Today’s Move to a Small-Cap Renewable Energy Company Pineapple Energy (NASDAQ:PEGY) is pretty amazing. Indeed, a move of more than 30% in any stock on any given day is remarkable. However, the fact that PEGY stock made this move on an otherwise low market day is even more notable.
Now, Pineapple Energy is a unique company to assess in this market. Indeed, this company focuses on the local and regional storage of solar energy, by combining solar energy with battery storage. Given the catalysts provided by President Joe Biden’s recent bills supporting green energy, there is precedent for this decision. Today the Invesco Solar ETF (NYSEARC:TANNING) jumped more than 2%, indicating that there is broad interest in this sector.
However, there have not been many concrete catalysts that investors can cite to justify such a move. This week, Pineapple Energy announced orders of more than $2.4 million worth of units to be deployed through a Hawaii Battery Bonus program. For a company with last 12 months revenue 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 around $26 million following today’s move, more than 10x forward earnings (taking into account this new).
Let’s see if this decision is sustainable.
Can PEGY Stock continue its incredible run?
I believe that renewable energy storage is going to play a very important role in ensuring a reliable long-term transition to renewable energy. In this regard, companies like Pineapple Energy certainly offer enormous potential for growth. Such potential seems to be embedded in this stock, and more, right now.
That said, it is important for any investment to analyze the risk-reward ratio of a particular security at any given time. Pineapple Energy is a company that is moving in the right direction. However, it remains to be seen to what extent this momentum can be sustained (and accelerated over time).
Along with speculative moves in other small-cap stocks today, investors appear to have a range of momentum-driven options to bet on. Maybe Pineapple Energy will prove to be a great choice in the long run. That said, at these levels, I’m happy to watch price action from the sidelines.
As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.