Congress is on the verge of enacting a $1 trillion infrastructure package, with a multi-billion-dollar package likely to follow. This might be a windfall for investors, particularly in the renewable and alternative energy sectors.
Because funding for renewable energy will be widespread, three of the top renewable energy stocks to gain from the infrastructure package differed greatly. Proterra (NASDAQ: PTRA), MasTec (NYSE: MTZ), and ChargePoint Holdings (NYSE: CHPT) were able to make the cut because they might all benefit from strong tailwinds.
The company that is constructing renewable energy infrastructure.
Travis Hoium (MasTec): If indeed the $1 trillion infrastructure plan succeeds, it will include a significant amount of money for contractors to build physical infrastructure. MasTec constructs a wide range of infrastructure, but it is a major player in the transmission of renewable energy from power plants to the grid as well as other markets. Here are a handful of the places that have been highlighted:
- An investment of $65 billion in the electric grid.
- $55 billion for improvements to water infrastructure.
- $50 billion to strengthen the water infrastructure;
- $39 billion to enhance public transportation.
- A total of $65 billion will be spent on broadband infrastructure.
This will provide a ten-year tailwind for contractors such as MasTec. The firm offers contractor services in every of the infrastructure categories mentioned above, and the stimulus might be a boon to the firm.
MasTec has the means and experience to create renewable energy as well as other infrastructure, but sales and profitability growth are dependent on macro tailwinds. A significant increase in infrastructure spending would be beneficial to the corporation. MasTec, an infrastructure contractor, may not get much press, but it’s the type of company that will benefit enormously from any infrastructure bill.
Howard Smith (Proterra): The bipartisan infrastructure package includes $15 billion for electric vehicles in its current form. According to reports, this includes $7.5 billion for both zero- and low-emission vehicles, including tens of thousands of electric school buses. Approximately $7.5 billion is set aside for charging infrastructure for electric vehicles. Proterra is in a good position to gain from both.
Proterra, which recorded revenue of $59 million in the 2nd quarter of 2021 and expected full-year sales of only about $250 million, could benefit from these expenditures in the long run. The company is already expanding, with a full-year revenue estimate for 2021 representing a 25% increase over revenue in 2020.
All three of Proterra’s business units are in line for funding under the planned infrastructure bill. It’s public transportation division produces battery-electric buses for a coach, school, and shuttle purposes. Since 2016, Proterra Energy has built charging infrastructure totaling more than 55 megawatts. Its powered section offers commercial EVs battery technology, electric drivetrains, and high-voltage systems.
Daniel Foelber (ChargePoint): ChargePoint, an electric vehicle charging infrastructure provider, released its second-quarter financial year 2022 results on September 1. Despite a jump of 8 percent, the next day, this stock still remains down 45 percent for the year as of this writing. The firm’s inability to meet growth goals could be the main source of downward pressure. However, it’s also possible that it’s due to the pure-play nature of the game. The EV charging sector will take time to mature into the industry that the market envisions.
ChargePoint is ideally positioned to benefit from rising EV adoption as North America’s industry leader in EV charging. Long-term investors should favor the company because of its elevated position in Level 2 charging, increased influence in Europe, and rising subscription business. On the other hand, management has been forthright about the significance of Congress adopting a positive infrastructure bill in the United States.
These businesses have in common that they are all developing items that are essential to increasing the usage of renewable energy. Transmission lines, electric vehicle chargers, and buses may not make the news, but they are critical to a greener energy future. And it’s on this that the government may spend trillions in the coming years.