Today’s move in small cap renewable energy company Pineapple Energy (NASDAQ:PEGY) is rather incredible. Indeed, a move of more than 30% in any stock on a given day is noteworthy. However, the fact that PEGY stock is making this move on an otherwise down day in the market is even more notable.
Now, Pineapple Energy is a unique company to assess in this market. That’s because this company focuses on local and regional storage of solar energy, via pairing solar power with battery storage. Given the catalysts provided by President Joe Biden’s recent bills supporting green energy, there is precedent for this move. Today, the Invesco Solar ETF (NYSEARCA:TAN) has surged more than 2%, indicating there is broad interest in this sector.
However, there haven’t been many concrete catalysts investors can point to, to justify a move like this. This week, Pineapple Energy did announce orders of more than $2.4 million in units to be deployed in a Hawaii Battery Bonus program. For a company with trailing-12-month revenues of less than $1 million, that’s a good thing. However, it’s important to keep in mind that Pineapple Energy is now trading at a valuation of approximately $26 million following today’s move, or more than 10 times forward revenue (factoring in this news).
Let’s dive into whether this move is sustainable.
Can PEGY Stock Continue Its Incredible Run?
I’m of the view that renewable energy storage is going to play a very important role in securing a reliable long-term transition to renewable energy. In this respect, companies like Pineapple Energy certainly provide tremendous growth potential. Such potential appears to be priced into this stock, and then some, right now.
That said, it’s important with any investment to analyze the risk-reward of a particular stock at a moment in time. Pineapple Energy is a company that’s moving in the right direction. However, the extent to which this momentum can be maintained (and accelerate over time) remains to be seen.
Along with speculative moves in other small-cap stocks today, investors appear to have a range of momentum-driven options to bet on. Perhaps Pineapple Energy will turn out to be a great long-term pick. That said, at these levels, I’m happy to watch the price action from the sidelines.
On the date of publication, Chris MacDonald 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 InvestorPlace.com Publishing Guidelines.