PODCAST: Great Renewable Energy and EV Stocks

Great Renewable Energy and EV Stocks. Stocks covered include Sumitomo Metal Mining, Wuxi Lead Intelligent Equipment, Aptiv plc., Infineon, Brookfield Renewable Partners, Atlantica Sustainable Infrastructure, and NextEra Energy. Excerpts from: “The investment opportunity offered by electric vehicles,” “3 Alternative Energy Stocks to Buy Amid Investment Concerns”, “3 High-Yield Renewable Energy Stocks to Buy Right Now”

PODCAST: Great Renewable Energy and EV Stocks

Transcript & Links, Episode 65, August 27, 2021

Hello, Ron Robins here. Welcome to podcast episode 65 published on August 27, titled “Great Renewable Energy and EV Stocks.”  Presented by Investing for the Soul, investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.

Remember that you can find a full transcript, links to content – including stock symbols, quotes, and bonus material – at this episode’s podcast page. It's located at investingforthesoul.com/podcasts.

Now, just a reminder. I do not evaluate any of the stocks or funds mentioned in this podcast. Also, I receive no compensation from anyone or entity covered in these podcasts.

Incidentally, if any terms are unfamiliar to you, simply Google them.

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1. Great Renewable Energy and EV Stocks

I’m beginning with something a little different. The article is titled The investment opportunity offered by electric vehicles by Juliet Schooling-Latter. It’s a UK perspective that appeared on whatinvestment.co.uk. Here are some quotes from the article and comments on the companies covered. Quote.

“Very much a global trend, a recent report indicated the number of EVs will grow from 11m on the road now to 145m in 2030.1 This, in turn, will boost various segments of the market.

Here are four stocks… from Elite-rated fund managers looking to tap into this drive.

1) Sumitomo Metal Mining. Stock pick at Baillie Gifford Japan Trust

Sumitomo Metal Mining is a top-10 holding in the Baillie Gifford Japan Trust. Manager Andy Brown says the firm has exposure to nickel and copper extraction, both integral to the EV industry in terms of the cars themselves and the batteries used to power them.

He says: ‘They have a materials business, and this is where they make a component called lithium nickel oxide. This feeds into the cathodes of electric batteries and major customers for this business are Tesla and Toyota. We believe it has fantastic growth prospects.’

2) Wuxi Lead Intelligent Equipment. Stock pick at Ninety One Global Environment

Wuxi Lead Intelligent Equipment predominantly designs, manufactures and sells battery production equipment and services to leading EV battery manufacturers in China. The firm is a holding in the Ninety One Global Environmental Fund.

Manager Deirdre Cooper says: ‘Sustainable decarbonisation will require a rapid transition towards a greener, lower-carbon transport system. Wuxi is directly exposed to one of the largest EV markets in the world and, as such, is at the forefront of decarbonisation.

‘It is also expanding sales internationally, with new customers such as Northvolt.’

3) Aptiv plc. Stock pick at Rathbone Global Sustainability fund

Did you know there are more than 8,000 connection points inside a typical EV? If any go wrong it can range from a minor to major inconvenience.

Aptiv provides fuse connectors that ensure the battery will disconnect if a spike in current reaches a potentially dangerous level, thus eliminating a potentially catastrophic event.2

The firm is a holding in the Rathbone Global Sustainability Fund. Manager David Harrison says: ‘We’ve held Aptiv in the fund since we launched. It is kind of the nerve centre of an electric vehicle.

‘We think it’s well-placed for the long run and has a management team that is very forward-thinking.’

4) Infineon. Stock pick at Liontrust Sustainable Future Global Growth fund

This German manufacturer is playing a key role in providing the chips for auto safety systems as semiconductor content in cars and other forms of transport continues to grow.

Liontrust Sustainable Future Global Growth manager Peter Michaelis says: ‘Infineon is the market leader in the chips that power the semiconductors within electric vehicles.

‘The company completed its acquisition of Cypress Semiconductor Corporation in April 2020, which it said is a landmark step in its strategic development towards offering ‘the industry’s most comprehensive portfolio for linking the real with the digital world and shaping digitalisation’.’’ End quotes.

1Source: Clean Technica – report from International Energy Agency
2Source: aptiv.com

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2. Great Renewable Energy and EV Stocks

Now turning our attention back to alternative energy stocks is this article titled 3 Alternative Energy Stocks to Buy Amid Investment Concerns by Aparajita Dutta. Found on Yahoo! Finance. Quote.

“Wind energy, the largest source of renewable electricity generation in the United States, continues to make noticeable progress. The amount of new wind capacity installed in 2020 was more than three times the amount installed in 2010. This makes us optimistic on alternative energy stocks’ growth prospects.

Also, increasing scope of the electric vehicle market is expected to boost the prospects of U.S. renewable stocks. However, the United States is lagging its Asian and European counterparts in terms of investments in hydrogen market, despite this market’s ample growth opportunities.

The forerunners in the U.S. alternative energy industry are TotalEnergies SE (TTE), Equinor ASA (EQNR) and Chesapeake Energy (CHK).” End quote.

