloom earlier today, is now up 4.1%. Best of all is solar power system producer SunPower (SPWR -1.95%), still holding onto a 6.5% gain after topping 11% earlier in the day.

So what

Why are these stocks soaring? In the case of Enphase, it's most logical to assume the stock is still coasting on the bullish news of four separate analysts lining up to endorse the stock yesterday, after Enphase was rocked by a negative short report Wednesday. As regards Bloom and SunPower, however, the rise of these stocks today is something of a mystery.

Three colorful arrows racing straight up on a black background

Image source: Getty Images.

Or maybe not so much of a mystery.

If you consider that alternative energy stocks are generally viewed as an alternative to something -- oil -- then it makes sense that when oil gets more expensive, alternatives to oil would become both more price competitive, and more profitable for their shareholders. Turns out, that's exactly what's happening today.

As reports, WTI crude prices and Brent crude are on the rise again today, up 1.8% and 1.4%, respectively. Moreover, oil prices have been climbing long enough now that it kind of looks like a new trend is developing. Over the last month, contracts for July delivery of WTI crude oil have enjoyed an 18% gain in price; Brent contracts for delivery in August are up 17.6%.  

Now what

The longer these price gains continue, the more attractive alternative energy sources such as hydrogen fuel cells and solar power will become. It stands to reason that the longer the trend holds, the more valuable the stocks of hydrogen fuel cell companies (i.e. Bloom) and companies tied to the solar power industry (Enphase and SunPower) will become as well.

But will the trend continue? I have my doubts. First, because the U.S. economy, and the world's, are mired in recession, which won't be good for oil demand, or for any energy demand for that matter. And second, and perhaps more pertinently, because over the past few days, we've seen reports of oil companies in Iraq, in Saudi Arabia, and even here in the U.S. laying off workers in response to oil prices that are, despite recent gains, still pretty low historically. On top of all that, the head of Russia's sovereign wealth fund, Kirill Dmitriev, just went on record opposing further production cuts by OPEC -- cuts that, were they implemented, would have helped to decrease supplies and raise oil prices further.  

When you combine this near-term negative for oil prices with the evident nervousness of the oil companies that are laying off their workers, I fear the next big move for oil prices -- and for alternatives to oil -- may be down, not up.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SunPower Corporation Stock Quote
SunPower Corporation
$24.69 (-1.95%) $0.49
Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
$279.49 (-1.46%) $-4.14
Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
$21.36 (-6.56%) $-1.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.