Fuel Tech Inc (NASDAQ: FTEK) is rocketing in the premarket this morning, following up on the dramatic gains the stock saw yesterday. As with many others in the clean energy space, the company hasn’t released any news any time soon. So, a search of Yahoo! Finance or the SEC will yield nothing. Nonetheless, there’s good reason for the gains.
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The Biden-Led Clean Energy Boom Is Sending FTEK Stock Through the Roof
Fuel Tech didn’t release any news this morning, or yesterday for that matter. It didn’t need to. Investors are flocking to clean energy in what may be the beginning of a bubble, and FTEK is the next target.
Why are investors flocking to clean energy?
Recently, Joe Biden won the United States Presidential Election. Over the past several years, Biden has been outspoken about the dangers of a growing carbon footprint on the global environment and his views on what needs to be done to solve the problem.
With Biden coming into office, clean energy plays like FTEK have quite a bit to look forward to. After all, as President, Joe Biden will likely push for tax cuts and grants provided to companies that operate in the clean energy space. Not to mention, there will also likely be tax cuts for consumers that take advantage of clean energy products, lifting demand.
Fuel Tech’s claim to fame is a technology that reduces carbon emissions from coal-burning power plants. In fact, its technology is used in more than 1,000 installations across the United States and around the world.
With Joe Biden coming into office, investors are looking for a boom in demand for the company’s technology, as well as potential grants and tax cuts. This started the growth.
Then came the boom.
The fact of the matter is that FTEK is a relatively heavily shorted stock. So, when the stock began to tick up, shorts started to lose their shirts, and raced to buy shares and cover their positions. This led to dramatic gains in volume and price, in what’s known as a short squeeze.
The Acquisition Argument
There’s also an argument floating around on Fuel Tech message boards that the company is the perfect target for a potential acquisition. We’re seeing this across clean energy penny stocks, and it makes sense.
Ultimately, with Biden coming into office, clean energy is the place to be. As a result, it would be surprising to see large traditional oil and energy companies snapping up the small fish in the pond to build a competitive advantage. Will FTEK get acquired, who knows, but the time is right for that type of transaction.
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The Bottom Line
The bottom line here is that there’s plenty of reason to be excited about the clean energy boom ahead and investors are obviously looking to FTEK as a way to take advantage of that boom. With so much new interest in the stock, shorts are being squeezed out of their positions. Moreover, the environment is shaping up for acquisition season among clean energy penny stocks, and this is one that many believe will be a target. All in all, FTEK stock is one to watch.
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