How To Invest In Renewable & Green Energy Stocks

Hi guys, Anthony here. I hope you're doing well. Just wanted to give you a different type of video from the Amplify Live community, and that on investing in green energy. Things like solar, wind, electronic vehicles— these are all really hot topics at present, and as such then we wanted to give you a bit of an insight as to how we would go about composing a basket of of different ETFs, single stock equities, and how to basically express a view and the timings and landscape of what green energy investing is all about. So no one else better to do this than one of my colleagues, senior trader Tim Duggan, who will talk you through a session that we shot earlier this week. Hope you enjoy it.

One of the core questions in the room here is, you know, Tim, looking at spending a stimulus check, what would you— what would your thoughts be on longer-term investing, um, in green energy plan, renewable energy, and so on and so forth? And so I thought it'd be good to just record a little bit of, of my, you know, my thoughts on this and what we're seeing. So let's get into it. So essentially it's kind of tiered in a way, and this is really good for me to actually also flesh out my thinking on this. And we've got— really, it's future energy. So really, what have we got? We've got renewables. We've got renewables, right? Renewables, and within that we've got like solar tech, we've got grid, oh, we've got, or let's say smart grid, we've got probably materials materials is like, you know, photovoltaic, photov, you know, solar paneling. So let's just say solar materials. Um, and yeah, you know, then you go into like wind, uh, you can go into hydro. Something else that's coming out of this is uranium and to a smaller degree, gas. This is the whole picture of the clean tech, renewables and clean tech. But, you know, we can— it's natural for us to think, oh well, right, clean tech in, combustion engines out, right? It's very easy to kind of just take that position of thinking, but it's— it's— you're not serving yourself too well if you do that, because essentially these are minnows. All— most of the companies that are in like, uh, that I have here, you know, these are all minnows like Smart Grid. These are startups effectively in a way, and, you know, maybe SME enterprises, um, and they're doing great stuff. They're getting, and they're getting, uh, they're getting bigger and bigger investment, and they're obviously now with the green energy plan, they're, they are going to come out of that minnow sort of status and the background and the shadows and really start to over the next 20 to 50 years, I mean, these companies will be the dominant players in what has been a traditional energy picture, you know, that is like, say, hydrocarbons, oil. Like, let's not make it— let's not fancy it up, right? Let's just call it like oil, oil and gas and coal, right? And in here you've got, you know, you've got like the big players like BP, Shell, um, Exxon. Um, now these guys are, these guys are pretty much the top two are fully integrated These are fully integrated companies, which means they own the entire stream. So that means that BP, they do the exploration and production, as in they find it, drill it, ship it to shore, they refine it, and they retail it. That's called fully vertically integrated as an oil company. And to a certain degree, Exxon— Exxon actually is fully integrated as well. So actually, I'll just make this real easy here. Yeah. So Now, how many of these companies on the left are or can be fully integrated producers to marketplace commercial or consumer-grade sellers of their products? As in a wind farm that makes the turbine, puts up the turbine, generates the energy from the turbine, and retails it to your house? There aren't many. There probably are a few, and their market exposure is probably quite limited when you look at these absolute, you know, like planet-sized companies. I mean, each one of these companies here are bigger than most global governments. And that's hard for people to realize, but they are, and they sway more influence than, you know, like the US administration, for example, has sort of less global impact than a company like Exxon or Shell. And people think, well, that's a bit conspiracy, conspiracy oratorial to think like that, Tim, but Believe me, I've read enough and researched enough and worked in this industry, and that is just a fact. And if you think that that's a conspiratorial thing to say, I'm afraid you haven't read enough about this topic and about these industries. And it's very naive to actually, um, poo-poo that idea. So these are very, very, very big corporations, the biggest. And they sway the most power. I can recommend some books if people are interested in reading about that. But the point being here is this is not a binary zero-sum game whereby essentially there's one loser and there's one winner. BP are already ditched on their oil and gas EMP They're getting out of refinery— of refinery— of refining. Uh, Exxon's sticking it out there to the end game for sure, but BP are already transitioning to a lot of this. A lot of this. A friend of mine in Shell is the head of transition to a lot of this, right? And these guys have more cash available and will be investing in snapping up all of these elements over time. So what you could do is, how do we invest in this, Tim? How do we invest in this? Well, there's two ways. You can invest in and believe in the transitioning of these marquee companies from their fully integrated abilities to then transition that to smart, clean, renewable tech, so on and so forth. You can believe in that and invest in that. And sure, I mean, I'm suffering, I'm