Renewable Energy Firm CEO Increases Stake in Expanding Co.

Revolve Renewable Power Corp. (TSXV:REVV;OTCQB:REVVF) announced Chief Executive Officer Steve Dalton has increased his stake in the expanding company, which develops utility-scale wind, solar, hydro and battery storage projects in North America.

Dalton indirectly acquired 133,500 shares on the open market between March 8 and April 5, the company said, increasing his holdings to 3,787,767 common shares, or 6.01% of the total issued outstanding shares of Revolve.

Dalton has said key parts of the company's strategy include increasing the size of its assets under development and M&A activities.

But the goal of investing back into your own company is often to make it more successful and increase the value of your stake in the business, or simply because of a belief in the company's mission, according to FasterCapital.

"Whatever the reason, when a CEO invests in their own company, it is a strong show of faith in its future," the website noted. "It can also be a risky move, as the CEO is putting their own money on the line in hopes of a payoff down the road. However, if the investment pays off, it can be a huge win for the CEO and the company."

According to the Globe and Mail, REVV was ranked among the top ten undervalued stocks in the Utilities – Independent Power Producers industry, the TSX Venture Exchange.

In total, the company now has more than 3 gigawatts (GW) of development projects in North America and just closed on its acquisition of WindRiver Power, an operator and developer of wind and hydro projects in British Columbia and Alberta.

The WindRiver purchase was financed through loans and also through the company's own cash, making "pretty efficient use of capital from ourselves in terms of pulling off these types of acquisitions," Dalton told Water Tower Research analyst Shawn Severson last month. "We've put up a certain amount of equity ourselves" for that purchase, said Dalton, speaking of the company.

According to the Globe and Mail in February, REVV was ranked among the top ten undervalued stocks in the Utilities – Independent Power Producers industry, the TSX Venture Exchange.

Revolve is working toward becoming "a dedicated renewable independent power producer focused on long-term recurring revenue and cash flow," Severson and colleague Graham Mattison wrote in a recent research note.

The Catalyst: A Stronger Domestic Clean Energy Industry

According to research by Deloitte Insights, renewable energy sources like solar, wind, storage, and hydropower are set for a "variable-speed takeoff" this year.

"The impact of unprecedented investment in renewable infrastructure will likely become more apparent in 2024," Deloitte said in its outlook for renewable energy in 2024. "Regulatory boosts to renewable energy and transmission buildout could help address grid constraints. And boosts to manufacturing could lay the foundations of a domestic clean energy industry with stronger supply chains supporting solar, wind, storage, and green hydrogen deployment."

In January, Technical Analyst Clive Maund wrote that it looked like the stock was set to "commence a major bull market as it just starts to advance out of a large low base pattern."

The renewable energy market is estimated to be a total of 4.23 GW in 2024, and it is expected to reach 5.98 GW by 2029, growing at a compound annual growth rate (CAGR) of 7.09%, according to Mordor Intelligence. Its value was about US$856 billion in 2021 and is expected to grow to more than US$1.6 trillion by 2027, Statista reported.

Renewable energy deployment is expected to grow by 17% to 42 GW in 2024 and account for almost a quarter of electricity generation, according to the Energy Information Administration.

"The tandem push of federal investments flowing into clean energy and pull of decarbonization demand from public and private entities have never been stronger," Deloitte wrote in its report. "Moving into 2024, these forces could enable renewables to overcome hurdles caused by the seismic shifts needed to meet the country's climate targets. The uplift and obstacles shaping the year ahead have set the stage for a variable-speed takeoff across renewable technologies, industries, and markets." 

Analysts: Stock Trades at Significant Discount to Peers

Severson and Mattison wrote that closing on the WindRiver acquisition was a "key milestone in Revolve's stated strategy of utilizing both a development strategy and acquiring operating assets."

The stock remains an opportunity as it "trades at a significant discount to its peers, even though it has delivered revenue and EBITDA, has a larger development pipeline than many of its peers, and further expected payments of US$50-60 million from the (French energy major) ENGIE transaction," the two analysts noted.

Last year, Revolve sold 1.25 GW of solar-plus-storage projects in Arizona to Engie.

In January, Technical Analyst Clive Maund wrote that it looked like the stock was set to "commence a major bull market as it just starts to advance out of a large low base pattern."

"After trending steadily higher for many months in a measured manner from this low and well into 2023, it reversed into an equally measured downtrend that brought it back to the Summer 2022 lows, with which it formed the second low of a Double Bottom last Fall, and we can also see that it then started to advance out of this low," Maund wrote.

The analyst said the price broke out "sharply and decisively" last November, a move that he believed to be the beginning of a new bull market for the stock.

"The conclusion is that all the technical factors described here are converging to indicate that Revolve Renewable Power Corp. is set to embark on a significant bull market advance from the current low level, which, although it has already started, is still in its very earliest stages," noted.

Ownership and Share Structure

About 60% of the company is owned by insiders and management, Revolve said.

Top shareholders include Joseph O'Farrell with 13.21%, Roger Norwich with 12.15%, the CEO and Director Stephen Dalton with 6.01%, President and Director Omar Bojoquez with 4.82%, and Jonathan Clare with 1.84%, according to Reuters and the company.

The rest is retail.

Revolve has a market cap of CA$18.28 million with 63.04 million shares outstanding and 38.08 million free-floating. It trades in a 52-week range of CA$0.68 and CA$0.20.

Important Disclosures:

1. Revolve Renewable Power Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Revolve Renewable Power Corp. 
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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