How I'm Prepping My Portfolio For A Biden Presidency.
In the U.S., renewable [energy] generation beat out coal generation for the first time on a quarterly basis in Q1 2020. That's according to Climate Nexus. The potential upside for clean and renewable energy is expected to grow exponentially.
The world is quickly moving away from a world powered by fossil fuels to one driven by cleaner energy sources. Clean energy sources are expected to receive an enormous spark under a Biden presidency. "Getting to a 100% clean energy economy is not only an obligation, it's an opportunity," according to Biden's presidential website. There are many strategies investors can use to take advantage of a renewable energy revolution. Below, I highlight three stocks that I believe will benefit greatly from a potential Biden presidency.
Getting to a 100% clean energy economy is not only an obligation, it's an opportunity. We should fully adopt a clean energy future, not just for all of us today, but for our children and grandchildren, so their tomorrow is healthier, safer, and more just.Joe Biden, Presidential website
Solar Edge Technologies, Inc (SEDG)
I previously recommended SEDG on 08/08/2020. At that time, it was trading at $211.47 per share. Solar Edge Technologies, Inc (SEDG) is a global leader in smart energy technology. Together with its subsidiaries, SolarEdge "designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide. Its SolarEdge system consists of power optimizers, inverters, communication and smart energy management solutions, and a cloud based monitoring platform. The company's products are used in a range of solar market segments, such as residential, commercial, and small utility-scale solar installations." Learn more about SolarEdge.
Like most companies, the COVID-19 pandemic has affected SolarEdge. However, the stock has since bounced back tremendously. In fact, SEDG has recently surged (YTD, 221%). Also, 5-day, 1-month and 6-month returns have hit 21%, 58%, 216%, respectively. Year over year revenue growth is reported at 45%. SEDG hit a 52-week high of $314.00 on 10/08/2020. SEDG is currently trading at $305.35 per share. As the clear leader in DC optimized inverter solution, a Biden presidency should propel the company to resume growth at pre-COVID-19 levels.
NextEra Energy (NEE)
As the world's largest producer of wind and solar energy, NextEra Energy (NEE) is well-positioned to thrive in a Biden presidency. NEE is truly a diversified energy conglomerate. It generates electricity through wind, solar, nuclear, coal, oil, and natural gas. Recently, NextEra Energy dethroned ExxonMobil to claim the title of America's most valuable energy company. On 9/15/2020, NEE announced a 4-for-1 stock split with a record date set for 10/19/2020. NEE management recently issued guidance through 2023. The company expects earnings to grow by 6-8% in 2022 and 2023.
The company has been a cash cow for investors. It has returned 945% to shareholders over the last 15 years. NEE has a 25-year dividend growth history. Its annual payout is $5.60 per share with a yield of 1.85%. The payout ratio is a healthy 61.29%. NEE is currently trading at $302.91 per share.
[Recommended: The Ultimate Dividend Growth Investing Guide.]
Renewable Energy Group, Inc. (REGI)Renewable Energy Group, Inc. (REGI) is a pure-play biodiesel and renewable diesel producer. REGI is "leading the transformation of biofuel into something that helps improve the environment and grow customers' profits. By pushing fuel forward, we are delivering cleaner fuels to meet growing global demand." The company provides lower carbon transportation fuels in the United States and internationally. It utilizes an integrated production, distribution, and logistics system to convert natural fats, oils, and greases into advanced biofuels. The company's performance has been phenomenal recently.
The bottom line
REGI, NEE and SEDG are well positioned to profit from Biden's ambitious goal of a 100% clean energy economy. What if President Trump wins re-election in November? As the global economy transitions away from dirtier fossil fuels toward cleaner energy sources, the three companies highlighted above should continue to produce stellar performances in almost any political environment.
I'm also looking at establishing a position in Enbridge Energy, ENB, in the next 24-72 hours (8% attractive yield).
A great alternative to NEE is competitor Duke Energy, DUK (stellar 4.14% yield; annual payout $3.86). NextEra Energy recently offered to acquire Duke Energy. The takeover offer was rejected, however. A substitute to SEDG is its red-hot competitor Enphase Energy (ENPH), which has been on a tear lately (1-mo: +61%; 6-mo: +186%; YTD: +317%; 5-yr: 2015%).
Do you have great stock ideas for a possible Biden presidency? Please share with us in the comment section.
Disclosure: I am LONG NEE, SEDG, REGI. This article may contain affiliated links to one or more investment products. I may receive a small commission when you click on the links and sign up for services. Thanks! All data is current as of the article publication date. Information presented here should not be construed as financial advice. You are always encouraged to conduct your own research. Read the full disclaimer.