Thirty-five years ago, oil was sold for about $ 30 a barrel. In July 2008, it hit a total of $ 147.27. And since then, it’s been in a 12-year, albeit choppy, downtrend.
In April 2020, it hit an all-time high low and even one day acted negatively.
Today, the commodity is at $ 42 per barrel.
So much has happened this year; the oil price war between Russia and Saudi Arabia that caused the 65% quarterly price attack seems to have been largely forgotten.
Is it time to dump oil spills?
Not at all.
You see, our traders – we’ve paid attention. And we have found a new way to profit from energy.
We just had to change our thinking …
The better path to energy gains
If top oil companies are looking for alternative ways to make money, the answer is clear: sustainable resources.
The seventh largest oil company in the world, BP Plc. (NYSE: BP) recently announced that it is pumping the brakes on oil and gas production and going billions of dollars in clean energy.
It looks like BP is looking at “writing on the wall”. Just ask the chairman of the company, Helge Lund. He expects demand for fossil fuels to fall by 75% over the next 30 years, and he will not leave BP behind.
With fossil fuels going down, worldwide, we are seeing an increase in the demand for renewable energy.
In the United States alone, in 2018, 11% of energy consumption was sustainable. This is expected to grow by a whopping 24% over the next 10 years.
Climate change is causing people to look for cleaner options for energy, and large oil companies are feeling the heat.
Gas giant Saudi Aramco was once the largest company in the world. Well, it’s fallen behind Apple Inc. (NASDAQ: AAPL). The share price has fallen more than 6% this year with staggering oil prices.
Oil is deeply integrated into our existence, so we do not completely lose it every moment.
That said, it is undeniable that money is being pumped into renewable energy – such as wind, solar, geothermal, and hydro.
Writing is on the wall – It’s time to invest in renewable energy
In the graph below you can see the trajectory that crude oil has been for the last 10 years.
And while crude oil and other fossil fuels are on the decline, many companies stand for renewable energy with speed and set tremendous heights.
The following map of the Invesco Solar ETF (NYSE: TAN), the ETF that tracks solar energy companies, says it all:
TAN has been in a strong rise since a bottom in March. There are many companies for sustainable energy with the same pattern.
Now there are two ways you can take advantage of these energy resources. The first is by looking directly at the stock of the energy company.
Here are three that have been set as multi-year highs all along. They are the ones leading the package …
- NextEra Energy Inc. (NYSE: NO)
With a market capitalization of $ 136 billion, NEE owns Florida Power and Light, which is a massive company that has more than 4.9 million accounts, and has reduced its energy production costs by 50% by adopting natural gas. It has plans to increase its solar energy generation capacity by 2028.
- Vestas Wind Systems A / S (OTCMKTS: VWSYF)
VWDRY is a global manufacturer and installer of wind turbines. A company of $ 28.59 billion, the stock market went up to an all-time high just until August 11, 2020.
- Renewable Energy Group Inc. (NASDAQ: REGI)
At a market cap of $ 1.2 billion, REGI develops and distributes biofuels, sustainable chemicals, and related products. It just took a very long time and with a price / earnings ratio (which determines if a company is overvalued or undervalued) of 3, this is a great value game!
The second way to profit on these sustainable energy companies is by investing in an exchange-traded fund (ETF). ETFs offer diversification across different companies in the space and are considered less risky than choosing specific stocks to invest in.
Here are three current leading sustainable energy ETFs by market cap:
- Invesco Solar ETF (NYSEArca: TAN)
With a market capitalization of $ 3 billion, TAN is one of the largest ETFs in this space. It follows two dozen global solar energy companies, including First Solar Inc. (NASDAQ: FLSR) and SolarEdge Technologies Inc. (NASDAQ: SEDG). Just this week, it sets a full high at $ 40.14 and appears destined for more upside.
- iShares Global Clean Energy ETF (NASDAQ: ICLN)
This $ 5 billion company provides diverse exposure to companies in the biofuel, ethanol, geothermal, hydroelectric, solar, and wind sectors. Its holdings include FSLR and SEDG, mentioned above, as well as Enphase Energy Inc. (NASDAQ: ENPH) and Plug Power Inc. (NASDAQ: PLUG).
- Invesco Wilderhill Clean Energy ETF (NYSE: PBW)
At a market cap of $ 9.76 billion, PBW just hit an all-time high of $ 53.62. This ETF is on fire and tracks supplies that work in clean energy as well as energy saving spaces. Its top holders include Vivint Solar Inc. (NASDAQ: VSLR), Sunrun Inc. (NASDAQ: RUN), and Nio Inc. (NYSE: NIO).
Now you can profit from these stocks and ETFs by buying them directly, but that can be an expensive investment for a low return.
The best way to play the renewable energy sector is by buying options on stocks and ETFs.
With options, you can minimize risk and maximize returns. Longer term options (30- to 60 days) will typically increase the return by ten times as opposed to just buying the stock.
You can make unusual profits with a smaller move upside down on these companies for sustainable energy.
With clean energy growing by 24% in the United States and 45% worldwide in the next 10 years, we want to come to the forefront of these trades.
Well, these are stocks that you want in your portfolio – but there are also a large number of stocks that you do not want to touch …
Hardly anyone realizes it, but some of the most dangerous, portolio-wrecking stocks are also some of the most popular picks on the market.
That is why the Chief Investment Strategist is in favor Good morning goes live to shine a light on these unstable names. In this fast-paced, lightning-fast-paced event, he will help you to make sure that none of these toxic stocks are attracted to your portfolio.
To learn how to tune in, click here. And make sure you “Buy this, not that “notebook. You will want to have this handy during the event – believe me, you will tons of information.
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About the Author
Money Map Press Specialist Tom Gentile is widely known as America’s No. 1 Pattern Trader thanks to his nearly 30 years of experience in spotting lucrative patterns in options trading. Tom has taught more than 300,000 traders his option trade secrets in a variety of settings, including seminars and workshops. He is also a bestselling author of eight books and educations.
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