ITM Power (LSE:ITM) shares have had a rough 2022. Just today, its shares fell a whopping 26% after its full-year results were released.

Also, the news of CEO Dr. Graham Cooley stepping down after 13 years in charge and a new €140bn EU windfall tax on renewable energy firms’ profits contributed to the decline.

Looking at the ITM Power share price action, this fall is not sudden. The stock has plummeted 54.5% in a month and 71% in a year. Considering the amazing year energy stocks have had, this does not look good.

Here I will look at the results, what to expect moving forward and if I will make an investment in ITM Power shares after this historic collapse.

Is net zero just a dream?

The UK’s 2050 net-zero ambitions are lofty, considering how powerful fuel companies are today. The oil lobby is still extremely influential and holds the resources and infrastructure needed to make the transition possible.

But with the larger global economy in an uncertain position, the green energy transition is proving too expensive, causing a huge spike in bills for most people.

Any positives for ITM Power shares?  

Firstly, hydrogen fuel is the only net-zero energy source we know. Its by-products are reusable. It doesn’t remove oxygen from the atmosphere or add more water vapour, creating a balance.

ITM Power manufactures electrolyser systems and develops plants that generate this clean hydrogen fuel. It also operates seven hydrogen refuelling stations and a 1GW-capacity factory in the UK.

In 2022, the company saw its contract backlogs increase by 79% to 755 MW. As a result, revenue jumped over 30% to £5.6m, coupled with a significant increase in assets and inventory.

But the company recorded a gross loss of £23.5m in FY 2022. The board expects this figure to increase to £45m-£50m next year given the company’s high R&D budget.

Also, to complete current contracts, ITM Power would have to significantly increase production capacity. The company raised £250m to expand energy output to 5GW by December 2024. But the board stated in the release that achieving this target after the current energy crisis will be very tough.

Due to mounting expenses, the company’s plans to set up a new factory were scrapped. Now, ITM Power is working on improving output from its Bessemer Park factory to 1.5GW. But this could be too little given the growing demand.

Should I buy ITM Power shares right now?

As a potential investor, I see a lot of green energy stocks still carrying significant risks given the demand to accelerate development. ITM Power has this issue too. Yes, a lot of government grants and private contracts are being signed by the firm. But scaling up in the current economic and political climate will cost billions.

With the demand for cheap energy at an all-time high, I think green energy explorations will take a back seat over the coming months.

ITM Power shares are currently crashing and I never try to catch a falling knife. Once signs of a turnaround are clear, I would re-evaluate my position. But right now, I wouldn’t touch it with a 10-foot pole.

The post Down 26% in a day! ITM Power shares are falling fast. Here’s what I’d do appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Centrica (LSE:CNA) shares are ranked amongst the top three FTSE 100 performers over the last year. Being a seasoned UK energy giant, its shares have jumped 48% in the last 12 months of trading. And I think this could be the start of a big bull run in 2023. 

The surge in its share price is primarily because of the energy crisis in the UK and Europe. Rising fuel costs are causing strong inflation in the region. Germany was in the news earlier this week when inflation hit its highest level in almost 50 years. Nine other countries in the region have registered double-digit annual inflation, thanks to a big spike in August. 

A recent report from the International Energy Agency showed that coal prices will remain close to all-time highs for at least the next six months. As a result, energy companies could see a further surge in earnings in 2023. And I think investors have rightly been clamouring to buy renewable energy shares in the UK while they are still cheap.

Centrica share price has strong momentum

Centrica is one of the largest suppliers of electricity and natural gas to consumers in the UK and Ireland. The company operates British Gas, which provides gas to over 9m homes across the country. 

Just this week, UK wholesale gas price tumbled by more than 20% thanks to Centrica’s efforts to reopen UK’s biggest gas storage facility located under the North Sea. However, despite this drop, prices still remain 12 times higher than 2021 levels.

While many investors will look at this as a step to reduce gas prices, I think this still benefits the firm. Gas storage facilities will now maintain reserves at 80% capacity. This is to avoid any abrupt supply disruptions when Russia further reduces gas exports before the winter. This means that British Gas‘ reserves could quickly jump in value again if reserves drop in early 2023.

