The proposed combination of SolarCity and Tesla Motors amounts to little more than a bailout of the fatally flawed renewable-energy company that loses more money with each incremental sale. Investors looking for exposure to clean energy should stay away.
The upcoming election season is heating up, but overheated valuations are a bigger concern for investors in utility stocks. With a highly contentious presidential race likely to stoke strong emotions, investors should keep a level head and focus on what can actually change with election results. Above all, remember to bet on probabilities, not your personal politics.
The Master Limited Partnership (MLP) Association hosted its annual investor conference in Orlando last week and, as always, the Energy & Income Advisor team was on the ground to talk to management teams and fellow investors. Here are some of our bigger-picture takeaways from the event.
After plunging almost 50 percent from early May 2015 to mid-February 2016, the Alerian MLP Index has defied the critics and torched slow-to-react short sellers by surging 45 percent since its nadir. But the easy money has been made: Investors must now focus on which names are best-positioned to grow in an environment where energy prices remain lower for longer.
Activity levels and pricing for oil-field services and equipment will likely remain under pressure in the US onshore market this year, with early 2017 bringing a bit of a recovery on both scores. But a return to the levels witnessed during the boom years appears unlikely, especially if Saudi Arabia opts to tap some of its spare capacity to take market share and keep oil prices in check.
Although most investors focus on China’s impressive economic expansion over the past two decades, the accompanying environmental challenges will create significant opportunities for savvy investors. Solid local partnerships will be critical to any international company looking to profit from China’s clean-up effort.
Subpar economic growth doesn’t support the S&P 500’s inflated valuation multiples, which have reached their highest levels since the 1999-2000 tech bubble. As part of our ongoing effort to reduce risk, we exit two of our Wealth Builders Portfolio holdings.
Reality has started to set in for the tech sector: growth in the overall online audience has slowed, and the leading players and markets have become entrenched. These trends have left more than a few shareholders and device manufacturers wondering where their sales went. But some markets and companies will mature gracefully—and profitably.
Leaving the EU won’t do Britain’s already-weak economy any favors, while the move could also jeopardize the UK’s own union. We examine the political and economic climate in Europe and its implications for investors.
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