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Why Stem Stock Jumped 10.6% Today

By Travis Hoium – Aug 23, 2021 at 4:12PM

Key Points

  • "Barron's" recently published a positive article about Stem.
  • Plus, the price oil has jumped and so has the market, which is pulling Stem along for the ride.

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This is one of the hottest renewable energy stocks.

What happened 

Shares of energy storage company Stem (STEM 4.81%) jumped as much as 12.2% on Monday as renewable energy stocks quickly came back into favor. Shares ended the session with gains of 10.6%. 

So what

Barron's recently published a bullish article on Stem and that seems to have gotten traders interested in the stock. The article touts the Biden administration's goal of 100% carbon-free electricity generation by 2035, which would require a large amount of energy storage to be possible.

Energy storage batteries in front of a wind farm.

Image source: Getty Images.

It doesn't hurt that renewable energy stocks in general have spiked today. The price of oil is up 5.3% as I'm writing, which can often lead to gains in renewable energy stocks. And the market overall is rising higher and typically volatile stocks like Stem often exaggerate the market's move. Add it up, and you have a big gain for this energy storage company. 

Now what

Tailwinds may be behind energy storage overall, but investors should also look at Stem's financials before getting too excited. The company is burning cash and is actually losing money on the software it sells, which should be a high-margin business. There are too many red flags in Stem's operations for me to think today's pop will last long. If the macro tailwinds turn into a growing profit, I'll change my tune, but right now this is a stock I'm staying out of.

Travis Hoium 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.

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Stocks Mentioned

Stem, Inc. Stock Quote
Stem, Inc.
$13.07 (4.81%) $0.60

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