3 Ways to Play the $30 Trillion ESG Boom in 2021
FN Media Group Presents Oilprice.com Market Commentary
London – December 29, 2020 – There’s an old dictum in investment circles that says that “the trend is your friend.” For decades, megatrends have always set the stage for winning investments, whether they involved technological revolutions, population demographics, or government-driven regulations. And right now, the $30 Trillion ESG Megatrend ticks all the right boxes… Especially with Joe Biden about to give a big boost to the sector. Mentioned in today’s commentary includes: Tesla (NASDAQ:TSLA), Bloom Energy Corporation (NYSE: BE), NIO Limited (NYSE: NIO), Workhorse Group Inc. (NASDAQ: WKHS), Plug Power Inc. (NASDAQ: PLUG).
Over the past half-decade, ESG (Environmental, Social, and Governance) investing has emerged as the single biggest global megatrend. Every year, more than $3 trillion in new global funds flow into the $30 trillion ESG market – and even the Big Banks are feeling the ethical squeeze keenly.
According to research provider ETF Flows via MarketWatch, $15 billion in new funds flowed into ESG funds during the first half of 2020, 40% faster than the year before. From EVs and renewable energy stocks to hydrogen stocks, ESG Platforms and even graphene stocks, the ESG sector is truly having its moment in the sun. EV stocks have collectively soared more than 60% this year thanks to record demand, record deliveries, and even record-breaking revenues and profits.
The EV hotshot, Tesla Inc. (TSLA), has already been slated to become the next trillion-dollar company. Such claims would have sounded far-fetched a few years ago, but investors just can’t get enough of ESG companies: TSLA is up a staggering 640% in the year-to-date, with its $608B market value exceeding the combined values of General Motors, Ford, and Fiat. It’s Chinese peer, Nio Inc.(NIO), has rallied a blistering 1,375% YTD. Investors in EV delivery and utilities darling Workhouse Group (WKHS) have seen 600% gains.
Bearing this in mind, here are 3 exciting ways to play the hottest megatrend in the investing universe. After all, over 3,000 global movers and shakers with over $110 trillion in assets under management (AUM) can’t all be wrong…
#1. Renewable energy stocks
The Covid-19 pandemic has dealt a heavy blow to the fossil fuel sector while greatly accelerating the shift from coal and oil to renewables like wind and solar. Even with a flurry of potential Covid-19 vaccines in the pipeline, the oil and gas sector has been unable to shake off the massive demand destruction that the pandemic has visited on it.The fossil fuel sector is facing unprecedented headwinds, booking billions in asset write-offs and a rapidly expanding pile of stranded assets.
Luckily for energy investors, the age of renewables is in full swing with solar and wind energy expected to rapidly replace coal in the global energy mix. The solar sector has been particularly red-hot and is expected to shine even brighter under a Biden presidency.
One of the first pieces of business expected for Biden is to order the International Trade Commission to review Section 201 solar tariffs, countervailing duties, and anti-dumping laws and potentially repeal them considering the damage they have wrought to the downstream solar industry in this country. Even partly eliminating those punitive tariffs on solar modules and inverters is expected to have tremendous positive effects on solar development.
Second, Biden has already pledged to lower or completely eliminate those subsidies on fossil fuels and channel the funds to renewables. This is very likely to give solar and other renewables an opportunity to play on a more level field with the oil, gas, and coal industries.
Finally, another multi-trillion dollar relief package is expected to not only help millions of struggling families but also encourage direct investments into the renewable sector including helping create well-paying jobs in industries like solar and wind.
#2. The EV Sector
The pandemic might have stymied the global auto sector, but it has been powerless to stop the EV revolution with the number of electric vehicles on our roads set to eclipse the 10M mark. Two weeks ago, the U.K. made history after announcing that it will ban the sale of gasoline-powered vehicles from 2030 as part of its “green industrial revolution”, becoming the first country in the world to do so.
