President Joe Biden has just signed into law the Inflation Reduction Act, sweeping legislation that includes bold renewable energy and climate change initiatives. That bodes well for Montauk Renewables (MNTK), a 2021 IPO that has just fueled a new breakout.
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Based in Pittsburgh, Pa., Montauk is a renewable energy company specializing in the recovery and processing of biogas from landfills and other sources for use as a fossil-fuel replacement.
It develops, owns and runs renewable natural gas, or RNG, projects. Montauk uses these technologies to supply renewable fuel for the transportation and electrical power sectors.
With over 30 years of industry experience, Montauk is one of the largest U.S. producers of RNG. It has an operating portfolio of 12 RNG and three renewable electricity projects spanning six states.
Publicly traded for less than two years, MNTK stock has earned a spot on the IPO Leaders list of the best IPOs to buy and watch.
Renewable Energy Powers 114% Sales Growth
On Aug. 9, Montauk Renewables released Q2 earnings and sales numbers. Sales growth spiked to a 114% year-over-year increase. Revenue came in at $67.9 million, more than double Q1’s $32.2 million.
Earnings growth has been sporadic but with flashes of explosive strength. For example, Montauk generated a 533% Q2 EPS increase compared with the prior-year quarter, which showed a loss.
Analysts forecast 83% Q3 growth.
Montauk Renewables scores a strong 96 Composite Rating in Stock Checkup. Fellow leaders in the alternative-energy industry include Ameresco (AMRC), Arcosa (ACA), Kenon (KEN) and NextEra Energy (NEP).
The industry ranks a very strong No. 3 among the 197 groups that IBD tracks.
The stock has seen five straight quarters of rising fund ownership.
Montauk Renewables Files For Biogas-Related Patent
Last month, Montauk filed a provisional patent application pertaining to a combustion-based oxygen removal, condensate neutralization technology.
The application focuses on a new acid neutralization technology, which is a critical component in eliminating the harmful acidic condensate produced when wastewater is removed from the biogas conversion process. This innovation aims to eliminate costly damage to processing facility components. It will also reduce downtime for equipment replacement and troubleshooting.
The provisional patent application aligns with Montauk’s continued efforts to deploy technology within the company’s portfolio of landfill biogas recovery innovations.
MNTK Stock Fuels New Buy Point
After breaking out to a new high in June, Montauk Renewables pulled back sharply for four weeks. The stock found support in early July, launching a string of up weeks that lifted it back above its 200- and 50-day moving averages.
With its relative strength line already hitting a new high, Montauk has just cleared a 16.75 buy point in a cup pattern.
Unlike many stocks reeling from this year’s bear market, Montauk’s shorter-term moving averages are all above their longer-term benchmarks. For example, the renewable energy leader’s 21-day moving average is above its 50-day line, which is above the 200-day line.
This bullish alignment is a sign of technical strength in a tough year in which many stocks have taken an extended beating.
On Wednesday, Montauk Renewables jumped 3%, closing at the top of its range. Volume came in 97% above average, with trade picking up in the final hour.
It added to those gains Thursday, soaring another 9% in volume 89% above average.
Montauk showed resilience Friday, pulling back but ended the week at the very top of its buy range.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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Source: https://www.investors.com/research/ibd-stock-analysis/renewable-energy-ipo-montauk-nears-breakout-on-114-growth/?src=A00220&yptr=yahoo