Barron’s Weekend Summary: The energy sector will move away from coal toward wind and solar power during the next 15 years, benefiting utilities
* Cover Story: Electric utilities are at the center of a seismic shift away from coal and toward wind and solar power that will occur during the next 15 years, and by the next decade, clean power sources are projected to provide 39 percent of the US utility sector’s generating capacity, a huge boon to both the environment and investors—and utility company stocks and funds are a cheap way to plug into this critically important transition; 12 ways to play the sector include LNT, AEP, CMS, D, ETR, EXC, NEE, PNW, XEL, XLU, VPU, and UTG.
* Tech Trader: Rising interest rates are putting a dent in tech stocks, though it isn’t simply a matter of higher rates, it’s how quickly they’ve spiked, says Ted Mortonson of Baird, who believes the prospect of a $1.9T stimulus package could add fuel to the fire; Tech investors may want to look at HPQ, CAN, TWLO, MU, HPE, IBM, CSCO, ORCL, and STX, all of which trade below five times sales and 15 times earnings.
* Trader: Positive on DOW: “Everything is breaking right for chemical company Dow, but market analysts have failed to notice—and this is one time when investors can get in ahead of Wall Street”; Investors don’t have to doubt the Fed to be worried about the possibility of rising interest rates—just consider the amount of money heading into the economy, which is likely to boost growth far beyond anything the US has experienced since the late 1980s.
* Interview: John Rogers is the founder of Ariel Investments, the first minority-owned mutual fund company and still only one of a few; The $15B firm has long been a value-oriented shop with an eye toward companies that have strong management and are good corporate citizens, a successful strategy for decades (picks: KMT, MSGE, LAZ, MSGN, MDP, MAT, NVST, MTN, BOKF).
* Profile: Murray Rosenblith and David Schoenwald, co-managers of the New Alternatives fund, invest mainly in alternative-energy stocks; With the rise of socially responsible investing—and now that climate change has become a force that Wall Street must reckon with—their sector has finally caught fire (top 10 holdings: BEPC, HASI, DEP Renovaveis, Orsted, NEP, ENEL, Iberdrola, Vestas Wind Systems, TransAlta Renewables, Siemens Gamesa Renewable Energy).
* Features: 1) Positive on C: Story looks at how incoming chief Jane Fraser can improve the bank, and how she can continue to improve what the firm already does well, such as payments, which along with its card business and treasury and trade solutions group provides cash-management services that drive strong revenues; The bank will also need to shed businesses that can’t compete efficiently, and stop trying to be everything to all people; 2) Barron’s list of the Best Online Brokers for 2021 consists of Interactive Brokers, Fidelity, TD Ameritrade, E*Trade, SCHW, tastyworks, Merrill Edge, SogoTrade, TradeStation, Ally Invest, and TradingBlock; 3) Positive on ROST: The retailer took a hit during the pandemic because it has little online presence, and its stores were shuttered during lockdowns, which went hand-in-hand with weak consumer appetite for nearly all clothing outside leisure wear—but the company increasingly appears to be a “hidden gem,” and its geographic exposure could spark a strong recovery by 2022.
* European Trader: Positive on Asos: The UK online fashion and cosmetics giant, which sells products from top brands and its own collections, benefited from being the online destination for shoppers who have been stuck at home during the pandemic; It is one of Britain’s fastest-growing retailers, and the pace looks set to continue.
* Emerging Markets: Optimism about Brazil has hinged on the assumption that president Jair Bolsonaro would stick to his pet social issues and leave economic policy to finance minister Paulo Guedes, but Bolsonaro’s move to fire the chief executive of PBR is dashing hopes of a return to economic orthodoxy.
* Commodities: Strength in oil prices may encourage producers to consider lifting output—the biggest incentive for the OPEC and its Russia-led allies, collectively known as OPEC+, to raise production will be the need to “take advantage of the high-priced oil,” says Stan Bharti of Forbes & Manhattan.
* Streetwise: Catherine Wood, who runs ARK Innovation, an ETF that returned 152 percent last year, is bullish on TSLA, saying the cost of making batteries will plunge, eventually making electric cars cheaper than gasoline ones, while Tesla also has a big head start in autonomous vehicles; She is also bullish on Bitcoin, based on Arthur Laffer’s notion that the cryptocurrency meets all the requirements of money.