Daily Stock Pick: September 29th, 2022

One of the greatest challenges associated with clean energy is the intermittency of its sources. The sun doesn’t shine all the time, and the wind doesn’t always blow. Energy storage is the solution that allows excess energy to be stored, enabling continuous power output at all times, and making clean energy as reliable and consistent as fossil fuel.

At the end of 2021, the global installed energy storage capacity measured about 46 GWh.  According to InvestorPlace, a meager 1.5% of renewable energy production in the world is backed by energy storage today. As governments and corporations worldwide strive toward carbon neutrality, that figure is set to grow exponentially. Bloomberg New Energy Finance targets at least 800 GWh of global energy storage capacity by 2030, indicating 17 times growth over the next ten years.  

Since the U.S. government officially introduced the first-ever tax credit for energy storage projects, there have been remarkable positive business developments in the industry. Today, we’ll look at a pure play on artificial intelligence-driven clean energy storage that’s making waves and looking to scoop up market share as solar power adoption increases across the globe.

Stem Inc (STEM) is a pure play on the smart energy storage space offering artificial intelligence-driven clean energy storage systems. The company’s advanced energy storage solutions with Athena(TM), an artificial intelligence-powered analytics platform, enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation, and grid power.

The company has already built up considerable infrastructure with established names. STEM’s Athena Software seems likely to become mission-critical for many electric utilities because of the rapidly increasing supply and demand for renewable energy.  

For the second quarter, which ended June 30th, Stem reported a record-breaking backlog of $727 million, up 191% from $250 million at the end of Q2 2021. Bookings were up 402% from $45 million to $226 million, and the 12-month pipeline increased 8% from the previous quarter to $5.2 billion. Revenue rose a whopping 246% year-over-year and came in 5% above the high end of guidance at $67 million. 

We are encouraged by Congressional support for the Inflation Reduction Act of 2022. The climate provisions in the Act would drive continued investment in America’s aging power grid, support customer adoption of renewable energy, and improve energy security by incentivizing development of our domestic supply chain. Importantly, a stand-alone Investment Tax Credit (ITC) for energy storage, and the extension of the solar ITC, would improve the economic returns for our customers,”  commented John Carrington, Chief Executive Officer of Stem. 

“Supply chain constraints, permitting and interconnection delays, and certain regulatory actions continue to pose challenges, but we believe we remain well-positioned to manage these risks and continue with our strong execution through the rest of 2022,” he continued.

STEM has high growth potential and looks like an ideal long-term investment. Athena is looking like an industry-changing platform with wide-ranging applications. STEM’s infrastructure is far ahead of its competitors and will prove to be a crucial piece of the investment thesis moving forward. 

Where to invest $1,000 right now...

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