This is the main reason why I think Centrica shares look cheap right now despite the 143% rise since 2020’s crash. At 77.8p, its share price is currently 20% lower than 2022’s highs of 93p. And I think the company can post new post-pandemic highs if current demand continues in 2023. 

Concerns and verdict

However, this is firmly dependent on how the UK government handles the current energy crisis. Relief measures, including cash payments to households, have been deployed to reduce the impact on the public. European leaders are turning to other major exporters like the Middle East and the US. However, given the demand, this could become expensive.

The price of crude oil is a big factor that Europe and UK will have to address. Companies, including Centrica, have an established renewable energy network. But if they are forced to increase green energy capacity, it could put pressure on operations and cash reserves. This could put off investors as profit margins and revenue will be affected. 

While this energy crisis is concerning, it also presents an opportunity. Centrica holds prominent green energy assets and is a market leader in the UK. The gas giant could play a substantial role in providing the infrastructure to help the UK transition.

I am bullish on the company and could be tempted to invest in Centrica shares if there is a significant correction in the coming months.  

The post Here’s why Centrica shares could be a big winner in 2023 appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Looking at the market recovery right now, I see a lot of opportunities to buy cheap UK shares that were too expensive just a few months ago. I love studying market corrections and analysing sectors that show high activity even during bear runs. And right now, the energy sector, mining stocks and anything electric vehicle (EV)-related looks very popular.

Although I refrain from investing based on fads, current market trends seem to be rooted in important recent developments. Renewable energy has become supremely important after Europe’s latest power crisis. 

I’ve identified three shares that could supplement the growth of this booming industry right now. These UK shares look primed for growth and could boost my portfolio over the coming years.

All charged up

Greencoat UK Wind (LSE:UKW) and Volex (LSE:VLX) are two shares I’m watching closely right now.

Electricity bills across the country are surging. Just yesterday, the Confederation of British Industry warned policymakers about the impact of this on local businesses. And I think this points to the larger crisis as we’re caught between an expensive transition to green energy while fending off sky-high crude oil prices. 

Greencoat UK Wind’s business model involves investing in wind farms and then selling the generated power back to the grid. This relatively low-risk strategy with 90%+ margins means the company is largely cash positive. In the first half of 2022, it has already generated 2,175GWh of energy with a net cash generation of £328.8m.

This share has risen 22% in the last 12 months. And despite this jump, it’s trading at a price-to-earnings ratio of just 4.6 times. I think this is a very attractive valuation for a firm with strong financials and excellent future prospects. 

The next company on my list is Volex, a manufacturer of fibre-optic, copper and battery wires. The company also operates a range of brands in the electronics space that collectively have a global presence. Its main markets are North America (44% of revenue), Asia (23%) and Europe (33%). 

Volex recently developed an EV division that manufactures components for the booming industry. These include charging cables, charging stations and storage systems. 

In FY22, the company saw revenue growth of 38.6% to US$614.6m. The company expects to generate revenue of $1.2bn by the end of FY27. Thanks to strong recent reports, this share has risen 12.8% in the last six months and is finally showing signs of a bounce-back after falling steadily for months.

Concerns and verdict

While both companies look in relatively strong financial positions, they also come with considerable debt. Given the nature of both businesses, a high percentage of profits are invested back into acquiring assets.

Slowing economies remain a concern for Volex, given its international presence. Its buying power could fall if a recession happens, affecting sales and currency values. Greencoat is currently seeing a premium paid for the energy it sends to the grid. If this stabilises, year-on-year profits could fall, spooking investors.

However, I’m bullish on the European energy sector. I think current changes will prove fruitful in years to come. While traditional oil shares have dominated the energy market, I think a shake-up is under way, which is why I’m considering an investment in these two stocks right now. 

