Best stock to invest in – Stock Picks for US Energy Dominance



Best stock to invest in

Tom Konrad, Ph.D. CFA

Thursday night (Friday morning in Sinapore) CNBC Asia’s Street
Signs
program must have had an interview cancellation, because
they needed someone to give them 3 energy stock picks in response
the Trump’s “Energy Dominance” speech on last minute notice. 
They sent me (and probably a bunch of other people) an email two and
a half hours before air.  I did not see it until 20 minutes
before the actual interview.  I warned them that I do clean
energy, not fossil fuels, but apparently they had no other takers
who were awake and able to give energy stock picks at 11:23pm ET on
a moment’s notice.

I think they found me because I was on Capital Connection Asia in
late January.  

I don’t think I was quite what the host, Martin Soong was
looking for.  He improvised well by turning from the Trump clip
saying “if you want to do something entirely different, you might
invest in alternative energy…”

I’m still trying to get video, but here’s my memory of the
interview.

MS: How is clean energy doing under Trump?
TK:  Great.  There was a little stumble after he was
elected, but then the market figured out that he’s living in the
20th century while the economy has moved on to the 21st.  Clean
energy has turned the corner, and is now the cheapest source of new
electricity. The market is realizing that, even if Trump doesn’t.


MS: Do you have stock picks?

TK:  Atlantica Yield (ABY),
Covanta Holding Co (CVA),
and General Cable (BGC).
 
I went on to describe why I like Atlantica – you can read about that
and Covanta in my last 10
Clean Energy Stocks for 2017 update.

General Cable was a last minute add for me.  I’m very nervous
about the market right now, so there are not many stocks I’m
enthusiastic about.  I was tempted to mention Seaspan (SSW)
Preferred shares (SSW-PRG), but they’d asked for energy stocks, not
efficient transportation.  You can read about Seaspan Preferred
in my recent update as well.  

My picks in January had been Pattern Energy Group (PEGI),
and Hannon Armstrong (HASI.)
Both have gained significantly (17% and 22%) since then, and so
they’re still top holdings, but not the most likely to make further
large gains in the near term.
     
I picked General Cable instead.  It’s a bit of a stretch to
call it an energy stock, but at least the connection between the
manufacturer of electric and communication cables and the energy
sector is obvious.  Given more than 20 minutes, I might have
picked something else, or just stuck with the two I’m most
enthusiastic about.  

Martin Soong wanted to talk about ETFs, we did not talk about
Covanta or General Cable at all.

MS: What about clean energy ETFs?  I’ve looked at six that are
up about 10% for the year.

TK: ETFs are okay if you’re unwilling to pick stocks, but clean
energy is such a new sector, pricing is not yet efficient, and there
is a lot of room for stock pickers to get an edge.

MS: But the ETFs are up 10% for the year.  Why not just invest
in those?

TK: My Green Global Equity Income Portfolio is up 17%.

MS: I have to admit, that’s good performance.

And he ended the interview.

Unfortunately, I had misstated my performance.  I don’t spend
much time thinking about past performance: Future performance and
how I can improve it is much more interesting.  For the record,
my Green Global Equity Income Portfolio (GGEIP) was up 13.5% for the
year to date…. not as good as I’d thought, but still ahead of the
alternative energy ETFs he was looking at.  

Despite my mistake on my track record, I stick to my assertion that
clean energy remains a stock picker’s market.  Until clean
energy investing becomes main stream, there will be a lot of room
for stock pickers like me to beat the indexes.  Perhaps I
should have mentioned that GGEIP was  up 30.5% in 2016,
although I achieved that using options and other strategies not
available in clean energy ETFs, not just stock picking.

DISCLOSURE: Tom Konrad has long positions in ABY, CVA, BGC,
PEGI, HASI, and SSW-PRG, and own puts on SSW (an effective short
position.)

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