Hey there, Power Profit Traders!
The holiday week is winding down, with New Year’s Eve and 2022 nearly upon us. This is a great time to take a moment and take stock of what you’ve accomplished this year, and what you’d like to improve upon and accomplish in the next.
And for me, your humble analyst and pattern trader, I’m doing my best to bring you even better trades for 2022. Cheers to making all of us wealthier, healthier, and even more successful.
As a bonus for our cherished viewers, and for this entire week only, it’s a Money Morning LIVE Open House! We’re giving viewers a backstage pass into select PREMIUM trading rooms absolutely free. It all kicks off at 9:15 a.m. ET right here. (And don’t forget, you can now watch REPLAYS of my sessions right here!)
Now, let’s break down my green call on a go-to company for green investors…
Mention green investing and most traders will immediately think of one stock: Tesla (TSLA).
Tesla is, of course, known for its leadership in electric vehicles (EVs), competing with companies like China’s Nio Inc (NIO) – at the top of today’s Unusually High Put Volume watchlist from the TG Suite Morning Report tool.
And EVs are, of course, viewed as green because they use electric power and emit largely nothing from their motors, unlike gas-powered vehicles. Otherwise, the only other pollution that EVs generate is from polymer debris that comes from their tires rolling over pavements.
But for the moment, let’s set aside the environmental costs of mining various minerals and elements needed for EV batteries and other components; EVs are, for now, perceived as the greenest cars on the market.
So, for traders and fund managers seeking green companies for their portfolios – TSLA fits in nicely and usually looks good on any holdings report.
But there is another name out there that really ticks all of the boxes of being green… and with the push to buy and own green companies and their respective stocks, it could be a poster child of eco-friendly stocks.
This stock is as much a desirable holding as TSLA, if not even more so, and it’s one I’ve been keeping on my shopping list…
And now, it’s once again setting up for more green in my Fast Fortune Club portfolio, if history is any indicator.
A Top Green Company on Traders’ Shopping Lists
Electric power for Tesla cars – and everything else – needs to be generated; it isn’t pulled out of thin air.
Utility companies use a variety of power sources to do this, like fossil fuels (including coal and even crude oil) and increasingly from natural gas. And in the U.S., nuclear power reactors are still large in number, with the nation leading the globe in capacity from fission power.
But wind and solar are quickly becoming the go-to sources for green-focused utilities.
These clean-energy sources are being demanded by more and more consumers, and with federal, state, and local government incentives and requirements now in play, their usage is expanding rapidly in the U.S. and beyond.
The leading utility in the wind and solar market is NextEra Energy (NEE).
The company is based in Juno Beach, Florida, and has its core operations in Florida Power & Light. But NextEra’s reach extends well beyond the Sunshine State – it is one of the globe’s largest (by capacity) wind and solar power generators.
NextEra Energy has really written the playbook when it comes to being a successful green utility company.
Like most utilities it has its regulated and unregulated business units. The regulated side provides power to homes and businesses in its Florida market. The rates and margins are all agreed to with oversight by the local public utility commissions (PUCs).
But the unregulated side of the business provides wholesale power that is, in turn, sold to other utilities, as well as directly to large-scale commercial users around the world – without constraints of PUCs. It’s this side that’s really taken green energy to the next level.
What’s more, my Fast Fortune Club members have a NEE trade that’s already in the green.
The NextEra of Stock Performance
NextEra has a long history of generating not just more green power – but more revenue for its shareholders. For the trailing 10 years, the company has built a steady history of consistent sales gains on a compound annual growth rate basis (CAGR).
And this increasing revenue has come with positive operating margins, stemming from both the regulated business overseen by PUCs, as well as NextEra’s unregulated wholesale businesses.
This fundamental strength has helped NEE on the charts, as you can see by this long-term outperformance:
NEE (white) vs. SPX (red) vs. S&P Utilities Index – Source: Bloomberg
Over the trailing 10 years, NextEra stock has returned 694% – nearly DOUBLE the return of the S&P 500 Index (SPX) and multiple times that of the S&P Utilities Index for the same period of time.
And recently, the stock set up what I call a Green Trade (long call option) strategy for my Fast Fortune Club members, based on my Money Calendar data.
My Money Calendar algorithms mine historical data for potential bullish and bearish trade ideas, based on a decade of seasonality (among other factors), and history indicates that NEE tends to shine around the New Year.
Already, the NEE calls are in the green.
For more Green Trade ideas in 2022, make sure you’re a member of my Fast Fortune Club!
So, kids, that’s your Power Profit Trades lesson for today. Be sure to take advantage of your peek behind the paywall with LIVE premium content starting at 9:15 a.m. ET right here!
Have a great day!
Tom Gentile
America’s #1 Pattern Trader
