Odds favor a Biden presidency … looking at one of his top policy initiatives … one company poised to benefit, which both Neil George and Louis Navellier recommend
According to professional handicappers, what’s the likelihood that Joe Biden is going to win the 2020 presidential election?
As of Monday morning, the political betting site, Smarkets, puts the odds at 57.80%.
Trump is second at 39.37%.
Interestingly, hedge fund billionaire, and the subject of several Digest issues, Ray Dalio, is in fifth place with a 0.50% chance.
Below, you can see how the odds have bounced around since February.
Back to Biden …
Here in the Digest, politics is not our beat. So, we make no political commentary on any of the candidates.
What is our beat is wealth.
And with a Biden presidency appearing a likely outcome, it makes sense to look ahead at how you might position your portfolio today.
So, in this Digest, whether you love it or hate it, let’s imagine a Biden victory.
In doing so, we’ll put a stock on your radar that should benefit from what’s likely to be one of his marquee policy initiatives if elected.
Let’s jump in.
***Biden and the Green New Deal
About a month ago, Biden announced a plan to spend $2 trillion over the next four years.
The money would go toward accelerating the adoption of clean energy in the transportation, electricity, and building sectors.
It’s part of Biden’s sweeping proposals designed to spur economic activity and strengthen infrastructure, while, perhaps most importantly to him, tackling climate change.
These are the most critical investments we can make for the long-term health and vitality of both the American economy and the physical health and safety of the American people.
Biden’s policy initiatives echo goals laid out in the Green New Deal.
For readers less familiar, this term refers to a congressional resolution outlining a master plan for tackling climate change.
From Biden’s website:
Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face.
It powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected …
We can lead America to become the world’s clean energy superpower …
Getting to a 100% clean energy economy is not only an obligation, it’s an opportunity.
We should fully adopt a clean energy future, not just for all of us today, but for our children and grandchildren, so their tomorrow is healthier, safer, and more just.
If you listen closely, you can almost hear knuckles cracking as fists clench in the Permian Basin …
***In 2019, the United States got 62.7% of its energy from fossil fuels
Nuclear energy contributed 19.7%. And renewables (green energy) supplied 17.5%.
If Biden takes the presidency and democrats are able to forward Green New Deal initiatives, they’ll do their best to cover a lot of distance between 17.5% and 100%.
And that means you can expect to see a tidal wave of federal dollars flowing toward renewable energy.
How big of a tidal wave?
Estimates are all over the place (Trump has claimed $100 trillion).
But for some perspective, tiny Vermont has a goal of achieving 90% renewable energy by 2050.
For that, the estimated cost is $33 billion.
Now, multiply $33 billion by the rest of the nation … oh, and don’t forget to bump it up from 90% renewable to 100%.
Here’s a map highlighting Vermont to remind you how small it is as you do your mental calculations.
Whatever number you landed on, I’m going to guess it’s “a lot.”
Of course, for the purposes of this Digest, we don’t need a specific number.
All we need to know is that companies that are aligned with Green New Deal politics are likely to benefit from the truly massive volume of dollars potentially headed their way if Biden is voted in.
So, let’s talk about one company in particular that fits this bill — a “green” utility company.
***The tailwinds behind NextEra Energy
Let’s turn to Neil to introduce NextEra (NEE).
The stoic, electricity-at-any-cost utility is going the way of the dinosaur. First, coal-powered generation, which was highly inefficient and dirty, became more of a problem than a solution.
Then, cheap and plentiful natural gas meant coal plants were swapped out. But all the while advances in renewables — like wind and solar — were making those technologies cheaper and cheaper.
Now, renewables are competitive with even cheap coal and natural gas. Many companies are jumping on board now.
Yet NEE is already there. It is the world’s largest producer of wind and solar energy. This is the company’s unregulated business. It sells this power to other utilities, factories, companies and governments. It also has Florida Power & Light, the utility for South Florida.
That means it has a solid regulated business in one of the fastest-growing regions of the country and an unregulated business with huge demand.
Now, let’s go straight to NEE’s website to see how they describe themselves:
Our investment in emissions-free and clean generation has reduced the impact on the air we breathe and demonstrates our commitment to environmental protection and stewardship.
Our strategy is based on generating and delivering clean energy and building energy infrastructure that’s reliable and affordable.
With this in mind, let’s jump back to Biden’s website:
A major focus of Biden’s commitment to increase federal procurement by $400 billion in his first term will be purchasing the key clean energy inputs like batteries and electric vehicles that will help position the U.S. as the world’s clean energy leader …
… he will focus on strategic research areas like clean energy, clean transportation, clean industrial processes, and clean materials over the next four years.
Do you see some overlap there?
And did you notice the commitment to throw $400 billion at energy … in just his first term?
Despite being a utility, cash-flows like that would make NEE a growth stock — which would make sense given Louis’ interest in it.
As to its income potential, which Neil likes, NEE currently pays a 2% dividend. It’s also been consistently increasing that dividend for about a decade.
In 2011, NEE paid $0.55 per share. Today, that figure has risen 155% to $1.40 per share.
The most recent dividend bump came in February, when NEE management juiced the payout by 12%.
***As we stand today, NEE has the potential to enjoy dramatic growth under a Biden presidency, all while paying you a healthy, growing dividend
One final thing …
Even if Biden doesn’t take the presidency, that’s not a negative for NEE. It’s still a winner due to the growth of the ESG movement.
If you’re less familiar with the acronym, ESG stands for “environmental, social, and governance.” It’s a market orientation that’s picking up steam with investors today.
It describes companies and investment styles that comply with the widely applied goals and stipulations of the three general areas of management.
In recent years, ESG has been attracting big institutional dollars. And with the focus on our environment today, there’s no reason to believe this will slow down.
Back to Neil:
… there is a surge underway by beneficiaries of pensions and endowments to force fund managers to follow ESG. This is bringing more and more capital into ESG stocks and related funds, adding to potential returns …
And what’s one of the top ESG companies today?
You guessed it — NextEra.
Wrapping up, we’re only 85 days away from the presidential election. It’s not too early to look ahead.
Have a good evening,