Shares in Camber Energy (NYSEAMERICAN:CEI) are no stranger to big moves in 2021. So the fact that CEI stock popped popped by 33% on Monday is hardly a shock. This isn’t its biggest single-day gain this year — not even close. On Jan. 28, the stock closed up 83%. However, there have been dramatic drops to go with those big gains and CEI has spent half of this year as a penny stock.
If your meme stock radar is going off, it should be.
Posts in Reddit’s r/WallStreetBets and on social media have a lot to do with what’s been going on with CEI stock in 2021. At the same time, this is a Portfolio Grader B-rated stock. You don’t want to dismiss it out of hand just because of that meme label.
Here’s a look at what has been going on during CEI’s latest surge.
Accessing CEI Stock and the Carbon Capture Market
One of the catalysts for the latest surge in CEI stock was an Aug. 24 announcement by the company. Camber announced that one of its subsidiaries (Viking Energy) had signed an exclusive intellectual property license agreement with a company called ESG Clean Energy. The license covers all of Canada as well as up to 25 non-exclusive U.S. locations.
The ESG Clean Energy System covered by the license is carbon capture technology. ESG claims its system will capture 100% of the CO2 generated by an internal combustion engine. The technology is applicable to a range of industries, including plastic recycling, data centers and crypto currency mining facilities.
In other words, the ESG Clean Energy System lets a customer run a conventional gasoline or natural gas engine/generator with net zero Carbon emissions. Byproducts of the process (such as distilled water or ethanol) are saleable.
We all know the emphasis that’s being put on net zero emissions.
Carbon capture is a very specific approach to zero emissions. The big money is in electrification, which is why the USPS and its fleet of delivery vehicles have been such a prize over the past year. That contract alone could be worth $6 billion. Carbon capture is more of a stopgap measure. It allows companies to continue using their existing methods without spending big on electrification, while also achieving net zero emissions.
Naturally this market is smaller. A report from August pegged the global market for carbon capture and storage to be worth $3.9 billion by 2026. That’s not massive, but the prospect of grabbing some of that — amplified by Reddit posts — helped propel CEI stock.
Oil and Gas Prices Are Rising
This fall has also seen rises in the prices of both oil and natural gas. Oil is at its highest levels in three years and currently flirting with $80 a barrel. Natural gas prices have gone through the roof and are now at levels not seen since 2014.
As an energy company with oil and gas holdings, it’s only natural that CEI stock would be gaining some momentum based on the recovery and growth in oil and gas prices.
The Meme Stock Challenge
What many investors will have a hard time getting past is Camber Energy’s position as a meme stock. Retail traders hanging out on social media and Reddit forums have been a big part of the spectacular spikes in CEI stock this year. But, like all meme stocks, CEI has also suffered big drops after the prices were pumped up.
It’s difficult to look at a meme stock and try to predict its next movement direction, let alone try to figure out whether it is a long-term growth candidate.
Bottom Line on CEI Stock
At the end of the day, Camber Energy is involved in business areas that are on the upswing, plus it’s making longer-term bets on carbon capture. Long-term growth is a distinct possibility, but what is the starting point? Is it CEI’s July and August lower penny stock levels, or $2.72 — its 2021 high close as of Monday?
Given the typical pattern of meme stock behavior, your best bet might be hanging on for a bit and waiting for the wind to come out of CEI’s sails before making a move.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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