French energy stock TotalEnergies saw its shares bounce closer to a buy point of a new base Wednesday after the member of the IBD 50 announced that it's agreed to acquire a 50% stake in San Francisco-based renewable energy company Clearway Energy Group.
TotalEnergies stock gapped up at the open and closed 2.6% higher on Wednesday. Shares also closed in on a cup base with a correct buy point of 60.14, according to MarketSmith chart analysis. The cup started forming when the energy stock peaked at 60.04 on Feb. 9. From there within weeks it descended below its 50-day moving average.
After finding support at its 200-day moving average during March and early April, TTE stock dipped below that line before staging a strong rally the past four weeks.
The rally's start coincided with the April 28 release of first-quarter results. Earnings jumped 203% to $3.33 a share and beat analyst expectations by 11%.
Explosive Growth For Energy Stock
The French multinational oil and gas company has seen explosive growth, with EPS increasing over 460% from $1.43 in 2020 to $6.68 last year. Growth is expected to continue unabated. Analysts expect EPS to increase to $11.21 this year before an expected decline to $9.34 a share in 2023, according to FactSet.
TotalEnergies' stock rebound has taken it well above key moving averages, forming the right side of the cup base, and to within 4% of its buy point.
A big plus in the energy stock's chart profile is that TotalEnergies' relative strength line is hitting a new high even before the stock gets to its buy point and a new high. This indicates a strong institutional appetite for the stock among mutual fund managers.
The energy stock has a Composite Rating of 98 and Relative Strength Rating of 92 out of a highest possible 99, according to Stock Checkup.
TotalEnergies has 100,000 employees and operates in 130 countries. It is transitioning from mainly an oil and gas explorer and products producer to a company focused on renewable energy. It plans to become carbon neutral by 2050. Another goal is to rank among the top five global producers of solar and wind electricity by 2030.
In exchange for its stake in Clearway, TotalEnergies agreed to pay investment fund Global Infrastructure Partners $1.6 billion in cash and 50% minus one share of the TotalEnergies unit that holds a 50.6% stake in SunPower.
Clearway Energy Group controls 42% of its listed subsidiary, Clearway Energy Inc.. The agreement values CWEN stock at $35.10 a share and SunPower stock at $18 a share.
Renewable Energy Leader
Clearway Energy Group is the fifth largest renewable energy company in the U.S., according to the news release announcing the energy stock deal. And the deal marks TotalEnergies' largest acquisition in renewable energy in the U.S., which is one of the top three renewable markets in the world.
Clearway Energy has 7.7 gigawatts in DC (direct current) capacity, or 7 GW of AC (alternating current), of wind and solar assets in operation through CWEN. And it has a 25 GW DC (22.3 GW AC) pipeline of renewable and storage projects. Additionally, 15 GW DC are in an advanced stage of development. Headquartered in San Francisco, Clearway has approximately 760 employees.
Clearway Energy stock also gapped higher Wednesday, gaining 5% in volume that jumped 49% above its 50-day average. The jump took it back to its 50-day and 200-day moving averages, where it's testing upside resistance.
CWEN is still in the middle of forming a new base.
