A couple of weeks ago during “Market on Close,” I fielded a question about refining stocks like Valero (VLO), Marathon (MPC), and Phillips 66 (PSX). I basically said the price action represented a pause, because the market had mispriced the risk in the refined product market.
It’s a supply-and-demand story I’ve also detailed in this space with regard to the VanEck Vectors Oil Refiners ETF (CRAK), which is now up about 10% since I made those comments on the livestream, and spiking to new highs today.
While CRAK is close to overbought based on its 14-day Relative Strength Index, the fundamental narrative isn’t over yet. I’ll continue to share my thoughts with you here and via “Market on Close,” so sign up to be notified when the broadcast returns.
But for investors in search of the next big thing in the energy space, how about virtual power plants (VPPs)?
Power grids and software now have the technology to connect to and reverse-flow electricity from home power-producing sources, including electric vehicle (EV) batteries, solar panels, and gas or propane generators. Google (GOOG) (GOOGL) is an early adopter, per its pact with Voltus.
The market is quite fragmented, and software continues to evolve with the help of artificial intelligence (AI). But in a nutshell, you – the homeowner – can sign up to allow your utility to draw power from your battery storage system or to turn on your generator during periods of extreme power demand.
For investors, one important takeaway is that most of the software companies are start-ups and pre-revenue.
However, if this starts to catch on, someone with a GENERAC at their home somewhere along the PJM grid or in ERCOT territory in Texas could conceivably make $25-40K, for instance. This could be a catalyst for companies like Generac (GNRC) and Sunrun (RUN).
Traders looking to track this investing theme should bookmark our curated Barchart watchlists of Battery Stocks, Clean Energy Stocks, and Power & Electricity Infrastructure Stocks for further research.
– John Rowland, CMT, is Barchart’s Senior Market Strategist and host of Market on Close.
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
