Oil Spike Could Spur a Stampede Into Alternative Energy Solutions

One of the more interesting upshots of Russia’s invasion of Ukraine has been a big shift to the game theory landscape in the energy industry, sharply incentivizing investments in alternatives to crude oil following the spike in oil prices that has resulted from sanctions against Russia.

WTI Crude Oil prices have spiked as high as $130/bbl in response to the invasion and subsequent sanctions and the global taboo now in place against sending money to Moscow in exchange for oil and natural gas. 

That spike in prices has served to highlight the importance energy independence for the West, which entails the development of more efficient grids and alternative sources of energy, including solar, wind, and nuclear, among other possibilities.

As a result, stocks in related industries have been posting big gains over recent weeks. For example, the Invesco Solar ETF (NYSEARCA:TAN) has rallied 27% over the past month while the Global X Uranium ETF (NYSEARCA:URA) is up about 35% over the same period.

More importantly, we could be seeing a longer-term transition in its early stages as governments around the world come to terms with the risks involved in being dependent on someone like Vladimir Putin to efficiently power large economies around the world. 

With that in mind, we take a look at some of the interesting opportunities among stocks with exposure to the alternative energy infrastructure theme.

Cameco Corp. (NYSE:CCJ) engages in the provision of uranium. The company operates through its Uranium and Fuel Services segments. 

The Uranium segment involves the exploration for, mining, milling, purchase, and sale of uranium concentrate. The Fuel Services segment involves the refining, conversion and fabrication of uranium concentrate and the purchase and sale of conversion services.

Cameco Corp. (NYSE:CCJ) recently reported its consolidated financial and operating results for the fourth quarter and year ended December 31, 2021 in accordance with International Financial Reporting Standards (IFRS), including Fourth quarter net earnings of $11 million and adjusted net earnings of $23 million, driven by normal quarterly variations in contract deliveries and the continued execution of the company’s core strategy.

“Our results reflect the very deliberate execution of our strategy of full-cycle value capture. We have been undertaking work to ensure we have operational flexibility, we are aligning our production decisions with the market fundamentals and our contracting portfolio, and we have been financially disciplined. Since 2016, with our planned and unplanned production cuts, inventory reduction and market purchases, we have removed more than 190 million pounds of uranium from the market, which we believe has contributed to the security of supply concerns in our industry,” said Tim Gitzel, Cameco’s president and CEO. 

If you’re long this stock, then you’re liking how the stock has responded to the announcement. CCJ shares have been moving higher over the past week overall, pushing about 17% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 41% in that time on strong overall action. 

Cameco Corp. (NYSE:CCJ) managed to rope in revenues totaling $464.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -15.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($1.3B against $413.7M).

Viking Energy Group Inc. (OTC US:VKIN) is a small-cap oil and gas play, but it has also expanded into grid technology and carbon capture over recent months, making it an interesting speculative possibility as those new strategies are further developed.

As an oil and gas play, VKIN has proven oil and gas assets valued at over $96 million located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi, which positions the company to benefit from a windfall on rampaging oil prices. However, VKIN has been expanding into other energy themes, including carbon capture, storage, and electricity grid operations through strategic activity, including through its majority owner, Camber Energy Inc (NYSE American:CEI).

Viking Energy Group Inc. (OTC US:VKIN) recently announced that it has acquired a 51% interest in entities that own the intellectual property rights to fully developed, patent pending, ready-for-market proprietary Electric Transmission and Distribution Open Conductor Detection Systems designed to detect a break in a transmission line, distribution line, or coupling failure, and to immediately terminate the power to the line before it reaches the ground. 

The technology apparently stands to dramatically increase public safety and reduce the risk of causing an incendiary event, and is designed to be integral component within a much-needed, worldwide grid hardening and stability initiative by electric utilities to improve resiliency and reliability of existing infrastructure.

The technologies were developed by Robert Stuart and Ronald Smith, respected professionals with decades of experience in the power generation, transmission, and distribution sector. Mr. Stuart had a distinguished 35-year career at Pacific Gas and Electric (PG&E), and led major initiatives in system protection, transmission operation, control, and disturbance analysis. Mr. Smith had a distinguished 33-year career at PG&E that began as a Power Plant Operator and quickly advanced to grid operations and dispatch.

Viking Energy Group Inc. (OTC US:VKIN) President and Chief Executive Officer James A. Doris commented, “This technology is extremely important. It truly is difficult to put a monetary value on a solution that can sense a broken power line and cut the electricity flowing through the line before the wire hits the ground. Arcing and sparking energized power lines are hazardous, and difficult to detect using traditional concepts. Unfortunately, people in places like California, Western Canada, Australia, and other parts of the world are fully aware of what can happen when a downed, energized power line makes contact with the ground. The damage caused by these wildfires has been catastrophic. We have already begun discussions with major utilities in California and global equipment manufacturers for deployment. Our solution can be quickly and cost-effectively deployed in high-risk areas first, then utilized more broadly by all utility companies to help reach their grid hardening goals.”

Enphase Energy Inc. (Nasdaq:ENPH) is a leader in the design, development, manufacture and sale of micro inverter systems for the solar photovoltaic industry. 

The company’s products include IQ 7 Microinverter Series, IQ Battery, IQ Envoy, IQ Microinverter Accessories, IQ Envoy Accessories and Enlighten & Apps. 

Enphase Energy Inc. (Nasdaq:ENPH) recently announced that installers in Spain have seen an increase in deployments of residential solar energy systems, powered by IQ 7+ and IQ 7A Microinverters. Residential solar deployments in Spain are growing exponentially as favorable regulatory developments and high electricity prices are motivating homeowners to make the switch to a more sustainable clean energy generation. According to data recorded by the Spanish Photovoltaic Union (UNEF), of the 1,203 MW of new solar power installed in Spain in 2021, 32% was in the residential sector.

“Solar energy is one of the cleanest and more affordable ways to produce electricity, and Enphase gives us strong confidence in the industry’s future,” said Angel Baños, general manager at Solideo. “As a testament to renewables growth in Spain, we’re closing in on 1,000 solar installations – all powered by the most advanced solar technology through our partners at Enphase.”

The chart shows 42% tacked on to share pricing for the company in the past month. What’s more, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running 30% beyond its prior sustained average level. 

Enphase Energy Inc. (Nasdaq:ENPH) has a significant war chest ($1B) of cash on the books, which must be weighed relative to about $439.8M in total current liabilities. One should also note that debt has been growing over recent quarters. ENPH is pulling in trailing 12-month revenues of $1.4B. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 55.8%.

Other key stocks with exposure to the alternative energy infrastructure theme include NextEra Energy Inc. (NYSE:NEE), First Solar Inc. (Nasdaq:FSLR), SunRun Inc. (Nasdaq:RUN), General Electric Co. (NYSE:GE), and Eaton Corp. PLC (NYSE:ETN).

 

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