One of the features of the post Covid 19 period since March is the way that we have seen many stocks and sectors rebranded in ways that could previously not be imagined. While there have been the obviously losers (to date) in hospitality, leisure and bricks and mortar retail, the winners have arguably been shining more brightly than in the strongest of bull markets.
Positive Reappraisal
It has been evident that most investors have been focusing on software and online based companies, the most refreshing aspect of the Covid 19 silver lining has been in all things green, clean and renewable. Unlike the most obvious new economy winners over the past quarter though, whose valuations have in many cases shot ahead of themselves, it is evident that here we are just seeing the beginning of a positive reappraisal.
Covid-19
The direct impetus for this given the respiratory effects of Covid 19 is that we shall have to tighten up on fossil fuel emissions in order that we can all breathe more easily, especially the most vulnerable. But even though such health concerns were in focus before 2020, it seems that only now have we been treated to a valuation re-rate on the stock market. This stems from turning around concepts that may have been regarded as indulgences – green, healthy, social conscience, to those which are essential to survival.
Chasing Value
Of course, where the stock market is concerned, the cliché of “elephants do not gallop” is always worth remembering when it comes to chasing value. Already we have seen Hydrogen Economy plays such as ITM Power (ITM) and Powerhouse Energy (PHE) soar this year, as has waste to energy group Eqtec (EQT). Ideally, we are headed for the Circular Economy, and in preparation for this the company with what appears to be a very well rounded offering is Verditek.
Broad Application
At the core of the company are its solar panels, up to 10 times lighter than the competition, and just as efficient. This broadens their application from being able to be placed not only on the tops of buildings, but also on vehicles to enhance performance and save on cost. However, the surprise winner from Verditek’s wafer thin solar panels is the mining industry, where the average company in this sector could save $3m a year. Adoption in Australia could mean a high margin win for Verditek, and significant cost reductions in the mining space.
Off Grid
Less surprising is that the military / defence area could use Verditek’s main offering – think off grid, geopolitically unstable areas where “mobile” power is needed. But uses are everywhere, with the likelihood that solar will be embedded all over the construction and infrastructure spaces. It is an added bonus for Verditek that just as the world is changing its attitude to clean energy, so it has brought in a new CEO ready to get the job done as far as driving the business forward. Rob Richards has already delivered his first commercial order, and the pace is likely to accelerate. The golden scenario is if current moves to develop graphene based solar panels – lighter and up to double the current efficiencies come through in the near term.
Graphene
Verditek has its offering not only in solar – and using graphene technology to enhance this, but also wastewater / industrial effluent treatment, and carbon capture. All the strings to the company’s bow are likely to become increasingly important, and with a market cap of less than £25m. Such a relatively lowly market cap versus its peers in the green space has not gone unnoticed as far as those who make a living out of tipping the next big thing for a living, and a couple of major subscription publications are already on the case.
Doubled Stock Price
So far they have seen Verditek’s stock double in recent weeks. Chart wise, it would seem that the same can and will be achieved over the summer, especially if new contract win momentum starts to accelerate. Perhaps just as important will be the arrival of green and ethical funds to the table, a group who may need to invest heavily in the likes of Verditek to build a weighting in this space to please their investors.
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