Can investors still make money in renewable energy? High-flying renewable-energy stocks like SunPower Corp (NSDQ: SPWR) and SolarCity Corp (NSDQ: SCTY) routinely garner headlines but also entail significant risks.
Our Portfolio holdings with exposure to renewable-energy have generated an average return of more than 26 percent since last fall.
And we see further upside for all five stocks, fueled in part by the bullish near-term outlook for renewable energy in the US. Our favorites should continue to generate reliable earnings and grow their dividends through acquisitions and organic-growth opportunities.
What sets our favorites apart from SolarCity Corp and other overhyped names?
These companies generate a profit and pay reliable dividends. Even better, our picks have the wherewithal to survive a slowdown in renewable-energy development, thanks to their contract-backed revenue and exposure to other business lines.
Despite these advantages, these stocks still trade at reasonable valuations, making them solid bets for investors looking to build wealth over the long term.
Investors seeking exposure to potential upside in natural-gas prices often gravitate toward producers in the Marcellus Shale. We prefer undervalued turnaround stories in the utility space that continue to reduce their exposure to the wholesale electricity market.
Far too many investors and commentators mistook last winter's surge in natural-gas prices as the start of a durable rally. But unless last winter marked the onset of a new ice age, the underlying supply and demand trends that prevailed before the polar vortex were always going to win out.
Looking at relative valuations is one strategy for investors to identify inexpensive MLPs whose valuations don't reflect their growth prospects.
The Marcellus Shale is a prolific, gas-producing formation in Pennsylvania and West Virginia, where robust drilling activity has driven huge production growth. But rising output has started to overwhelm local demand, pressuring smaller operators and increasing demand for new takeaway capacity.
Rather than regarding Kinder Morgan Inc.’s consolidation of its associated limited partnerships as a referendum on the MLP structure or the end of an era, investors should regard this move as a fresh start for the midstream giant--an opportunity to reshape itself to meet the demands of the marketplace and competitive environment.
Enterprise Products Partners LP boasts one of the strongest balance sheets and growth prospects in the MLP universe. However, a frothy valuation means that investors should stand aside and wait for a pullback before adding to or establishing a position in the name.
Breitburn Energy Partners LP's recently proposed acquisition of QR Energy LP demonstrates that the search for scale is alive and well among upstream MLPs, as private-equity buyers ratchet up the competition for asset acquisitions.
Imagine a future where US coal-fired power plants continue to generate reliable baseload power, while CO2 collected during their operation fuels the shale oil boom.
NextEra Energy Partners LP--a publicly traded partnership that specializes in renewable energy--has been a slam dunk since its initial public offering on June 26. But at these levels, there are better plays in this industry.
Elliott and Roger on Aug. 1, 2014
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Roger Conrad’s coverage of more than 70 dividend-paying energy names.