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Powering the Future: 3 Industries to Benefit from a Changing Energy Backdrop
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The world is gradually moving away from fossil fuels for several reasons, driven by environmental, economic, and technological factors. Key reasons behind the transition include:
Climate and Environmental Concerns: Regardless of what side of the aisle one is on politically, it’s hard to argue that concerns about greenhouse gases (primarily carbon dioxide (CO2)) drive the world’s energy agenda. To meet these concerns, worldwide governments and companies are pushing a “clean energy agenda.”
Technological Advances: Though fossil fuels are still the most cost-effective energy source, renewable and alternative energy costs have become much more competitive in recent years as technology has improved.
Health Benefits: If you have been watching the news, you probably heard about the air quality concerns in New York due to a massive wildfire in Canada. While the air quality issues that have plagued New York are likely temporary, parts of the world, such as India and China, suffer from consistently poor air quality. Alternative energy solves these issues.
3 Industries to Benefit
Uranium
Nuclear power often gets a bad rap due to fear over disasters such as Chernobyl and the Three Mile Island accident. However, when you compare the raw data versus other energy sources like coal, nuclear power is one of the safest means of energy on the planet (even when you account for Chernobyl and other disasters).
The best bet for investors who want to long nuclear is Cameco ((CCJ - Free Report) ). The Canadian-based company is the largest producer of uranium in the world. Last quarter, earnings shot higher by 575% while revenue jumped 73% year-over-year. CCJ is also showing strength from a relative strength perspective. While the Global Uranium ETF ((URA - Free Report) ) is well off highs, CCJ is near 52-week highs and is set up in a bull flag pattern.
Image Source: Zacks Investment Research
Lithium
Electric vehicles are taking up a larger slice of the global automotive market each year. If you’re an automaker and want to compete, you must offer EVs. Even Italian mega-luxury automaker Ferrari ((RACE - Free Report) ) announced that it would be unveiling an EV plant in 2024. Meanwhile, generous government incentives are accelerating the move to an EV-centric marketplace. For example, a Tesla ((TSLA - Free Report) ) Model 3 is now cheaper (after tax credits) than a Toyota (TM)Camry in California.
Beyond tax incentives and environmental friendliness, the next significant catalyst has arrived – widespread charging capabilities. The lack of uniformity in EV charging and the relatively small amount of EV charging stations available has been a major obstacle to widespread EV adoption. However, recently, General Motors ((GM - Free Report) ) and Ford ((F - Free Report) ) inked charging deals with Tesla. In other words, the issues mentioned above will likely be resolved in the coming years.
EV-makers are not the only beneficiaries of further EV adoption. Because EV batteries require lithium, lithium miners such as Sigma Lithium ((SGML - Free Report) ) will benefit greatly. Analysts agree. Though SGML is currently trading in the low $40’s, the average price target for the stocks is $51.09.
Image Source: Zacks Investment Research
Like CCJ, SGML is also dramatically outperforming its peers. The Lithium & Battery ETF ((LIT - Free Report) ) is up 8.6%, while SGML is up by 48% and threatening to break out.
Image Source: Zacks Investment Research
Solar Providers
Solar companies are constantly trying to become more efficient because renewable energy solutions such as solar are not as efficient as traditional fossil fuels. Recent IPO Nextracker (NXT) is an innovative solar software provider that helps its customers to enhance production yields, protect themselves from high-risk weather events, and more. NXT has produced triple-digit earnings growth for two straight quarters, and its positive Earnings ESP score suggests that when it reports in August, it is likely to produce big earnings again.
Image Source: Zacks Investment Research
Takeaway
Environmental concerns, technological improvements, and health awareness are three leading drivers moving the world away from fossil fuels. Lithium, solar, and uranium companies are set to benefit significantly from this trend.
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Powering the Future: 3 Industries to Benefit from a Changing Energy Backdrop
The world is gradually moving away from fossil fuels for several reasons, driven by environmental, economic, and technological factors. Key reasons behind the transition include:
Climate and Environmental Concerns: Regardless of what side of the aisle one is on politically, it’s hard to argue that concerns about greenhouse gases (primarily carbon dioxide (CO2)) drive the world’s energy agenda. To meet these concerns, worldwide governments and companies are pushing a “clean energy agenda.”
Technological Advances: Though fossil fuels are still the most cost-effective energy source, renewable and alternative energy costs have become much more competitive in recent years as technology has improved.
Health Benefits: If you have been watching the news, you probably heard about the air quality concerns in New York due to a massive wildfire in Canada. While the air quality issues that have plagued New York are likely temporary, parts of the world, such as India and China, suffer from consistently poor air quality. Alternative energy solves these issues.
3 Industries to Benefit
Uranium
Nuclear power often gets a bad rap due to fear over disasters such as Chernobyl and the Three Mile Island accident. However, when you compare the raw data versus other energy sources like coal, nuclear power is one of the safest means of energy on the planet (even when you account for Chernobyl and other disasters).
The best bet for investors who want to long nuclear is Cameco ((CCJ - Free Report) ). The Canadian-based company is the largest producer of uranium in the world. Last quarter, earnings shot higher by 575% while revenue jumped 73% year-over-year. CCJ is also showing strength from a relative strength perspective. While the Global Uranium ETF ((URA - Free Report) ) is well off highs, CCJ is near 52-week highs and is set up in a bull flag pattern.
Image Source: Zacks Investment Research
Lithium
Electric vehicles are taking up a larger slice of the global automotive market each year. If you’re an automaker and want to compete, you must offer EVs. Even Italian mega-luxury automaker Ferrari ((RACE - Free Report) ) announced that it would be unveiling an EV plant in 2024. Meanwhile, generous government incentives are accelerating the move to an EV-centric marketplace. For example, a Tesla ((TSLA - Free Report) ) Model 3 is now cheaper (after tax credits) than a Toyota (TM) Camry in California.
Beyond tax incentives and environmental friendliness, the next significant catalyst has arrived – widespread charging capabilities. The lack of uniformity in EV charging and the relatively small amount of EV charging stations available has been a major obstacle to widespread EV adoption. However, recently, General Motors ((GM - Free Report) ) and Ford ((F - Free Report) ) inked charging deals with Tesla. In other words, the issues mentioned above will likely be resolved in the coming years.
EV-makers are not the only beneficiaries of further EV adoption. Because EV batteries require lithium, lithium miners such as Sigma Lithium ((SGML - Free Report) ) will benefit greatly. Analysts agree. Though SGML is currently trading in the low $40’s, the average price target for the stocks is $51.09.
Image Source: Zacks Investment Research
Like CCJ, SGML is also dramatically outperforming its peers. The Lithium & Battery ETF ((LIT - Free Report) ) is up 8.6%, while SGML is up by 48% and threatening to break out.
Image Source: Zacks Investment Research
Solar Providers
Solar companies are constantly trying to become more efficient because renewable energy solutions such as solar are not as efficient as traditional fossil fuels. Recent IPO Nextracker (NXT) is an innovative solar software provider that helps its customers to enhance production yields, protect themselves from high-risk weather events, and more. NXT has produced triple-digit earnings growth for two straight quarters, and its positive Earnings ESP score suggests that when it reports in August, it is likely to produce big earnings again.
Image Source: Zacks Investment Research
Takeaway
Environmental concerns, technological improvements, and health awareness are three leading drivers moving the world away from fossil fuels. Lithium, solar, and uranium companies are set to benefit significantly from this trend.