Valuentum Exclusive Analysis for the Discerning Investor

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Mar 30, 2022

WEC Energy Is a Solid Utility with a Nice Yield
Image Source: WEC Energy Group Inc – March 2022 IR Presentation. WEC Energy Group Inc is a holding company that owns electric and natural gas utilities in the Upper Midwest (Minnesota, Wisconsin, Michigan, and Illinois), a ~60% stake in American Transmission Company (its service area is in the Upper Midwest and overlaps with the operations of WEC Energy’s other utility assets), and the merchant power firm WEC Infrastructure. WEC Energy serves roughly 4.6 million customers across its service area. Some of its electric and natural gas utilities include Upper Michigan Energy Resources Corporation, Wisconsin Public Service Corporation, Minnesota Energy Resources Corporation, Peoples Energy LLC, The Peoples Gas Light and Coke Company, North Shore Gas Company, W.E. Power, Michigan Gas Utilities, and more. The bulk of WEC Energy’s asset base is represented by regulated utility operations which have incredibly stable and predictable cash flow profiles given the regulatory environment these companies operate in.

Mar 4, 2022

NextEra Energy’s Bright Outlook
Image Shown: NextEra Energy Inc, one of our favorite utilities, owns the largest regulated electric utility in Florida and has exposure to the state’s promising population and economic growth trajectory. The utility is shifting its power generation base away from coal and towards renewable energy, leaning on natural gas and nuclear power plants to make the transition feasible. Image Source: NextEra Energy Inc – Fourth Quarter of 2021 IR Earnings Presentation. We are big fans of NextEra Energy. The utility is a cash flow generating powerhouse with a bright adjusted EPS and dividend growth outlook, underpinned by its rapidly growing renewable energy division and exposure to Florida’s promising economic growth trajectory. Shares of NEE yield ~2.2% as of this writing.

Feb 28, 2022

Our Report on Stocks in the Utilities (Large) Industry
Image Source: doggo. Our report on stocks in the the Utilities (Large) industry can be found in this article. Report includes AEP, D, DUK, ED, EIK, ETR, EXC, FE, NEE, NGG, PCG, PPL, SO, XEL.

Oct 22, 2021

NextEra Energy’s Promising Earnings Growth Outlook Underpins Dividend Growth Trajectory
Image Source: NextEra Energy Inc – Third Quarter of 2021 IR Earnings Presentation. On October 20, the electric utility firm NextEra Energy reported third-quarter 2021 earnings that missed consensus top-line estimates but beat consensus bottom-line estimates. The company reaffirmed its medium-term guidance in conjunction with its earnings report. We include shares of NEE in the ESG Newsletter portfolio and continue to be huge fans of the name. NextEra Energy’s capital appreciation and dividend growth upside potential is quite substantial. Our fair value estimate for shares of NEE stands at $102 per share with room for upside, as the top end of our fair value estimate range sits at $124 per share of NextEra Energy. Shares of NEE yield ~1.8% as of this writing.

Aug 24, 2021

We Continue to Be Big Fans of Ameresco
Image Source: Ameresco Inc – August 2021 IR Presentation. The economic and investment landscape is changing, and Ameresco is well-positioned to capitalize on the “green energy revolution” and growing interest in environmental, social, and governance (‘ESG’) investing standards. Ameresco’s focus on reducing operating costs for its clients while bolstering their green energy credentials and helping secure financing for the relevant projects underpins the value proposition of the company’s offerings. We first covered Ameresco in detail through an article published back in August 2020 and followed up on that work in a subsequent article published in November 2020 and provided a brief update on the firm in a piece published in January 2021. Shares of AMRC have more than doubled since we published our first article covering the name as of mid August 2021, and we think there is ample room for additional capital appreciation upside.

Aug 7, 2021

PPL Corp Updates Investors, Launches Share Buyback Program
Image Source: PPL Corporation – Second Quarter of 2021 IR Earnings Presentation. On August 5, PPL Corp posted second-quarter 2021 earnings, and shares of PPL initially moved higher after the report. Though the gas and electric utility, which has a major regulated utility presence in Kentucky and Pennsylvania, missed both top- and bottom-line estimates, what investors were likely focused on most was the announcement that PPL Corp had approved a $3.0 billion share buyback program. The firm expects to spend $0.5 billion buying back its shares in 2021, and we view this as a solid use of PPL Corp’s capital given our fair value estimate sits at $45 per share of PPL, well above where the utility is trading at as of this writing.

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

May 10, 2021

Utility PPL Is Pursuing a Major Transformation and Has a VBI Rating of 9
Image Source: PPL Corporation – First Quarter of 2021 IR Earnings Presentation. After updating our valuation models for the utility sector, PPL recorded a VBI of 9 and we are keeping a close eye on the firm. Our fair value estimate for PPL sits at $45 per share. As of this writing, shares of PPL yield ~5.8%. The utility’s outlook is bright, and we are excited by its potential upside once the pending transactions with National Grid are complete. In the High Yield Dividend Newsletter portfolio, we include the Utilities Select Sector SPDR Fund ETF (XLU) to gain broad exposure to the space.

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Jan 13, 2021

Surveying the Clean Energy Landscape for Ideas
Image Source: American Electric Power Company Inc (AEP) – January 2021 IR Presentation.  There’s a lot of interest in clean energy these days! Though our favorite ideas within a portfolio context are always the ideas within the Best Ideas Newsletter portfolio, the Dividend Growth Newsletter portfolio, the High Yield Dividend Newsletter portfolio, and the Exclusive publication, we also highlight interesting ideas via our articles that we publish on our website. In this article, let’s dig deep into the clean energy space. We’ll talk more about 1) Ameresco (AMRC), one of the green energy ideas we highlighted in the past that has performed incredibly well, 2) NextEra (NEE), a large utility “family” to keep an eye on (a utility firm and a merchant power spinoff), 3) First Solar (FSLR), a US-based manufacturer of solar panels, and 4) various alternative fuel and power storage companies, including Clean Energy Fuels Corp (CLNE) and Gevo Inc (GEVO). The recently-passed omnibus spending package in the US included significant funds to support various alternative and renewable energy activities. For example, the production tax credit for wind farms was extended for one year while the investment tax credit for solar plants was extended by two years. This is a major benefit for both manufacturers of solar modules and wind turbines along with the utility firms (XLU) that would own/operate such assets. Looking ahead, we expect that the US federal government will be very accommodative toward the green energy space as President-elect Biden and the incoming US Congress (which will be controlled by the Democratic Party) will likely step up federal investments in the space (such as subsidies, low or no interest loans, favorable procurement contracts, and other considerations). The share prices of various solar companies are on the rise as witnessed through the performance of funds such as Invesco Solar ETF (TAN) surging higher of late, while the impressive price performance of iShares Global Clean Energy ETF (ICLN) showcases the widespread nature of investor excitement toward almost all green energy oriented firms. Other securities in this realm include ALPS Clean Energy ETF (ACES) and SPDR S&P Kensho Clean Power ETF (CNRG).