July 29, 2008 – EnerNOC (Nasdaq:ENOC) announced this morning that the Connecticut Department of Public Utility Control (DPUC) has determined that the energy savings generated by its monitoring-based commissioning solution at Western Connecticut State University qualify for Class III renewable energy credits. The ruling is another catalyst that we think will continue to drive EnerNOC’s performance.
Connecticut has mandated that by 2010, 14% of electricity in the state should be obtained from renewable sources, and by 2020, the minimum requirement will be 27%. Class III renewable energy credits can be traded on the open market, and customers that install Class III resources on or after January 1, 2008 are entitled to credits equal to at least one cent per kWh.
Electric providers have to meet the standard with 4% Class III resources by 2010.
Last week we wrote that EnerNOC should outperform, when the stock was trading at about $21, and the stock rallied to as high as $24, after pulling back to current levels this morning at about $15.97. We think that based on our target revenue for 2008 ($103 million), and a 5.5x P/S multiple, we think the stock could trade as high as $28, another 75% higher than current levels.
At $15.97 we think the risk-reward level here is compelling and we are pounding the table on the stock this morning.
Disclosure Note: SCPEditor does not have a position in ENOC.