by Tom Konrad, Ph.D., CFA
Rounding out the discussion of the stocks in my 10 Clean Energy Stocks for 2021 list are the two that don’t fit either of the themes I highlighted for 2021: Picks and Shovels or a Possible Yieldco Boom. Both help with diversification, both in terms of their industry and geography.
MiX Telematics (MIXT) was retained from the Ten Clean Energy Stocks for 2020 list because I expect its prospects to improve rapidly as the world comes out of covid lockdowns. The global vehicle telematics provider has a large number of its customers among mass transit, logistics, and multinational oil and gas vehicle fleets. All these industries were disproportionately impacted by covid, and idled many vehicles. When the owners bring the vehicles back into service, they will once again start paying on the subscriptions for those vehicles.I also believe that covid has led many businesses to take a new look at what parts of their operations can be handled online and remotely. This should provide a lasting boost to the vehicle telematics industry in general.
Another holdover from the 2020 list is Spanish transmission utility Red Eléctrica (REE.MC, RDEIF, RDEIY). European countries understand how a robust transmission grid is essential to transition the economy to renewable energy, and they support significant investment in their transmission networks because of this. Red Eléctrica is an attractively valued European utility transmission utility without any natural gas networks or fossil generation. Plus it has a nice dividend.
Both these picks get the majority of their revenues in currencies other than the dollar, which should provide an added boost to the stocks as I expect the dollar to continue to fall in 2021 because of America’s mishandling of the pandemic and the effects it will continue to have on our economy relative to most other countries.
Conclusion
While I am hopeful that the US economy will begin to recover in 2021, I worry that the buoyant stock market has already priced in this recovery and then some. These high valuations and the damage the pandemic continues to do the US economy have me keeping plenty of cash on the sidelines and looking more to Europe than the US for investment opportunities.
Here are links to the other articles on the Ten Clean Energy Stocks for 2021:
- The list
- The Yieldcos: Covanta Holding (CVA), Green Plains Partners (GPP), Avangrid (AGR), and Brookfield Renewable Energy Partners (BEP)
- Picks and Shovels: Valeo, SA (FR.PA, VLEEF, VLEEY), Veolia (VIE.PA, VEOEF, VEOEY), Umicore, SA (UMI.BR, UMICF, UMICY), and Scorpio Bulkers, Inc. (SALT),
DISCLOSURE: Long MIXT, REDIF, CVA, GPP, AGR, BEP, VLEEF, VEOEF, UMICF, SALT.
DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