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3. Great Renewable Energy and EV Stocks

In a similar vein is this article by three analysts who appear regularly in this podcast. The article is titled 3 High-Yield Renewable Energy Stocks to Buy Right Now and is by Travis Hoium, Howard Smith, and Daniel Foelber

Here are some quotes from the article. Each analyst comments on the company they’re recommending.

“The theme with all of these companies is that they're big, diverse renewable energy asset owners with long-term contracts to sell electricity to utilities or other end customers and that fuels their dividends. As long as the renewable energy industry continues to grow and there are assets to buy at attractive yields, these are great dividend stocks to buy and hold… they're our best high-yield renewable energy stocks today…

1) Travis Hoium recommends Brookfield Renewable Partners (NYSE: BEP)

The best long-term business in renewable energy has proven to be asset ownership. Renewable energy projects usually come with 10-25 year contracts to sell electricity to utilities, businesses, or homeowners. That allows owners to finance them with debt and equity, and in this case, in the form of dividend-paying stocks. 

Brookfield Renewable Partners is one of the industry's biggest renewable energy asset owners with 21,000 megawatts of projects around the world. The company aims to generate annualized returns of 12% to 15% through organic growth in distributions of 5% to 9% and some price appreciation in the stock…

In the last year and a half, dividends paid are down partly because of a split of Brookfield Renewable Partners and Brookfield Renewable Corporation (NASDAQ: BEPC) stock and a 3-for-2 stock split. Without those events, dividends per share would be steadily higher, continuing a decade-long trend. 

As steady as dividend growth has been from a company like Brookfield Renewable Partners, there are also risks for renewable energy projects that shouldn't go overlooked. Right now, hydro assets are underperforming expectations because of drought conditions around the world, especially in Brazil… On the flip side, less rain and more sun could mean solar projects outperform expectations long term, so there's value in being a diverse and large asset owner. 

I think the stability and know-how of Brookfield Renewable Partners makes it a great long-term dividend stock. 

2) Howard Smith picks Atlantica Sustainable Infrastructure (NASDAQ: AY)

More and more companies in a wide range of industries are signing power purchase agreements with renewable energy generators to power their facilities and ensure products can be made and sold sustainably. Companies like Atlantica Sustainable Infrastructure that own or invest in that power generation are benefiting and growing from this movement. And those benefits are being shared with investors in the form of a high-yielding dividend. 

Atlantica… aims to pay shareholders 80% of generated cash. And it has been consistent growing those dividend payments in the past. Its quarterly dividend has increased by 65% in the past four years. That growth should continue as cash available for distribution increased by 12.9% in the first half of 2021. 

Atlantica's business is spread among North America, South America, and the Europe, Middle East, and Africa region… Almost 75% of Atlantica's revenue came from its renewables sector in 2020.

And 2021 is starting out strong. The company's continued investments in renewable energy assets have driven its megawatts in operation to grow 30% in the first half of 2021 compared to 2020's first half. 

The stock looks inexpensive from a price-to-free cash flow perspective, compared to peers with similar strategies. 

With a dividend yielding over 4.3%, now looks to be a good time to buy Atlantica.

3) Daniel Foelber likes NextEra Energy (NYSE: NEE)

NextEra Energy just had an impressive quarter. Its portfolio consists of natural gas, solar, wind, and other assets, giving it diverse revenue streams that allow it to weather the ebbs and flows of the energy market.

Its established presence as Florida's leading utility -- through Florida Power & Light and Gulf Power -- provides the bulk of its revenue and net income. A strong foundation from this profitable business paired with access to inexpensive debt has allowed NextEra to grow its renewable energy investments, mainly through its NextEra Energy Resources division. Today, the company is the largest producer of wind and solar energy in the U.S.

NextEra's head start in the energy transition gives it a leg up over other utilities since it has had time to build relationships, fill out its supply chain, refine its logistics, and tackle a variety of projects in different markets…

NextEra's long-term game plan is to generate predictable revenue (mostly from renewables) via long-term contracts and distribute a portion of earnings to investors through a dividend… Earlier this year, the company raised its quarterly dividend to $0.385 per share, representing a 1.9% annual yield at the time of this writing.” End quotes.

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4. Great Renewable Energy and EV Stocks Honorable Mentions

Article 1. Bain to Start Long-Short Hedge Fund Focused on Green Investing by Nishant Kumar and Melissa Karsh, on Yahoo! Finance. Quote “Bain Capital is starting a hedge fund to bet on and against companies based on sustainable-investing criteria as part of the alternative asset manager’s roughly $3 billion public-equities business.” End quote. Now, the ability to go short in a green fund is a new idea.

Article 2. My Top Renewable-Energy Stock to Buy in August by Matthew DiLallo. Quote “Brookfield (Renewable) (NYSE: BEP) (NYSE: BEPC) is increasingly becoming the partner of choice for companies that want to reduce their carbon footprint.” End quote.

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Ending Comment

Well, these are my top news stories with their stock and fund tips -- for this podcast: “Great Renewable Energy and EV Stocks.“

To get all the links, stock symbols, or to read the transcript of this podcast -- and more -- go to investingforthesoul.com/podcasts and scroll down to this episode.

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Talk to you next on September 10. Bye for now.

© 2021 Ron Robins, Investing for the Soul.