The EV explosion is expected to continue over the next decade, with Bloomberg New Energy Finance predicting that 10% of new vehicle sales in 2025 will be electric compared to only 2.7% in the current year. EV companies like Tesla and Nio might currently be hogging the limelight, yet it’s another company with an EV subscription service that plans to entirely change the way the world owns or leases cars that’s likely to prove the most accessible for millennials.
The company is Facedrive (FD; FDVRF), a ride-hailing company that is rapidly becoming an ESG cultural icon. Why? Because the company plants trees every time you ride to offset your carbon emission. It’s the climate-friendly answer to the ride-sharing revolution.
With its recent acquisition of Steer, a high-tech Electric Vehicle subscription service, Facedrive isn’t just looking to transform the ride-sharing business, but intends to disrupt the entire auto-industry, completely rethinking the way we “own” cars.
Its innovative hassle-free technology gives subscribers access to their own ‘virtual garage’ of low emissions vehicles. And now as more and more people could opt for ride-sharing and subscription-based alternatives over car ownership, this tech-based economy has exploded, putting Facedrive right at the forefront of a brand-new megatrend.
There’s a ton of money floating around this space. Another EV startup backed by Bill Gates has been valued at $3.3 billion. One of its main competitors already has a market cap of $1.1 billion. And Facedrive (FD; FDVRF), a tech company participating in multiple ESG verticals, has seen its share price explode by 669% just this year.
This fast-track company has 6 ESG divisions, making it a one-stop-shop for many of the hottest sectors in the impact-driven tech space:
- FaceDrive and HiRide–-Environmentally-friendly ride-sharing and long-distance carpooling
- Facedrive Health: Carbon-neutral pharma deliveries and government-endorsed COVID contact-tracing with TraceScan
- Facedrive Marketplace, with celebrity co-branded (Think: Will Smith’s Bel Air) exclusive clothing, focused on sustainably sourced materials
- Facedrive Foods carbon offset food delivery platforms
- Social distancing trivia platform, HiQ, with over 2,000,000 app downloads
- Steer in the EV subscription space
- Tally Technologies, another potentially transformative tech collaboration aimed at major league sports
#3. Hydrogen Fuel Cell Stocks
After several false dawns, the hydrogen sector has suddenly come alive with a bang. Back in June, the European Union outlined its ambitious new hydrogen strategy that will help companies in the region achieve carbon neutrality by 2050. Among other things, the EU pledged to build 40 gigawatts of electrolyzers by 2030, which works out to 160x the current global capacity of 250MW.
Meanwhile, the U.S. Department of Energy recently announced its first hydrogen investment dubbed the H2@Scale initiative whereby it will invest $64 million in a handful of companies to undertake hydrogen research projects.
The hydrogen bug has bitten even energy utilities, with renewable energy giant, NextEra Energy Inc. (NEE), recently talking up plans to convert its natural gas plants to run on hydrogen. Predictably, hydrogen stocks have become hot property: Plug Power Inc. (PLUG) 676% YTD, Ballard Power Systems (BLDP) has racked up YTD gains of 178% while Bloom Energy Corp. (BE) is up 283% over the timeframe.
Whether it is hydrogen fuel cells, electric vehicles, or renewable energy, it is time to get in on the ESG revolution. And if you’re looking for places to start, you can’t go wrong with Invesco Solar ETF (TAN), Facedrive (FD; FDVRF), or Bloom Energy Corp. (BE).
California-based Bloom Energy (BE), for its part, designs, manufactures and sells solid-oxide fuel cell systems. And, yes, there’s been a ton of cash burn up to this point, but it’s heralding massive innovation–and that’s what tech startups are all about. Growth runways, not immediate profit.
That’s why we are willing to throw tons of money at our innovative future. Eventually, the narrative changes and for the successful companies, the cash burn stops and there starts to be payback for investors. Anyone who didn’t get in on time got left in the innovation dust.
