One of President Biden’s priorities is putting America back on top in the clean energy space. It’s a major part of his infrastructure plan and his pledge to “build back better.”
It’s not hard to understand why. While the United States was an early innovator in renewable energy, our competitors muscled in on our turf and took over.
The U.S. has several world-class clean energy companies — and a handful of globally recognized brands, such as Tesla Inc. (Nasdaq: TSLA). But the center of gravity in the world of renewables has shifted overseas.
A Green Energy Case Study: Volvo AB
Sure, Ford is launching its electric F-150, and General Motors hopes to sell 30 electric-vehicle models by 2025.
But as far as green energy stocks go, consider the case of Swedish carmaker Volvo AB (OTC: VLVLY). It has already launched every new car since 2019 with an electric motor option. By 2025, Volvo aims to have at least half its sales from fully electric vehicles with the remaining half coming from hybrids.
This isn’t some lofty goal for the future. It’s happening now, and this is just one example.
Volvo rates well in my proprietary Green Zone Ratings system, by the way. It scores an 84 overall, placing it in “Strong Bullish” territory. And it rates particularly well in the volatility, value, momentum and quality factors.
Volvo AB’s Green Zone Rating on June 23, 2021.
Volvo is a European company, and most of the trading in its shares takes place on European exchanges. But the shares also trade in the U.S. as American Depository Receipts (ADRs). It’s pretty common for non-U.S. companies to list their shares here as to tap into America’s vast capital markets.
Strong Green Energy Stocks Lie Abroad
If you’re an American investor who wants access to clean energy stocks, you should look at the assortment of foreign stocks trading as ADRs. (You could buy the stocks directly on their home exchanges too, of course. But in most cases, this is more expensive, involves foreign currency and may require you to use a specialized broker. ADRs are a much easier option.)
To give you a sampling, I pulled a handful of non-U.S. stocks in the green energy space that rate highly on our Green Zone Ratings system.
Not all of these are pure green energy stock plays, of course, just as Volvo isn’t a pure play. For example, Siemens and Hitachi are two of the largest and most diversified industrial conglomerates in the world.
But even the stocks that aren’t 100% green energy play an important part in this revolution by supplying the necessary parts and equipment.
All of these stocks are at least “Bullish” in my Green Zone Ratings system. Hitachi is “Strong Bullish.” In my historical backtesting, I found that Bullish stocks, on average, outperform the market by two times over the following 12 months, and Strong Bullish stocks, on average, outperform by three times!
So, I expect this basket of stocks to perform well in the months ahead.
A Stateside Green Play
Green energy will be central to Biden’s “build back better” initiative. Apart from the revolution in “Imperium,” my term for DNA-based innovations, I believe that the boom in infrastructure spending is the closest to a “sure thing” we’ll find.
But the bigger play here — and the one that I’m convinced has a much longer runway — is in clean energy.
Clean energy is a theme I focus on in my premium service, Green Zone Fortunes. Last week, I added a new position in a company that’s critical to the clean electric grid. It rates a Strong Bullish 88 overall. And based on its earnings per share growth and its price to earnings ratio, I expect this stock to skyrocket over 80%, to $166 per share, in the next two years.
To learn how you can join my Green Zone Fortunes readers in these top trends, check out my presentation here. You’ll see why I’m convinced that a trend I call “Imperium” will be bigger than the internet.
I hope you’ll join us!
To good profits,
Adam O’Dell, CMT
Chief Investment Strategist, Money & Markets