probably at a loss of maybe $30 per share by investing in BP on the down move last year, as opposed to Shell or Exxon. They are trading at about a $30 premium to BP because of the price of oil right now. But that investment I made is literally a 5 to 10-year investment. I can't buy them all at the level I want to invest in this, but I feel comfortable in BP. Bad earnings, last earnings, but don't care. Bad full-year earnings, I don't really care. So you can buy BP, Shell, or Exxon, and the story of who will be around in 20, 30, 40, 50 years' time, and more importantly, who will be the major player in this area. Are we going to see a wind or a hydro company rise to the ranks of one of these companies on its own? No, they're just going to get bought out. But the point being is that how to play this investment is there are in this, you can invest in, let's kind of create a— where to look. Right, I'm not, I'm not an investment advisor, and this is informational purposes only, so I have to caveat that. But in, in looking at this, well, we've got green energy and the subsectors I have below. There are ETFs that cover, you know, wind, solar, photovoltaics. There are, let's see, renewable energy ETFs that are baskets of all of the companies that I've described above here. Right. And so I like the ETF story. I mean, this isn't even— we're not even getting— we're not even touching on the topic of electronic vehicles there. I mean, we're not, you know, that's a whole subsector in this conversation, um, that we have to do another session on, to be honest, um, which I'm invested in for all due diligence purposes. And so you can look at playing ETFs and you can look at playing stocks. So he's got ETFs, you've got individual stocks, right? You've got your— I don't actually have a lot of the individual equity names within these breakdowns, but you can find that information out very easily. You know, so individual stocks, uh, you have ETFs, individual stocks, and then within those you can play options, you can own outright. I would not do any of this stuff leveraged at all. Do not do that would be my advice, you know. Um, but adding into this, you also have, um, you know, the traditional names Traditional energy. And you know, you got your— just, you can buy BP shares, right? Dividends. Uh, Shell dividends. The ETFs aren't going to be paying dividends. They are a little more tax efficient, but the individual stocks is pretty much this part. So you can have essentially then when it comes to portfolio construction, you can have— so the portfolio construction, would consist of something similar to this, right? You would say, OK, I want a couple of resources. With any portfolio, you kind of say, What are my racehorses? Now, this is just a personal analogy that I like to have. What are my racehorses and what are my turtles? Okay. Well, you're starting to get a picture here, guys and girls, aren't you? Well, my racehorses are that really small, sorry, let's say solar, solar, like ACME Solar, right? ACME is a word for an ABC XYZ company. ACME Solar, right? So what you want is to explain this is basically, actually, i.e., high growth. High growth. And the turtles are your steady, steady Netties. Was it N-E-D-D-Y? Right. Steady Netties. And this is going to be your BPs, shells, Axons, et cetera, et cetera. The racehorses, PAA, for example. PAA. The racehorses are going to be the speculative companies, the ones that are breaking new ground, putting in new smart grids. High growth, for example, would be Tesla. That's a racehorse. I have an ETF called Hail. Hail. There's another ETF called iDrive. Oh, I-D-R-V. And these are all electronic vehicles. These are electronic vehicle ETFs, but this is the portfolio construction. And so we do want our racehorses, we do want our turtles, and we believe in the general growth over time of the entire sector. So it's more thematic. What this portfolio would be, it would be based on a thematic investment. That's how you would call this. So you're betting on green energy. And then, you know, I mean, maybe you have a portion of your sector of the— this is your EV sector of the overall green portfolio, right? And then, you know, you put more resources in here like NIO. Is it— well, NIO is another EV. I mean, I'm pretty hot on EV right now. So NIO is another one, right? It's basically the Asian version of Tesla. But what else? I mean, you'd have to go and find— I might ask Shelby to find some of these companies for us in this here, who are the winners and losers up here. And you have to track. Once you have a couple of interesting names, you kind of got to track them for maybe at least a quarter to kind of see how they react to certain shifts in the economy and the macro environmental news picture, see how they respond to certain things. Are they overbought? Do you want to put on alerts to buy them when they fall to a certain level? I mean, I think a lot of this stuff is horrendously overbought right now. Actually, since 3 months before Biden was elected, these things have been going up like at parabolic rates. No joke, parabolic, straight up. So I do like, I want to have most of these in a portfolio, but I'm constructing, really at the moment I'm constructing the EV part. I've done this already on the EVs. I might actually take a bit of overweight myself to NIO actually soon enough. And I'll certainly put Tesla in there. If I get like 400 on Tesla, boom, I'll buy more of that. And then I'll be overweighting myself. Here, I like Hail because it's actually— Hail is actually overweight NIO and underweight Tesla. But I want a bit of exposure to Tesla at $400 because I think that's good value. But there are individual names within this and you need to