The post 2 UK shares from booming industries I’d buy now appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

FTSE 100 shares in the energy sector have witnessed a huge surge in profits over 12 months. Like many investors, I am looking at shares in the industry that could supercharge my portfolio. While there are several good stocks on offer, I have identified two showing explosive growth potential over the next decade.

But first, why are renewable energy shares witnessing historic levels of interest right now? I think the COP 26 summit last year triggered the perfect storm for a transition to cleaner energy. While governments increased focus on green alternatives, crude oil prices rose after Russia’s invasion of Ukraine. This added fuel to the green energy lobby and countries are now scrambling to secure sustainable alternatives to meet the power demand.

With money pouring into Europe’s thriving energy sector, I think this is the perfect time to invest.

FTSE 100 shares I’d buy to capitalise

The first company on my list is SSE (LSE:SSE). The FTSE 100 giant has the largest renewable electricity portfolio in the UK and Ireland. It specialises in onshore and offshore wind as well as hydropower. The company sells and distributes its energy to UK’s power grid.

In the financial year (FY) 2021, SSE generated £6.83bn in revenue and a total income of £2.28bn. These figures jumped significantly in FY 2022 when the company generated a revenue of £8.61bn and recorded an income of £3bn. The 33% jump in income comes primarily from its renewables wing.

Thanks to this strong showing, the FTSE 100 share has gone up 15.4% in the last six months. And despite this jump, it is still trading at a price-to-earnings ratio of 7.7 times. SSE shares also come with a healthy 4.6% yield making it really cheap right now

The other company on my watchlist is Centrica (LSE:CNA), a power transmission and delivery company with 11.7 gigawatts (GW) of renewable power under management.

Centrica operates British Gas, which powers millions of homes in the country. Centrica has been adding services like installing EV chargers to help consumers hit net-zero emissions as well. The company also owns a 20% stake in UK’s nuclear energy bank which is considered one of the cleanest sources of energy today.

The FTSE 100 share saw its dividend reinstated last month after the company saw revenue jump a whopping 2,851.22% in 2021 to £1.21bn. Although this is in comparison to a terrible 2020, the bounce back is significant. The energy giant also presented a stronger balance sheet, repaying the £93m debt from 2021.

Concerns and verdict

While both companies look financially strong right now, it is worth noting that energy prices play a major role here. When energy prices stabilise, profits could trend back towards pre-pandemic levels. This will slow down the investor interest in these two FTSE 100 shares.

Right now, both companies have a strong cash flow. But as we move closer to UK’s net zero ambitions, R&D budgets and asset purchases will increase, which could affect future results.

However, given the size, reach, and finances of these two companies, I think they are the best FTSE 100 energy shares for my portfolio right now. Depending on share price performance, I may be tempted to make a £1,000 investment in both in the coming months.

The post Green energy boom: 2 explosive FTSE 100 shares I’d buy to capitalise appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The renewable energy lobby has witnessed a massive surge over the last two years. World leaders are finally acknowledging the need to phase out fossil fuels. Latest projections show that over £850bn will be funnelled into the sector this decade via grants and investments, a huge boost for renewable energy firms.

The sector is red hot right now, with many top renewable energy shares across the world gaining momentum even as indexes fall. And I think I have zeroed in on an FTSE 100 name that looks like a winner for my long-term growth portfolio.

Riding the wave

SSE (LSE:SSE) shares have been outperforming the FTSE 100 index for some time now. Since the pandemic crash in March 2020, the Footsie has gone up 36.8% while the SSE share price is up 62%. This is largely due to the EU and the UK focussing on stronger collaborative renewable energy programs. And this revolution is led by wind and hydroelectricity, given the high potential for both in the region. And SSE is a market leader in both. 

The region has lofty ambitions when it comes to fighting climate change. The UK government recently detailed its Energy Security Strategy and the focus is on “homegrown power generation,” which includes a mix with 95% low-carbon power by 2030. This is great news for renewable energy production and distribution companies like SSE.

Is this FTSE 100 share the best growth option for me?

