From the Ashes of the Oil Industry

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Renewable Energy Stocks to Watch - ASX Energy Stocks

More volatility in the markets! The NASDAQ is retreating and thus taking the Aussie market down too.

This is great for me. I know exactly which stocks I want to buy. The volatility gives me a chance to get in at lower prices!

I was telling my readers about this last week. Momentum and breakout traders will struggle in this market. They’ll get whipsawed by the big down days.

You tailor your approach to today’s market…not yesterday’s or tomorrow’s!

Of course, it depends on your timeframe. I had a reader write to me this morning upbraiding me for selling one of our positions recently.

He quite rightly said the outlook for the stock remains very bright.

Indeed. But my service is a short-term trading strategy. I wanted to lock in the big gain.

And I didn’t put a gun to his head…he could have held it for the long term.

(Note: I’ve also thought many of my previous positions were very bright too…only to see something derail the whole shebang.)

Where to look for the long term?

Lots of places!

The growth potential is huge

Clearly one must be the ‘green’ theme.

Just this week I saw ANZ CEO Shayne Elliott say any big carbon emitters on their books better have a climate plan or they can look elsewhere for credit.

Take the opposite side. Any stock with a ‘green’ tinge will find favour with investment funds and thematic investors.

And the growth potential is huge.

We have so much to share on this in the next few months. One day couldn’t do it justice.

My colleague Natalie had a brilliant idea today, all by herself. That’s to share a sneak peak of our ‘in house’ service The Insider.

Subscribers to any paid Fat Tail Media publication receive this as a bonus.

It’s a reason to join up by itself.

Why? It brings you access to energy experts like James Allen…a UK-based analyst.

James’ portfolio this year is astonishing.

Some of his positions have gone up hundreds of percent — all from tapping into the thematic of clean energy.

You can see what he had to say recently when our publisher James Woodburn got in touch with him.

Enjoy…

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

PS: If you ARE a paid subscriber to Fat Tail Media and not receiving The Insider, make sure you contact our customer service team to get it!


From the Ashes of the Oil Industry Comes This…

By James Woodburn

I was shown to my desk on my first day in financial publishing.

It had one of those old-school white computers. You remember the ones? With a really thick TV-like base.

Opposite me was James Allen.

It was his first day too. We both sat down with that look that said we both felt a little out of our depth.

We’ve been mates ever since. But while we started at the same company in London, our paths went in different directions.

I stayed at the firm, eventually moving, here, to Australia to join the research team at Port Phillip Publishing.

Meanwhile, James entered the energy markets…

For five years, as head of Montel’s real-time newswire bureau in New York’s Manhattan, he reported on the main trends affecting global wholesale energy markets.

He covered everything from LNG pipelines, coal, carbon, power, oil, generation spreads, utility hedging, and associated regulation.

Prior to joining Montel, he was Team Leader of the power markets desk at Platts, a huge energy price-reporting agency.

Then in 2016, he found his way back full circle into our world, at the firm where we first met over 15 years ago.

And with him a wealth of expertise and a rolodex of key contacts, including energy insiders, CEOs, analysts, and experts.

For the last few years he’s been using his knowledge and contacts to help his readers position for one sector (and the stocks within it) that is booming right now: clean energy.

Now, today’s essay isn’t about the questionable politics of renewable energy.

It’s simply a dispassionate look at a stock market trend that is firing right now and has huge long-term tailwinds behind it.

As James told me in a catch-up email a week or two ago:

Here are three things we don’t know to be true and one thing we do…

Firstly, we don’t know exactly when, or how, the coronavirus crisis will truly end.

No one does.

It’s very difficult to model, which means we don’t really know how bad it’s going to get — which, of course, is part of the problem.

When and how the coronavirus crisis ends will largely depend on the number of people who end up getting infected and the virus’ still-largely-unknown mortality.

Secondly, we don’t know what life will look like when coronavirus does finally pass.

Already societal norms are being dropped and, who knows, perhaps won’t be picked up again.

How commonplace will handshakes, meetings and conferences be when the pandemic ends?

The global shift from the analogue to digital might just have shunted from third gear into fifth.

Thirdly, we don’t know what the financial markets will do while the world waits for a vaccine to be developed.

Again, no one knows for sure.

Markets are already down by a third, give or take, since the virus reached our shores three/four months ago.

But while it’s never good to be too sure of these things, it does seem likely that, for long-term investors, this could well turn out to be a great investment opportunity.

After all, every pound, dollar or euro invested today buys many more shares than it would have done just a few short weeks ago. 

Which brings me on to something I do know to be true.

That is, the great megatrend towards cleaner energy, which has been underway over the last decade or more, certainly won’t be derailed by coronavirus.

It is going too fast, with too much intensity and far too much momentum to see off any challenge posed by the economic fall-out of COVID-19, which include crashing oil prices.

In fact, I believe renewables investment is the best way we can turn the financial narrative surrounding coronavirus on its head, from threat to opportunity.

The reality is that decarbonisation is the single biggest investment opportunity on the planet right now and, arguably, ever has been in peacetime.

The numbers — potentially up to $110 trillion to create a fully climate-safe system by 2050 — eclipse any other possible investment opportunity out there today by an order of magnitude.

As we emerge from the post COVID-19 wreckage, investors will see that climate change — backed by ambitious global climate change targets — provides perhaps the only long-term structural growth opportunity in the markets, one that has the potential to make life-changing returns.

Like I said, I don’t want to get into the politics of it today.

That wasn’t James’ point either.

Megatrends don’t come around often…

What he is saying, hearing, and seeing is that huge government spending AND private capital — whether we like it or not — is flooding into this sector at a phenomenal rate.

He sees the shift to cleaner energy and electrification as a megatrend.

And when you think about it, megatrends don’t come around often. In fact, there’s only been one — the birth of the online world — in my lifetime.

Here’s how James put it:

Remember, the last time we ramped up our energy capacity and infrastructure was for oil, almost 100 years ago.

To be watching and participating in the current megatrend is a massive long-term opportunity, one that cannot be undone by a halving of the oil price, coronavirus or even a full-blown recession.

The climate imperative is too strong; the economics of renewables too powerful.

Change is coming and investors who keep their heads could pick up some life-defining bargains.

Indeed, right now, this megatrend is seeing a fire-sale as it’s been hit along with every other sector out there.

Some of the winners of the next decade, the next cycle, are being offered at huge discounts.

But while all stocks get knocked during times like these, investors need to focus on what is likely to lead the rebound.

My view is that renewables will soar out of the ashes of the oil crash.

Stay tuned for a lot more on this.

Best wishes,

James Woodburn Signature

James Woodburn,
For, Profit Watch

Editor’s note: This article was originally published on 3 July 2020 in The Insider.