think, right, well, which one— they're all pretty much racehorses, but which are the real thoroughbreds in here and which are the ones that, yeah, they're going to come in somewhere in the middle of the pack But generally they're going to appreciate over time. But all the while, you cannot discount these companies that are literally bigger than the government that has told you to stay inside for the last year. And they are going to be buying up any of the good value racehorses that come past the winning post, if you like. So this is kind of just a smattering of portfolio construction. On how I look at the green energy space that's coming. It is important that if you're putting a lot of money at play over an undefined time horizon, that you get paid, get paid dividends, right? Get paid dividends. The banks aren't giving you anything on your money on deposit. Why not just put it into something that's paying you a dividend? All the while then, as your overall portfolio appreciates over time, you're then making dividends on the bonds, if you like, of this portfolio, the resources and the turtles. The turtles are essentially like— these are equities, right? And these are the bonds. Right, cool. A couple of questions there. Yeah, and the books, right, the books. Um, so the energy picture— oh, one of it on there. Um, where's my— I'll take my whiteboard up. All right, so another one of the— one of them here, I'll get get an image and drag it in. So the first is The Prize by Daniel Juergen. Now this is a big book, this is a huge book, it's— you could kill a man with this book. It is literally something you could probably put, you know, your car up on if you needed to, you know, do some work underneath it. It's a biggie. Um, but essentially, Daniel Yergin is the world's foremost authority on the oil industry, to be honest. Uh, he won a Pulitzer Prize. The guy— whatever— what the guy doesn't know about oil, uh, it doesn't matter, right? It doesn't matter. It's a thick book. But it's interesting and it's well worth it. He actually has a new book out called— well, I won't get it out because it's equally as big, but it's called The New— what is it? The New World? The New Order of Energy. Yeah, it's called The New Order and it's really about the new order of energy. And I can't wait to read it because it's going to be more insights into what the future is for a lot of these companies that he's tracked their developments for for the last, since they were developed, like Shell. I mean, Samuel Samuel started Shell in, what was it, in the 1840s, I think, 1840s, selling shells from the Far East as trinkets of interest to Londoners. And that business took off wildly. And then he got into trading food like rice and flour and corn. And then developed that business into then trading oil on a global level, all from London. And that's why Shell is called Shell, essentially, because the company started off selling boxes covered in lovely, pretty shells from tropical waters in the Far East. So Daniel Jürgen, the prize. Another one is Confessions of an Economic Hitman. So this is actually a fantastic book. This will really open your eyes up to how global governments and global economics actually works. And so John Perkins was a consultant at government economic consultant for the Mann Group and a couple of other companies that have been at the, at the center of a lot of controversy for the last 50 years, actually, when it comes to funding projects in developing countries. There's information in here about the deal over the Suez Canal, over the Panama Canal, and what the government— how the governments approach, try— the US government particularly, um, tries to vie influence over, um, the development of these type of projects that are of, you know, global interest. So these are my book recommendations for today, for my Monday recommendations. I'll put the links to them in the room. And, uh, yeah, that's about it. So uranium, yeah, uh, I'm actually not up on the uranium thread of this story, and I'm just really at the start of developing my own knowledge about the uranium relevance in this space. It is— basically, it's a clean way of producing energy, but obviously from the Fukushima incident, we've seen that, you know, these nuclear volatile products have have tremendous and tragic impact and fallout. And I don't need to go on about the Chernobyl incident. That's well documented. That's why we have radon barriers in any houses that we build now, because essentially there is radiation that was from the fallout of Chernobyl in the '80s that spread across most of Europe, actually. And that radioactive material fell down into the ground, into the earth, and then there is a certain raised radiation exposure that comes from that, from the ground now. And that's just a fact. So actually, I don't think you're allowed to build a house technically in the European Union without a radon barrier on the floor. So Yeah, sorry, Seifeng, I'd have to brush up on that to be able to talk about it in any capacity really, so I'm not going to just jump in there on that conversation. So yeah, hopefully this is some interest and some insight into how I see attacking this. You know, what we see is the movement to green energy, and just to footnote this, you know, We do have— what is the catalyst for what has been here? This future of energy has been sort of a nascent industry for quite some time, trying to find funding, trying to find developments. Well, we know what the catalyst is now, Biden dollars, green stimulus. Some new serious dollars, right? So that's the catalyst. That's why we're going to see a shift, a huge, huge shift to, you know, this, all of this stuff here, um, to do something like this. All right, thanks folks.