SSE Renewables focuses on onshore and offshore wind and hydroelectric power. SSE already owns nearly 2GW (gigawatt) of operational onshore wind capacity with over 1GW under development. The company also holds hydroelectricity resources capable of generating 1,459MW and an offshore wind portfolio estimated at 579MW across UK waters.

SSE wants to treble its renewable energy by 2030 to 50TWh a year. This includes a fully-funded £12.5bn investment by 2026, that will help ramp up clean power generation. The board also plans to power the increasing demand for EVs (electric vehicles) by supplying 20GW to charging ports across the country. 

In financial year (FY) 2022, the FTSE 100 company recorded total revenue of £8.6bn, up 26% from FY 2021. The board expects increased free-cash generation until 2026 and plans on growing its dividend by 5% per annum to FY 2026. 

These figures point to a business with a large market share operating in a healthy sector. And I consider them strong indicators of future growth. But there are some risks to consider as well. Regulations and currency fluctuations can impact SSE’s operations across UK, Scotland, and Ireland.  Also, analysts expect crude oil price fluctuations to settle in 2023. This could slow down the renewables push, impacting future profits. 

Governmental grants and regulations play a major role in energy prices. And the UK, which is witnessing financial and political turmoil, could tighten current renewable energy budgets if this inflationary period extends beyond 2022. This could increase taxes, stall development projects, and impact SSE’s performance. 

But this FTSE 100 stock looks like a robust renewable energy option for my portfolio right now. Given its strong presence in the UK, plans underway, and predicted jumps in revenue, I could be tempted to make a £10,000 investment if the current share price performance continues. 

The post Renewable energy boom: 1 top FTSE 100 share I’d buy appeared first on The Twelfth Magpie.

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• How UK shares could build a £339,849 ISA

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I think a shift in investor mentality towards companies working with common Environmental, Social and Governance (ESG) goals will become vital in the next decade. Businesses embracing sustainability and working in areas that promote renewable energy sources are multiplying as we move towards a greener supply chain. And an important concern raised at last year’s COP 26 event is switching to more renewable power sources and phasing out coal power.

I feel UK renewable energy companies can benefit tremendously given recent trends. Here are three shares I’m looking at in this space that could explode in 2022.

EVs take off

If I had to pick one industry that grew enormously in 2021, it has to be electric vehicles (EVs). Car giants are increasing their EV offerings and global markets are opening up infrastructure possibilities that could enable the long-needed switch. And this is where firms like Nexus Infrastructure (LSE: NEX) stand to benefit.

The company’s primary focus is civil engineering and outfitting new homes with utilities. But it also specialises in installing EV charging ports in homes. Last year, the government passed legislation that made EV ports mandatory in all new homes in the country from 2022. This is great news for Nexus because it already works with established builders like Persimmon and Taylor Wimpey. EV ports can be an auxiliary service the company provides, which already gives it a large market share in an emerging space.

It should be noted that a lockdown remains possible given the Omicron spread. And Nexus’s primary business, civil engineering, could be affected given rising construction material shortages and inflation. This could eat into revenue and cause its share price to fall. And Nexus shares already look slightly expensive at 222p, at a forward price-to-earnings ratio of 34 times. But I’m watching this renewable energy stock closely to try and find the optimal entry point for 2022 and beyond.

Future power?

Eqtec (LSE:EQT) is a waste-to-energy company that has patented gasification tech to solve two separate environmental issues. The company uses waste to produce gas fuel to power industries. But this innovative tech is a risky pick that has high potential. And a lot of its future revenue rides on massive adoption.

Its share price has remained dormant for nearly a decade now, falling below 10p in 2015 and never recovering. But a new three-year deal with Toyota Motors and two new power plants could breathe life into this renewable energy stock. The company could build recent developments and work towards wider adoption, which is why it is on my watchlist. However, this remains a speculative pick for my portfolio. 

The next company on my list is ITM Power (LSE:ITM). The hydrogen electrolysis machines the company makes separate hydrogen from water and use clean hydrogen as fuel. This process has zero carbon by-products, which is vital. Hydrogen as a fuel source is still in its infancy, in terms of adoption. This makes me optimistic about ITM’s future potential.

