Oil Giant Puts Money in This Emerging Energy Resource (Two Ways to Follow Along and Profit)

By TradeSmith Editorial Staff

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In the July issue of the Stock Advantage Report, TradeSmith Senior Analyst Mike Burnick shared how he spent an entire summer in the 1980s selling residential solar panels.

It didn’t leave him with a positive impression of the renewable energy market back then. Solar panels were clunky — he even called them “glorified water heaters.”

Mike theorized that the company was only in business because of the tax credits customers would receive for installing renewable energy equipment.

But if you fast forward to today, instead of being a “gimmick,” renewable energy — and making money from it as an investment — is very real.

In the renewable energy “family,” solar and wind may be the most well-known.

The global solar energy market was valued at $184.03 billion in 2021, and the global wind energy market was valued at $99.28 billion.

But there’s a “baby brother” in this sector that is starting to grow up fast — green hydrogen. This renewable energy could be used to fuel vehicles and to power homes and factories while also helping to greatly eliminate emissions.

Source: nyiso.com

It could also be a boon for forward-thinking investors, as the market is expected to increase nearly 50-fold from $1.83 billion in 2021 to $89.18 billion by 2030.

And when a 113-year-old oil company wants to get involved with this new energy form, it’s not doing so out of the kindness of its ancient heart.

It’s doing so because it expects it can make a lot of money.

And that means there’s a profit opportunity for shareholders.

Going Green

BP (BP) was originally incorporated as the Anglo-Persian Oil Company Limited in 1909 and has gone through several name changes throughout the years.

It’s still cashing in on its oil operations today, as its latest earnings report revealed its biggest windfall in the last 14 years. But with the U.S. government’s plans of spending $430 billion to reduce carbon emissions, to borrow a song title from Bob Dylan, “The Times They Are a-Changin.”

BP is taking a 40.5% stake in the Asian Renewable Energy Hub project planned for Australia, which BP says has “the potential to be one of the largest renewables and green hydrogen hubs in the world.”

The plan is for the hub to provide energy to local customers and export it internationally.

Analysis from BP projects that 8% of energy consumption could come from hydrogen by 2050, and that could even be a low estimate, as demand to generate power and produce synthetic fuels could be doubled.

Of course, we want to put BP “under the microscope” of our trading tools to make sure the numbers match the narrative.

BP Under the Microscope

BP is considered high risk with a Volatility Quotient score of 32.12%, so that is something to keep in mind for the more risk-averse investing crowd.

But it’s also a company that’s been in our Green Zone since February.

BP can generate revenue from mature energy sectors as it grows its operations in the renewable energy sector, meaning that it has diverse revenue sources.

The company also offers a dividend payout that has a hefty yield of 4.13%.

And altogether, that makes BP a great way to invest in the growing demand for green hydrogen but still receive income from a company because it’s making money in the here and now.

Bonus Investment Idea

If you’re more comfortable with risk, take a look at Plug Power Inc. (PLUG).

Plug Power produces, stores, and delivers green hydrogen energy. And it just inked a hydrogen supply deal with Amazon.com Inc. (AMZN) that would allow 1,000 to 2,000 heavy-duty trucks to be fueled for a year, according to a Barron’s estimate.

Plug Power believes the deal will help it reach its revenue goal of $3 billion by 2025. As a reference point, the company generated $502 million in revenue in 2021. So, there’s a lot of growth ahead for this company.

PLUG has a VQ score of 73.37%, which places it in our sky-high-risk category. But it’s in our Green Zone, and since triggering an Early Entry Signal on Aug. 5 at $24.11, the stock price is up 20% as of this writing.