Yesterday we left the day’s musings on the rise of renewable energy and ‘green investing’. Lo and behold! What do I see on this merry morn?
Energy giant Shell just bought ‘carbon farmer’, Select Carbon out in Western Australia.
What does Shell get for its money? Credits that offset its emissions. They must be building up a big bank because Select Carbon is the fifth business they’ve purchased in the last 18 months.
Here is what I think is the most important snippet, courtesy of the Australian Financial Review…
‘‘‘It’s clear from our perspective that as we progress through the energy transition the expectation of customers will be for low CO2 products, and our job is to make sure we do that in our portfolio,’’ Shell Australia chairman Tony Nunan told The Australian Financial Review.’
I take this as the general gist of the whole shebang when it comes to climate issues and investing. This is the way the markets are going and just get on board with it.
But how? That’s where you come in! Thanks again for some of the suggestions that came my way. Here’s a taste…
Energy Stocks to Watch:
- Liontown Resources Ltd [ASX:LTR]
- Western Areas Ltd [ASX:WSA]
- Vulcan Energy Resources Ltd [ASX:VUL]
- New Energy Solar Ltd [ASX:NEW]
Once you start digging into this theme you see just how diverse the opportunity base really is. I could list a dozen more without even thinking about it.
One suggestion from me is to start following Vmoto Ltd [ASX:VMT]. They sell electric motorbikes out of China into the global market. It’s had a bit of a run lately, so I’m wary of picking it up today.
But the business seems to be picking up strong momentum with a couple of big tailwinds at their back. They put out a good update in the last few days. Go check it out!
Liontown Resources also intrigues me. I don’t know a heap about this one except they have a big, undeveloped lithium resource identified.
However, the trump card might just be their Chairman, Tim Goyder. His other company is Chalice Gold Mines Ltd [ASX:CHN].
It’s amazing what a steal this stock was back in December 2018. You could buy it for 12 cents when it had 10 cents worth of cash on the books!
They went on to massive success with a big hit out in WA last year. And who knows? They have other projects that could work too.
Could Tim Goyder pull off another massive share price rise in LTR? I wouldn’t discount the chance too much. He must be pretty confident himself, because he just put half a million into the stock.
Certainly LTR is one to follow. Just remember it’s an explorer/developer. They carry unique risks.
Just as there is opportunity along this theme, there is also danger. Which companies LOSE from this switch?
It’s hard for me to see coal and oil stocks carrying much growth premium anymore.
Banks that finance fossil fuel projects might have to hold more capital against these loans and they’ll be less profitable.
Utility companies look under pressure if they have coal assets, not to mention the coming disruption to the grid. I can’t get excited by much there.
Don’t be shy about writing in to email@example.com with any other suggestions for companies that you think lose out.
I think the more perspectives we have here the better. One of my favourite letters came from Geoff in WA. He wrote:
‘I am finding it increasingly difficult to get any reliable cost figures on the cost of dispatchable power from the various sources of renewables and renewable mixes.
‘I am finding that the concept of dispatchable power and reliability of the grid are being lost and swamped by ideology.
‘Just like the climate change brawl [it is certainly NOT a debate] the reasoned compromise solutions and arguments are swamped by the extreme elements demanding that their idea is the best and ONLY one.
‘A series on the current and future energy supply situation Australia and the opportunities it presents now and in the immediate future would be of great interest to readers not least to me.
‘Love reading the newsletter.
‘Keep up the good work
One of my challenges over the next six months is to address exactly this situation. The situation IS unclear, confused and ideological.
Editor, Profit Watch
PS: Our publication Profit Watch is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.