Despite impressive tech, the energy firm was plagued by a massive debt pile in 2021, which led to a poor showing last year. The loss-making company expects a 31% increase in projected revenue which could plug the £250m debt hole. And right now, the company is at a crucial point in the market and could take off in 2022, which is why it is on my watchlist.

The post Renewable energy boom: my top 3 shares for 2022 appeared first on The Twelfth Magpie.

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• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

These are five of my top renewable energy stocks for the renewable revolution.

Hydrogen

Lithium-ion batteries might work for cars, but they aren’t energy dense enough to drive buses, diggers, lorries, or boats.

Hydrogen fuel looks like it will be the most viable replacement for petrol and diesel, especially for large, industrial machinery. Hydrogen can also be stored, transported, and then burned to heat homes.

The best part is that solar and wind farms can be used to make hydrogen.

Earlier this year, Prime Minister Boris Johnson announced his hopes that the UK would become the “Qatar of Hydrogen”.

ITM Power

Right now, ITM Power (LSE: ITM) is my top pick in this field. ITM builds modular hydrogen electrolysis machines. Because the machines are modular they can be easily bolted onto existing green energy infrastructure. The company does have a lot of debt right now but has recently raised £250m to fund construction of two new factories. It is poised to meet growing demand.

My main worry with ITM is that it has struggled to turn a profit and still isn’t forecast to do so for at least another three years.

AFC Energy

Another hydrogen company on my radar is AFC Energy (LSE: AFC). This Surry-based company manufactures the fuel cells needed to turn hydrogen fuel into electricity. I’m particularly bullish on AFC because it has a patent on alkaline fuel cells. Alkaline fuel cells use lower purity hydrogen than their non-alkaline counterparts. Cars, trucks, and even buildings using alkaline fuel cells will be able to be run at a far lower cost, giving AFC a competitive edge.

On the financial side, unfortunately, AFC suffers from many of the same setbacks as ITM power: high debt and a track record of low income.

But, just like ITM, revenues are up, and are projected to climb over the next few years. The market has a clear desire for hydrogen. JCB just signed a multibillion-pound deal with Fortescue Future industries to import green hydrogen all the way from Australia.

Hydrogen power still remains untested at a commercial scale. It’s a risky investment compared to some already established technologies. What I’m betting on is that to bring down carbon emissions, firms around the world need access to low carbon fuel that can be produced and used today. I fully expect these companies to have some growing pains, but to ultimately come out on top.

Wind

Within the UK, my top pick for a wind power-related stock is Greencoat UK Wind (LSE: UKW). This investment firm owns or partially owns 40 wind farms around the UK. Greencoat also has some of the best financials I have seen in the sector, operating with a net profit margin of 77.6% and paying a reasonable 5.33% dividend.

However it is a smaller company, and might be squeezed out by larger competitors.

Spanish energy company Iberdrola (LSE: 0HIT) is also on my radar. Iberdrola has a much higher market cap than Greencoat UK (£54bn and £2bn, respectively), but has a much lower net profit margin at 10.45%. Unlike Greencoat, Iberdrola builds its own turbines and funds in-house research and development.

Iberdrola recently announced it was building a massive wind farm off the coast of the UK. The company is also promising to help the Norwegian government construct two new offshore farms, capable of generating a total of 9GW of energy.

Iberdrola leads the charge in floating turbines. Offshore windfarms can only be installed where the water is shallow enough for the turbines to be driven into the seabed. Thousands of new deep-sea sites will become available to energy companies once floating wind farms are perfected.

To do this, Iberdrola has taken on a lot of debt. The UK wind farm will cost upwards of £6bn alone, so I’m uncertain about its short- to mid-term profitability.

If I had to pick one, I would choose Greencoat because of the higher profit margins and lower liabilities. But I think Iberdrola remains a very attractive option.

Solar

When people imagine solar power, they commonly think of photovoltaic generation (solar panels).

