I believe I’ve got an unusual but worthy sustainability pick for you today. Months after special purpose acquisition company (SPAC) Star Peak Energy (NYSE:STPK) unveiled its plans to merge with battery technology specialist Stem, STPK stock has fallen from its peak price.
Granted, this isn’t the most well-known clean-energy stock pick in the world. If you like under-the-radar investments with strong growth potential, though, then this one might be right up your alley.
Besides, there aren’t very many publicly traded stocks available to folks seeking exposure to the AI-driven energy storage niche. Star Peak operates within the smart battery storage solutions sector; it’s not yet a crowded field, so this company could be an early mover.
Battery storage is an unusual angle for ESG investors, but the risk-reward profile of Star Peak Energy could tip in shareholders’ favor as the company pushes the envelope in the growing green energy space.
A Closer Look at STPK Stock
The aforementioned blank-check merger deal was announced on Dec. 4 of last year. Prior to that event, STPK stock traded close to $10, which is not unusual for early-stage SPAC stocks.
In the wake of the announcement, the stock climbed significantly for multiple weeks. In fact, the share price topped out at a 52-week high of $51.49 on Feb. 17, 2021.
You might have seen similar scenarios play out with other highly anticipated SPAC stocks. First, they jump from $10 to a much higher price after their acquisition targets have been revealed. But then, the enthusiasm towards them fades and their share prices begin to decline.
That’s precisely what happened to STPK stock, which drifted down into the low $30’s before February was even finished. And yesterday the stock closed at $23.70.
So is this decline a bad omen? Not necessarily, especially if you’re ready to give Stem a chance to prove itself as an ESG disruptor.
Revolutionizing the Grid
The intermittent nature of renewable energy sources, including solar and wind, presents a persistent issue. Consequently, the current U.S. government, which has ambitious clean-energy plans, will have to grapple with this potentially costly problem.
Stem seeks to address this issue by pairing “smart,” AI-powered batteries with renewable energy projects. Hopefully, this approach can enhance reliability without creating climate-impacting emissions.
As Star Peak Chairman Mike Morgan put it, “the problem here is climate change and a revolutionized grid is a big part of the way you deal with climate change.”
Morgan’s company has actually been in the “revolutionized grid” business for awhile. Founded in 2009, Stem provides an energy storage system that enables users to automatically switch between battery and grid power.
Moreover, the tech-enhanced system is optimized by an artificial intelligence platform called Athena.
According to the company, Athena is “[t]rained on tens of millions of system runtime hours across 40-plus utility territories” and enables businesses to reduce their energy bills by 10% to 30%.
Bet on Data, Not Chatter
I have to admit that my ears perked up when InvestorPlace contributor Chris MacDonald recently reported on a bit of buzz brewing among some social media speculators.
“There’s been a significant amount of recent chatter on Reddit and Twitter of late,” MacDonald teased. Naturally, I had to know what the buzz was all about.
Apparently, there’s talk going around that some sort of partnership between Tesla (NASDAQ:TSLA) and Stem could be in the works.
But don’t get too excited now ; as it turns out, this is likely just speculation. MacDonald’s got the scoop:
“A Redditor suggested in an initial post that Stem’s AI software could be used on top of Tesla’s Powerwall which will reportedly power New York’s first small virtual power plant… [However, a] clarification post from the initial Redditor in question suggested that there’s likely no deal pending.”
My apologies if I got your hopes up. But there’s a lesson to be learned from this episode: informed investors should stick to the confirmed data and usually avoid social media chatter.
For instance, one confirmed data point is that Stem has more than 550 partners.
Plus, the company has over 40 utility contracts and dozens of Fortune 500 companies as customers. Now those are stats you can actually bank on.
The Bottom Line
I won’t deny that an investment in Star Peak Energy carries some risk. It’s hard to predict the future course of the smart battery storage solutions sector.
That being acknowledged, I really like the company’s revolutionary approach to electric grid optimization.
So sorry if there’s no confirmed connection between Star Peak and Tesla. But owning STPK stock is still worthwhile, based on the facts instead of the fallacies.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
