The Tide has Finally Turned for #Solar & #Wind- J Peter Lynch
Point Roberts WA, Delta BC, July, 2020 – Investorideas.com, a global news source and leading investor resource covering Cleantech and renewable energy stocks issues today’s Cleantech column at Investorideas.com and Renewableenergystocks.com with J.Peter Lynch.
Read this article in full at https://www.investorideas.com/news/2020/renewable-energy/07011Solar-Wind.asp
Introduction
The Solar Boom is starting: The Cost and Wind are now FAR cheaper than ANY other form of Energy.
Solar has been on the brink of becoming the cheapest form of energy for literally decades. I know many will say, that is just not true. Well, they are correct if you only look at the surface and not explore deeper to consider ALL the information, data and the massive subsidies the fossil fuel industry has been receiving for DECADES.
If you look deeper you will see, and very likely to be shocked by how much the fossil fuel industry is subsidized annually worldwide. In 2015 the U.S. alone spent MORE on fossil fuel subsidies than on national defense! In 2015 $599 Billion for the U.S. Military in the same year (2015) the US alone spent $649 Billion on direct and indirect subsidies to the fossil fuel industries (coal, oil, and natural gas).
In fact, the International Monetary Fund (IMF) reported in 2015 that 85% of ALL subsidies WORLDWIDE of any kind were directed to fossil fuel subsidies. It is very unlikely they accounted for all the other less obvious costs - damages to our environment (bad air, bad water, etc.), increases in medical costs for Americans, and many other "non-obvious damages caused by fossil fuel companies as they knowing and purposely destroy our planet for profit.
So you can see that if you counted all of these other "costs" solar and wind were actually cheaper decades ago and today they are FAR cheaper in spite of the massive subsidies the fossil fuel industry still receives. Obviously the fossil fuel industry is a “zombie industry” and as soon as the government stops supporting them with incredible amounts of money they will cease to exist – some people would call that “socialism”.
Finally, the situation has changed today and for the past few years because more and more businesses and governments see clearly that solar and wind is the lowest-cost energy in the world, and will only get cheaper (source: investment banks Deutsche Bank and Lazard in 2019) despite solar and wind having tiny subsidies, compared to fossil fuels. The hand writing is on the wall, beginning of the end of the fossil fuel industries is well underway.
Today - Solar and Wind are booming around the world
As a result of these facts now being apparent, the implementation of solar and wind by governments and industry has literally exploded worldwide. You may not have realized this because it is barely or not at all covered in the mainstream American press, you have to dig around in more specialized publications and many foreign news services - if you look there you will see it and it is ONLY the start of the worldwide ramp up.
At some point solar and wind will not be a good investment – they will be GREAT investment
“Goldman Sachs Sees $16 Trillion Investment In Renewables By 2030” • Goldman Sachs analysts issued a research note for investors saying investments in renewable energy are set to overtake those in oil and gas for the first time next year. They think the clean energy field will be a $16 trillion opportunity for investment between now and 2030. [CleanTechnica]
“Investing In Renewable Energy Could See A Return Of To Up To 800%” • Fossil fuels interests would like to tell us otherwise, but the International Renewable Energy Agency says investing in renewable energy and a green economy would create tens of millions of jobs worldwide and provide investment returns of up to 800% over time. [CleanTechnica]
The Problem
At the current time we have a historically overpriced and precarious Stock Market
I think the market is VERY overpriced and is due for a correction, how large is impossible to know. My is it will start when public companies start to report 2nd quarter earnings – legally they are required to report financials 35 to 60 days after the close of this quarter – Tuesday June 30th. I think the next correction or worse will occur around that time span, mid-July to mid-August. The second quarter numbers will be terrible because of the virus and the market was historically expensive BEFORE the virus struck and terrible financial numbers started to come in at the end of the first quarter. The markets recovered close to 90% of the last decline from the bottom and are almost at the prior ALL TIME high and now the financial numbers will be the worse in decades, with the result being: the historically overvalued market will be even more overvalued and likely the most overvalued market in history.
How to can one invest to take advantage of this transformation to a new energy world?
Historically, stocks over time move from “too expensive” to “very cheap”. Whenever, (now) people always ask, Warren Buffet, arguably the greatest investor of all time – why he is holding so much cash and not buying stocks? He gives the same simple answer – “there is nothing cheap to buy out there now”.
What we need to do is simple, but not so easy most of the time, we need to:
1. Be patient
2. Heed the words of Warren Buffet and
3. Wait for things to get “cheap”.
In the meantime I think it time to put together a "Renewables Buy List" of the leading stocks in the industry so that we can be ready to buy them when the markets bottom out and have started up in a sustainable way.
The following is a list of 14 stocks and ETF’s which I think are among the most financially sound and also the most technically strong securities in the renewables market sector.
I am going to break down the 14 stocks into two groups:
1. The 8 stocks that I think have the least risk, pay a dividend and have excellent management.
2. The second 6 stocks are higher risk. They are more volatile and can have very large moves one way or the other.
Renewable Energy Securities “Watch List”
These companies own renewable energy projects (solar and wind farms etc.) that generate solid long term revenues and are more stable less volatile companies
1. Northland Power, NPI-TO (symbol my vary - listed on Toronto Exchange), Yield = 3.59%,
2. Brookfield Renewable Partners, BEP, Yield = 4.57%
3. NextEra Energy L.P. , NEP, Yield = 4.37%
4. Hannon Armstrong, HASI, Yield = 1.75%
These two ETF’s are focused on the solar energy sector and the electric car sector
5. Invesco Solar, TAN, Yield = 0.25%
6. KraneShares Electric Cars and Future Mobility, KARS, Yield = 1.75%
These two companies are in the Wind Sector
7. Orsted ADR, DNNGY, Yield = 0.85%
8. Vestas Wind, VWDRY, Yield = 0.81%
These companies are mostly smaller and not as financially strong. They are more volatile and therefore can be either a bigger winner or a bigger loser.
9. Gamesa Corp., GCTAF, Wind Sector, Yield = 1.18%
These two are in the Fuel Cell Sector (Energy Storage)
10. Plug Power, PLUG, Yield = 0.91%
11. Ballard Power, BLDP, Yield = 1.58%
These two companies are the leading companies in Inverters (devices that convert DC to AC power)
12. Solar edge Technologies, SEDG, Yield = 0.95%
13. Enphase Energy, ENPH, Yield = 1.0%
This last company is a leading company in the manufacturing of Silicon for solar companies products
14. Daqo New Energy, DQ, Yield = 0.94%
Note: even if you are willing to take big risks, I would make sure that I bought more of the top 8 companies than the bottom 6. For example 75% of portfolio in top 8 and 25% in bottom 6.
There will be updates as we move along and see if the market does correct, or worse, as I think it will and also input on stocks in the watch list after a correction or crash as to when they could be moving in a sustainable up trend.
Background Notes
Keep in mind that there are two basic types of equity (stock) analysis. Below is a brief description of each and its primary purpose:
Fundamental Analysis – this is the analysis of the fundamental financial condition of the company and will identify which stocks are stocks you may want to buy when the timing is right. This form of analysis will give you NO indication of the best time to buy the stock.
Technical Analysis – this form of analysis will tell you “when” to buy a stock. It will do this by showing you (in chart format) the basic interaction of supply and demand and when the two change and shift which will indicate a time to buy or a time to sell.
Mr. Lynch has worked, for 36 years as a Wall Street security analyst, an independent security analyst and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, an early publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and has from time to time been a financial/technology consultant to a number of companies. He can be reached via e-mail at: SOLARJPL@aol.com.
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