While photovoltaic technology has improved in efficiency, the core design has one unfortunate drawback. Solar panels are made from silicone, which has high electrical conductivity but a low melting temperature. Overexposure to direct sunlight causes them to overheat and lose efficiency. 

Because of this, my top pick for solar is Acciona (LSE: 0H4K), which is a leader in concentrated solar power.

Concentrated solar uses mirrors to focus sunlight on a single point, superheating a plant-based oil or rock salt, which is then used to heat water into steam and drive a turbine. Unlike solar panels, the hotter it gets, the better.

Concentrated solar has two more distinct advantages over panels.

• Computers can adjust the mirrors to maintain energy production at peak efficiency throughout the day.
• Heated elements can then be stored in insulated containers and used throughout the night.

Acciona is a conglomerate, and only one of its subsidiaries actually produces concentrated solar energy. I feel this makes the investment a little safer.

The firm has a market cap of £7.7bn and last year it brought in £5.4bn in revenue. Of this, £3bn was gross profit.

I think the biggest risk to this investment is that there is no guarantee that concentrated solar will gain the mass adoption needed to push the stock up. The 2.44% dividend payment is a reasonable consolation prize.

Conclusion

Renewable energy is the future, there is no doubt about it. The technology is here and some of it can even fit into our existing infrastructure. The best part about the green revolution is that, unlike tech, there’s room for everyone. So, I will continue to learn about the amazing new solutions that are emerging every single day. And in the meantime, I will be adding all of these to my portfolio.

The post Invest in renewable energy today with these 5 green companies appeared first on The Twelfth Magpie.

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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Shell has refuted these claims and abrdrn, another major investor, believes a split would damage the company. As a rule, I don’t invest in oil companies. But the possibility of a green-only subsidiary with the capital of an oil giant has me interested.

Key statistics

Royal Dutch Shell is an Anglo-Dutch petrochemical company. It holds the rights to oil and gas fields across the world and has integrated refinement and distribution arms. It has also been making investments in researching hydrogen based fuels.

Today, Shell has 5.7bn shares outstanding — the total number of shares available — and is trading for 1,679p.

Third Point has currently has a $750 stake in Shell, which is quite a small holding compared to other investors. Despite this, the fund’s leader, David Loeb, made headlines on 27 October by suggesting that the company should be split up.

Why split up?

Loeb has called for the breakup because he believes that too many competing interests among stakeholders are preventing the Shell from taking decisive action on climate change.

Loeb claims that Shell is trying to appease shareholders who want maximum profits (by maintaining petrochemical extraction) as well as those who want to go green. The result of this is an ‘incoherent, conflicting’ strategy that appeals to no one and achieves nothing. Shell’s much touted blue hydrogen initiative has shown few results and relies heavily on non-existent carbon capture technology. Despite an announced share buyback worth $2bn, Shell has cut its dividend from 47 cents to 16 cents and the share price hasn’t fully recovered from the 2020 crash (when it traded for 2,270p). 

Loeb argues that breaking Shell into multiple subsidiaries will allow for each division to focus on its core goals. It seems he’s not the only one losing confidence in Shell. Dutch pension fund ABP has announced plans to divest all of its holdings in Shell, worth $15bn, claiming there is ‘insufficient opportunity’ to achieve ‘necessary, significant acceleration of the energy transition’.

Could this push up the share price?

There is no guarantee that Shell will split up, but if it does then how that split is implemented would have a major effect on its share price.

Abrdrn argues that splitting Shell up would negatively affect the company’s highly integrated supply chain. A fall in revenue would hurt investor confidence and bring the share price down. 

But, a company with even a fraction of Shell’s resources, focused on green energy, would be in a position to race ahead of the competition. A split up represents the kind of bold and decisive action needed for companies to survive the green transition.

For now, a split up still seems unlikely, however, I will keep an eye on the situation. If Loeb and ABP are able to leverage enough pressure to successfully implement this split, I would be interested in adding the renewable subsidiary to my portfolio.

The post Will Shell split up to go green? How would it affect the share price? appeared first on The Twelfth Magpie.

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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.