Ocean Power Technologies May Be an Aspirational Investment to Believe In

Arguably one of the most intriguing speculative investments, Ocean Power Technologies (NASDAQ:OPTT) stock may represent a healthy middle ground in the search for viable clean energy infrastructures.

A photograph of the ocean.
Source: Manu Galdamez/ShutterStock.com

With growing concerns about climate change many turned their eyes to wind and solar energy platforms. Along with the proven desirability of green solutions like the burgeoning electric vehicle market, green stocks are getting hotter. However, a huge narrative impact on those sectors may help cynically lift OPTT stock.

If you think I’m referring to the Texas winter storm, you’re right. With several regions throughout the Lone Star State devasted and people succumbing to the extreme elements for totally preventable reasons, this was a terrible tragedy.

It’s almost as if Mother Nature were playing a sick joke on us following the worst of the novel coronavirus pandemic.

But what particularly irked many was the rush to judgment on renewable energy infrastructures. Perhaps most notably, Fox News’ Tucker Carlson, in one of his opinion pieces stated, “The windmills froze, so the power grid failed. Millions of Texans woke up Monday morning having to boil their water because with no electricity, it couldn’t be purified.”

Frankly, this is the evil genius of Fox News’ editorial pundits. They’re experts in taking kernels of truth and twisting it to fit a conservative talking point. It’s exactly what MSNBC and other left-leaning media sources do but for the right. Lost in the middle is the truth, the dynamic of which makes OPTT stock interesting.

Yes, the wind turbines froze, and the sun didn’t come up to power solar panels. But to blame these sources for the grid failing in Texas is a bit disingenuous. That renewable energy sources are intermittent has been a known factor for years.

But what if we could enjoy the cleanliness of clean energy without having to deal with its drawbacks? That’s the promise behind OPTT stock and the underlying wave energy innovation.

Aspirational OPTT Stock Worth Some Dumb Money

Before I get into it, I must say that I’m not a big fan of using terms like “aspirational” to cover up a shoddy business. While I’m not going to trash OPTT stock, before you get involved, you should take a look at its financials.

Since at least 2006, Ocean Power has been losing money. Further, it’s never posted positive annual free cash flow during this time. Moreover, revenue growth has taken a hit during the trailing year, which isn’t exactly what you want to see, even for an aspirational company.

Nevertheless, wave energy could be the balancing act that we need to get everyone on the clean energy train. As Carlson noted, wind and solar are very much intermittent and will stay that way short of an astronomical paradigm shift.

However, pushing dirty fossil fuels indefinitely is not the answer, considering that even conservatives are turning around to accept climate change.

Further, nuclear energy, while a viable and reliable power source is both controversial and incredibly dangerous in certain circumstances. We need something that’s out of sight and out of mind, which perfectly describes the underlying product of OPTT stock.

It’s not just the fact that we don’t have to look at ugly apparatuses as we’re crisscrossing the nation’s highways. The science of wave energy is quite compelling. According to information from the U.S. Energy Information Administration:

The theoretical annual energy potential of waves off the coasts of the United States is estimated to be as much as 2.64 trillion kilowatthours, or the equivalent of about 64% of U.S. electricity generation in 2019. The west coasts of the United States and Europe, and the coasts of Japan and New Zealand, have potential sites for harnessing wave energy.

Moreover, in the right regions, the ocean provides consistent energy streams while not disturbing land and being much safer for the environmental overall compared to fossil fuels.

Not Without Cons

Although OPTT stock seems like the best solution for next-generation power production, nothing is without disadvantages.

For starters, wave energy platforms disturb some marine life so it’s not completely impact-free. Also, a heavily built-out wave energy infrastructure could disturb commercial and private vessels.

But the biggest problem is likely cost and scalability. Marine solutions are not cheap. Plus, they have to endure severe conditions, making durability and maintenance recurring issues.

It’s no surprise that, as previously mentioned, Ocean Power’s financials are not quite up to snuff.

Still, moving forward, I believe the biggest lesson from the Texas cold snap is energy diversity. We need to harness all available solutions – wind, energy, wave, even fossil fuels in some cases – to become energy independent against various threats and potentially disruptive events.

Because the ocean plays into this broader strategy, OPTT stock is worth a look with speculation funds.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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