Supply chain issues and the war in Ukraine have concentrated investors’ minds on the need to move towards a more sustainable form of clean energy. However, confidence in companies involved in the sector has been hit by Covid-19 outbreaks and interest rate hikes. Although share prices of companies including ChargePoint, Pod Point and Enphase Energy have been hit, analysts remain convinced that clean energy is the future.
Amid a backdrop of rising energy prices, Covid-19 supply chain disruptions and high interest rates, high-growth clean energy stocks including ChargePoint [CHPT], Pod Point [PODP.L] and Enphase [ENPH] have seen shares dragged down in the year so far.
Russia’s invasion of Ukraine has rocked energy markets, driving oil and gas prices to decade high levels, which has put pressure on global economies to reconsider energy supplies.
In the US, the cost of natural gas delivered through pipes rose 24% in February, while the price of fuel oil has jumped 40% since January 2019. The result has been an increased realisation that central infrastructures need to be less reliant on traditional forms of energy and more focused on moving towards a clean alternative.
The investment opportunities in the sector are highlighted in a report by the International Renewable Energy Agency, which states that the shift towards clean energy will need an increase in investment by around 30%, from $93trn to $120trn by 2050.
ChargePoint: A global leader
With fuel costs on the rise, one transition that seems inevitable is the switch to electric vehicles (EVs). American company ChargePoint provides hundreds of thousands of EV charging spots across the US and Europe.
Year-to-date (through 27 April), the ChargePoint share price is down 30%. While March saw a 37% jump in the stock’s price, since the turn of the month shares have slumped 33%.
ChargePoint's Q4 revenue growth year-over-year
he firm does not have a P/E ratio due to the fact it is not yet profitable, but its Q4 results were rather impressive. Revenues saw a 90% increase year-over-year, while the company expects sales up to $500m in 2023. However, its $60m loss in the quarter may provide a stumbling block for growth.
With this said, over 50% of the Fortune 500 use one of the company’s products or services, and its global use has seen Cowen analyst Gabe Daoud raise its target price to $27 from $24. Citi has also increased its target to $17 from $15.
The firm has also attracted private sponsorships with firms such as Goldman Sachs, highlighting the potential it holds as a long-term investment.
Pod Point: Strong growth potential
The UK firm Pod Point is one of the leading providers of charging infrastructure for EVs. Based in London, the stock has struggled year-to-date and is down 18%. However, the Pod Point share price has seen an 14% revival so far in April as the cost of fuel continues to rise, showing the firm is in a prime position to benefit from this.
The EV sector’s growing importance can be seen through the recent three-year partnership Pod Point signed with BMW [BMW.DE], becoming a preferred supplier to its UK consumers. The firm has also taken strides in its expansion through agreements with commercial partners such as Tesco [TSCO.L] and Lidl.
Deals such as these have attributed to strong results for the firm. Its gross profit rose 99% year-on-year according to its latest results, while its revenues grew a substantial 86%.
CEO Erik Fairbairn addressed concerns raised by some analysts over the discrepancy between supply and demand by arguing that less money should be spent on press releases and more time spent on ensuring there were enough charging points. He said it was up to businesses to work together as a team.
Enphase Energy: A home energy alternative
Enphase Energy is an alternative clean energy stock, focusing on forms of solar energy for homes.
Like ChargePoint and Pod Point, the Enphase Energy share price has had a poor start to 2022. Since the turn of the year, the stock is down over 9.4%. And while March saw a near 20% spike, April has seen 17.9% shaved off its price so far.
Enphase Energy's price-to-earnings ratio
Enphase Energy currently has a P/E ratio of 150.8, highlighting that the stock is incredibly overvalued. However, analysts remain bullish about its future. With the share price trading just above $150, some believe that shares hold the potential to rise to the $290 barrier in 2023, highlighting the growth potential in the space.
Long-term energy outlook
The hike in interest rates in the US and the UK looks like it could continue into 2022. For stocks like ChargePoint, Pod Point and Enphase Energy, this provides a challenge as their rising debt could provide a further knock to investor confidence.
However, as a long-term investment, these stocks could be a great buy. It is inevitable that the clean energy sector will expand, and the impressive partnerships struck by these firms prove it. With many analysts also holding a positive outlook on these stocks for the year ahead, the dip we are seeing may present an opportunity to buy shares at a slashed price.
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