Thanks to Bloom’s forward-thinking approach on this burgeoning market, it has seen its share price soar from $7.88 at the start of the year to $30.20 at the time of writing. In the stock world, a 283% return is never a bad thing. But as this sector grows, so to could Bloom’s market cap.
Plug Power (PLUG) is one of those plays that defines speculation. But here’s the thing: it’s based on an industry that’s on track to be worth $11 trillion. This is a hydrogen fuel cell play, and the massive money inflow around hydrogen could keep PLUG–a highly volatile stock of late–pumping along nicely.
In Q2, it delivered an earnings surprise of 66.67%. It’s outperforming the market wildly, so why did investors get cold feet on November 10th, after piling into it hours before? Quite simply: This run on hydrogen is a new thing and no one can pinpoint what might come next for this stock.
If investors are getting cold feet, all it takes is a bit of a reminder as to how much money is pouring into hydrogen right now. Despite the volatility however, Plug is still riding high the hydrogen hype. Its share price is up over 1000% year-to-date, and it’s showing no signs of slowing. Hydrogen is already being touted as the fuel of the future, and a vital component in the world’s race to reduce carbon emissions. And as more money piles into the industry, companies like Plug and Bloom are set to win big.
Bonus: Electric Vehicle Stocks To Watch
NIO Limited (NIO) is an electric vehicle producers which has had an absolutely stellar year. Late last year analysts and veteran traders alike were ready to give up on the automaker…but the Chinese Tesla rival powered on, blew away estimates, and most importantly, kept its balance sheet in line. And thanks to its efforts, the company has seen its share price soar from $3.24 at the start of 2020 to $47.80 earlier this week, representing a massive 1375% returns for investors who have believed in it. And it’s just getting started.
Though NIO’s sales slumped at the beginning of the year, they quickly rebounded in the second quarter and have maintained an upward trajectory ever since. By its Q4 report in October, NIO announced that its sales had more-than doubled, projecting even greater sales in the months to come. The EV darling has come a long way from its rumored potential bankruptcy in 2019, and if this year shows investors anything, it’s that its CEO William Li is has big ambitions and enough drive and skill to see them through.
Workhorse Group (WKHS) is somewhat of an outlier in the electric vehicle explosion. Because of its delivery-vehicle focus, it’s not necessarily a consumer-focused brand, but more of a business-to-business manufacturer. And that’s not a bad thing. Especially considering the future of this budding industry.
Though one of its recent but headline-grabbing deals with the United States Postal Service has been delayed, it’s still pulling a lot of high-value retail deals. And shareholders see that value, and more importantly its potential for long-term growth. Since January of this year, Workhorse has seen its stock price skyrocket from just $3.29 to today’s price of $23, representing a near 600% increase. The USPS delay on its orders aside, that’s still a pretty hefty return and sure to keep shareholders at bay for the time being. And analysts seem to agree.
And of course there’s Tesla (TSLA). The king of the electric vehicle industry has been tearing it up, with its stock price skyrocketing this year. Smashing Wall Street consensus left and right, there seems to be no stopping Tesla, and it’s taking the rest of the industry along for a ride in its wake.
There’s a reason Tesla has performed so well this year. Investors love Elon Musk’s vision. As one of the world’s most innovative car manufacturers, it has single-handedly made electric vehicles cool. Its slick design is beloved across the world. In fact, it’s almost impossible to NOT see a Tesla in cities like Hong Kong or San Francisco.
Accounting for its 5:1 stock split in September, Tesla has seen its share price rise by over 640%. And though some bearish analysts have proclaimed that it is overvalued, it seems the Street disagrees.
By. Alex Nicholas
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Forward looking statements in this publication include that Facedrive will be able to expand to the US and Europe; that transport in an EV will become much more popular and that Facedrive will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially. Risks that could change or prevent these statements from coming to fruition include that riders are not as attracted to EV rides as expected; that competitors may offer better or cheaper alternatives to the Facedrive businesses; Facedrive’s ability to obtain and retain necessary licensing in each geographical area in which it operates; and whether markets justify additional expansion. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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