3 stocks should benefit from booming infrastructure investment

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President Biden’s Infrastructure Investment and Jobs Act was officially proclaimed into law this week, adding billions of dollars in fuel to the growing U.S. renewable energy economy. For some companies operating in this nascent market, this increased funding might just be the support they need to mainstream their products.

We asked three of our foolish contributors to choose an action that they think will progress particularly with this injection of money for renewable energy. Their choices – all leaders in specific green energy niches – were Flowering energy (NYSE: BE), Proterra (NASDAQ: PTRA), and Charging points (NYSE: CHPT). Here’s why they think these companies are well positioned to benefit from the boom in green energy investment.

Image source: Getty Images.

The hydrogen energy game

Travis Hoium (Bloom Energy): Today, most energy storage is carried out using lithium-ion batteries, but they have limits. Large storage batteries are great solutions for a home, where you may need it to provide backup power for a few hours, or for a business so that it can continue to operate even in the event of a short-term outage. . However, they are not as viable a solution for long-term storage, such as storing solar energy generated in the summer for use in the winter. This is where hydrogen can come into play.

Companies like Bloom Energy are building a hydrogen economy that consists primarily of electrolysers – devices that turn electricity and water into hydrogen – and fuel cells, which use this hydrogen to generate electricity. . Done well, it could be an entirely clean process, creating a carbon-free fuel that could be stored and easily transported for use in everything from buildings to container ships. But the industry is extremely young, so there is a lot of risk.

The infrastructure package could help the hydrogen economy in several ways. The law allocates $ 14 billion for resilience programs and includes another program of grants of $ 11 billion for states, utilities and other organizations to make investments in resilience.

It is also investing $ 3 billion in “grid flexibility” and an additional $ 3 billion will be used to help energy storage companies grow their manufacturing operations.

What is clear is that the government is pushing investment in energy storage and clean energy technologies, and hydrogen is likely to be one of the beneficiaries. It provides a valuable solution, its costs are falling, and manufacturing facilities are being built in the United States. Bloom Energy could therefore benefit from a sharp increase in new government spending in the years to come.

A helping hand for buses and beyond

Howard Smith (Proterra): Commercial electric vehicle (EV) technology company Proterra has already grown as transportation electrification progresses. But now it has a new catalyst – the Federal Infrastructure Act, which allocates billions of dollars in funding to accelerate the country’s transition from internal combustion vehicles to electric vehicles.

Proterra, which makes electric transit vehicles, transmissions and battery platforms, just released its third quarter financial results last week and its revenue grew 30% year over year . In addition, its battery production nearly doubled and its electric battery deliveries increased by 144% due to a 58% increase in transit bus deliveries.

blue Proterra battery electric bus.

Image source: Proterra.

Biden’s $ 1 trillion infrastructure investment and jobs law includes two line items particularly aligned with Proterra’s business. The bill contains $ 5 billion for zero and low emission buses and other transit vehicles that will replace much of the country’s school bus fleet. And an additional $ 7.5 billion is spent on building electric vehicle charging infrastructure in the United States

Unlike many other newly publicized EV names, Proterra is not a pre-income startup with plans but no products. Its forecast calls for nearly $ 250 million in revenue in 2021. It has already delivered more than 750 electric transit buses and installed more than 55 megawatts of charging infrastructure for its fleet customers.

While there will most certainly be bumps along the way, the transition to electric vehicles in the United States appears to include much more than consumer vehicles. Proterra is well positioned to benefit not only from vehicle sales, but also from growing demand for its battery and energy platform solutions.

The stock has jumped nearly 25% in the past month, boosted by investor optimism about how the infrastructure law will benefit the company. In this sense, Proterra management said in its latest financial update that the law will continue to “provide additional tailwinds to the growth prospects of each of our businesses in 2022 and beyond.” Investors who want to take advantage of the upcoming growth in the electric vehicle industry may not want to miss this bus.

ChargePoint plays a pivotal role in the growing electric vehicle industry

Daniel Foelber (ChargePoint Holdings): Although it took months for Congress to craft the bipartisan infrastructure law, the resulting legislation is still a big win for electric vehicle charging companies. About $ 7.5 billion of the roughly $ 1 trillion bill is for expanding electric vehicle charging infrastructure in the United States. ChargePoint operates one of the largest Tier 2 charging networks and has worked hard to expand its fast charging capabilities. It should benefit from the government’s investment in infrastructure, but arguably, an even more important catalyst will be the rapid increase in electric vehicles.

In addition to You’re here, more recent companies such as Rivien, Lucide Group, Nio, and others are entering the scene with impressive technology. Unlike Tesla, which out of necessity built its own charging network, many of these new players will depend on third-party charging providers like ChargePoint. In addition, most traditional car manufacturers like Ford and General Motors increase their spending on EV.

The growth of ChargePoint is driven by the level of demand for charging options adjacent to businesses and commercial and recreational areas. The COVID-19 pandemic has hampered the company’s growth as businesses lost foot traffic and therefore felt less of the need to attract customers with charging stations. As the economy reopens and businesses recover, ChargePoint is also seeing its numbers improve. It will take time for the company to become profitable, especially as it continues to spend heavily to maintain its leadership position in the market. However, the company’s second quarter FY2022 results showed it has stepped up to the plate and is ready to return to the growth path it was on before the pandemic.

Add fuel to the energy transition

Each of these companies already had strong market trends behind them. Sales of electric vehicles are increasing and companies and governments are investing more in hydrogen-related assets. But the billions of federal dollars allocated to supporting their technologies could accelerate these companies on the path to growth. This is why we believe Bloom Energy, Proterra and ChargePoint could be among the biggest winners of the Infrastructure Investment and Jobs Act.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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