What happened
Whether electric-vehicle charging companies or hydrogen fuel-cell and solar producers, alternative energy stocks across the board are having a fun ride this week. As of Friday's opening, here's how some of the stocks were performing:
- ChargePoint Holdings (CHPT -3.73%) up 4.8%.
- Blink Charging (BLNK -0.85%) up 8.6%.
- Ballard Power Systems (BLDP -2.68%) up 6.3%.
- SunPower (SPWR -1.02%) up 8.4%.
All of these stocks dropped like a rock last week, so investors evidently saw buying opportunities even as encouraging news -- both on the macro and company-specific fronts -- fueled their enthusiasm.
So what
Volatility in oil prices sent alternative energy stocks on a choppy ride. So when oil prices tanked last week after OPEC and its allies agreed to increase oil output, clean energy stocks tumbled as lower oil prices erode the competitiveness of renewable sources of energy. This week, though, oil prices bounced back as quickly as they fell, and that's helped clean energy stocks recoup some of their losses.
To add to the optimism, a bipartisan agreement on President Joe Biden's infrastructure bill has inched one step closer to reality. Although the Republicans voted against his $1.2 trillion infrastructure plan on Wednesday, Biden said he's expecting another vote on Monday and believes it'll be in favor of the bill.
Image source: Getty Images.
Since the bill proposes significant investments in clean energy, it could open up big opportunities for companies in the industry. SunPower, for example, sees an incremental market opportunity of more than $225 billion under the Biden administration. On July 20, Morgan Stanley raised its price target on SunPower stock to $24 a share.
ChargePoint and Blink Charging have a lot to look forward to as well given the infrastructure bills' proposal to invest $174 billion on the electric-vehicle (EV) market, with a goal to expand the number of EV charging stations in the U.S. by more than 11-fold by 2030. Both companies are expanding their charging network, although leader ChargePoint is making the bigger moves; this week, it announced its intention to acquire a Europe-based e-mobility provider.
As for Ballard Power, sectors like transportation are increasingly eyeing hydrogen fuel as a clean energy source, opening up opportunities for the company. For example on July 15, Ballard Power received an order for two fuel-cell modules from Siemens Mobility to power a passenger train. This came just days after it received an order from India-based auto giant, Tata Motors (TTM), for its electric buses.
Now what
Clean energy stocks are bound to be volatile given the various macro factors at play. But this week's rebound in stocks from the industry also suggests that investors have recognized potential long-term winners in the making and aren't missing any opportunity to buy shares while they can -- and rightly so.
Economies across the globe are switching from fossil fuels to renewable energy, and with the Biden administration committed to tackling the climate crisis and reducing greenhouse gas emissions, future prospects for clean energy companies are looking brighter than ever. That positive outlook plus individual companies' setting themselves up to exploit opportunities are what investors in clean energy stocks should keep in mind and ignore the day-to-day meanderings in share prices.
