STEM Stock: 2 Reasons the Energy Storage Play Is Charging Up Today

Investors continue to pour into the shares of clean energy storage play Stem (NYSE:STEM) for a fourth day. STEM stock was up more than 5% in pre-market trading after gaining nearly 11% on Monday.

A concept photo of different energy storage systems.

Source: Shutterstock

The rally follows news of key hires by the Millbrae, California firm.  Notably, veteran M&A executive Matt Tappin has joined the leadership team as vice president of corporate development, focusing on mergers and acquisitions, investments, and joint ventures. His remit became clear in management’s April 27 fireside chat that focused on its merger and investment strategy to capitalize on the power grid shifting to renewable sources.

Stem’s flagship product, known as Athena, is an intelligent software solution. The target market for Athena primarily consists of businesses, including independent power producers and utilities. More than 950 projects are already operating or contracted with Athena. In the first-quarter earnings report on May 17, management said the company’s contracted backlog grew more than 20% sequentially in the period.

Stem completed its business combination with a special purpose acquisition company (SPAC) called Star Peak Energy Transition. on April 28. In anticipation of the reverse merger, buyers bid the share price higher. By Feb. 17, the stock hit a 52-week high of $51.49.

STEM Stock Roadshows Looks to Stoke Investor Interest

This week’s STEM stock rally comes as a relief to investors who chose to ride the shares down near 20% for the year through May 13. At that point, InvestorPlace contributor David Moadel advised that the decline should not be read as a sign that STEM stockholders should cut and run. “This is still a high-potential investment in a company that uniquely combines artificial intelligence, software and sustainability,” he wrote on May 12.

He was right. Declines have now reversed as trading volumes spiked over the course of the last eight days, boosting the share price by more than 34.5% through yesterday.

On that momentum, Stem management is making the rounds at a slew of virtual investor conferences in the coming weeks, including the Goldman Sachs Solar and Storage Symposium and the JP Morgan Energy, Power & Renewables Conference, both in mid June.

The story they will likely tell was highlighted by contributor Chris Lau earlier this month, specifically Stem’s first-mover advantage in storage for otherwise problematic intermittent electricity generated from wind and solar energy farms. “The grid will need a smart energy solution to collect that energy. STEM supplies smart energy battery storage already,” he wrote.

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor.

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