Setting Your Portfolio Up for “Peak Oil”

Last time we talked, I told you about the best energy plays available now that energy stocks are coming back into favor with investors.

As I said, near-term demand remains an issue for big oil companies. The economic fallout of COVID-19 has caused problems for the energy sector as cars and planes are not moving like they were before the virus mess.

Stephen Leeb, a former business partner of mine, wrote The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis. It discusses the theme of “peak oil.” This concept theorized the world only had so much of the vital stuff and that producers had reached the peak of what was possible to bring to market.

We haven’t reached peak oil yet – at least not in the way Leeb described it. Instead, we’ve reached peak demand thanks to the pandemic.

But if we presume the supply levels will one day peak, what are the right plays?

Post Peak

Though natural gas, helium and CO2 will be needed for the foreseeable future for many industries, when it comes to energy, oil and natural gas will be eventually moving down in importance. This is why I’ve been looking at alternative energy companies for power and power storage.

Wind and solar energy are only getting bigger. For utilities, NextEra Energy (NYSE:NEENYSE:NEE) and Xcel Energy (NASDAQ:XEL) are big pioneers that should be a part of your portfolio. And aiding the rollout of wind, solar and other green energy projects is Hannon Armstrong (NYSE:HASI), which is a primary financier of green energy projects.

Hannon Armstrong (HASI) Total Return—Source: Bloomberg Finance, L.P.

Hannon Armstrong is also moving to the next level of green power with battery storage backup. Wind doesn’t always blow, and the sun doesn’t always shine, so beyond natural gas, batteries are needed. It’s expanding backup with a co-op financing deal with the global energy company out of France, Engie (OTCMKTS:ENGIY), for US-based solar with backup systems as part of a major distributed generation (DG) rollout. DG sets up businesses and homes to operate off-grid.

Batteries are key for green power. And that’s why I continue to recommend the leaders in the current and next-generation batteries from Samsung Electronics (OTCMKTS:SSNLF) and TDK Corp. (OTCMKTS:TTDKY).

Then there’s hydrogen. Green, non-natural gas made hydrogen is one of the best next technologies to get us past post-peak oil and gas. Two companies that I’m looking at right now are Air Liquide (OTCMKTS:AIQUY) and Air Products (NYSE:APD) as leaders in the hydrogen markets as well as other must-have gasses like CO2 (liquid oxygen for vaccine delivery).

And fuel cells using hydrogen make for some of the most compelling backup power systems for the future. TDK with its newer partner GenCell (TLV:GNCL) of Israel is the go-to for this post-peak power, making TDK the must-have tech stock right now.

TDK Corp. (TTDKY) Total Return—Source: Bloomberg Finance, L.P.

If you’re a regular reader of this column, you know just how much I like TDK. In addition to its ties to battery technology for backup power systems aren’t the only reason to consider it a winning investment.

TDK provides batteries for everything from fifth-generation (5G) wireless to electric cars to the latest smartphones, wearables and pretty much every other new tech product.

Oil and energy stocks are an attractive short-term investment, but they may have risen too much because investors are buying up value stocks. If you’re looking to lay a base for your future, the next generation of alternative energy companies is a great place to start.

On the date of publication, Neil George did not hold (either directly or indirectly) any positions in the securities mentioned in this article.


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