XLU

Market Yawns at Government Shutdown

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It finally happened Monday night. After weeks of discussing the possibility of a government shutdown, the US government came to a standstill over the Affordable Healthcare Act and the budget, forcing governmental agencies to shutter doors and not pay employees on Tuesday. The shutdown impacts the Department of Defense most, where 400,000 workers out of the total 800,000 on leave are employed. The Department of Energy, Department of Commerce, and Department of Transportation are all also meaningfully impacted. At this time, the duration of the shutdown is unknown. It may not last long.   We think most market participants are not expecting a prolonged shutdown. Political parties should be sufficiently embarrassed, pride will be swallowed, and a deal will eventually … Read more

The Fed Won’t Taper

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Wednesday afternoon, Federal Reserve Chairman Ben Bernanke stunned the consensus and announced the continuation of quantitative easing. Nearly every major investment bank expected the Fed to taper bond purchases in September, so Bernanke’s surprise announcement ignited a rally in both the stock market and Treasury bonds. Why not taper? According to the Fed, the economy has not performed up to expectations over the past year, and more importantly, the Fed reduced its growth outlook for 2014. However, in our view, the real reason is that the Fed is concerned about another bout of incompetence from Congress stalling economic progress. The following words came from Bernanke during his post-policy announcement press conference: “A government shutdown, and perhaps even more so a failure … Read more

Summers Bows Out

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Equity markets jumped higher Monday as Federal Reserve Chairman frontrunner Larry Summers ended his pursuit of the position. The news suggested Summers had been President Obama’s preferred successor to current Chairman Ben Bernanke, but several Democratic senators opposed the nomination, and Summers may be bowing out to avoid any chance of embarrassment. With Summers out of contention, Fed Vice-Chair Janet Yellen is the clear frontrunner. As we’ve mentioned before, Yellen is viewed as a consensus builder and receives credit for predicting the housing bubble. Powerful Democratic Massachusetts Senator Elizabeth Warren, who sits on the Senate Banking Committee, supports Yellen and indicated that she would be able to gather the necessary votes for her nomination. Regardless of the politics behind the decision, … Read more

We Continue to Be Big Fans of Ameresco

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Update: We first covered Ameresco in detail through an article published back in August 2020 (link here) and followed up on that work in a subsequent article published in November 2020 (link here) and provided a brief update on the firm in a piece published in January 2021 (link here). 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.  Image Source: Ameresco Inc – August 2021 IR Presentation By Callum Turcan Ameresco Inc (AMRC) provides its customers with an expansive slate of clean energy and energy efficiency solutions ranging from upgrades to energy infrastructure (e.g., battery storage, … Read more

Which Sectors Are Leading the Market Higher? And Why Is This Important?

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Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more

The Correction: Markets Collapse! Ebola Fears!

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This is why you pay us to do our job. We put you way ahead of the market, while others sat back and did nothing. This is what we talk about when we try to feed your mental model with the right information: “We’re not after a ‘two-second advantage’ on widely disseminated market-moving information. We’re trying to get you the right information…even before it becomes information.” We take our job seriously, and we sincerely care about you and your wealth. You now know that beyond a shadow of a doubt. The Dow Jones Industrial Average is down 300+ points at the time of this writing.   Please consider cancelling your free research provider or your higher-paid investment service provider because … Read more

Dividend Aristocrat Albemarle Bets Big on Lithium

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Image Source: Albemarle Corporation – May 2021 IR Presentation By Callum Turcan  Dividend Aristocrat Albemarle Corporation (ALB) is a specialty chemicals company with three core business operating segments; ‘Lithium’ (primarily used for battery storage solutions), ‘Catalysts’ (primarily used in the oil refining industry), and ‘Bromine Specialties’ (primarily used as flame retardants). The company is focused on aggressively growing its lithium derivatives operations going forward, Albemarle’s largest in terms of revenues and most profitable in terms of non-GAAP adjusted EBITDA performance. Let’s learn more about this fascinating company. Image Shown: An overview of Albemarle’s business profile. Image Source: Albemarle – May 2021 IR Presentation Lithium Prices Are on the Rise During the final quarter of 2020, Albemarle sold its economic stake … Read more

January 5-9: The Week That Was – Drowning in Crude

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By Brian Nelson, CFA The first full week of 2015 was a wild one! Monday and Tuesday brought some hefty losses to the indices, but the middle of the week helped recover most of the ground, only to give some of it back Friday. When all was said and done, however, the S&P 500 still closed comfortably above 2040, a huge leap from just 5-6 years ago. We’re still enjoying the good times, with economic data still coming in relatively sanguine. Like a frog in water, the markets are just waiting for the next shoe to drop, and the Federal Reserve is doing all that it can to assure investors that the Yellen-put is there to prop up the markets should … Read more

NextEra Energy’s Promising Earnings Growth Outlook Underpins Dividend Growth Trajectory

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Image Source: NextEra Energy Inc – Third Quarter of 2021 IR Earnings Presentation By Callum Turcan On October 20, the electric utility firm NextEra Energy Inc (NEE) 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. … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more