Morgan Stanley analyst Jessica Alsford’s Sustainability in 2022: Broader Thematics is an extraordinarily useful report for investors interested in renewable energy, identifying the subsectors ripe for investment and those that are likely a few years away.
The analyst began by quantifying the mammoth scale of decarbonization and ESG-related spending ahead. Investment flows into ESG funds increased to US$533-billion in the first 10 months of 2021, compared with $331-billion for all of 2020. Morgan Stanley expects that assets under management for sustainability investments will reach $6.5-trillion by 2025, an annual increase of 29 per cent annually.
Ms. Alsford believes that, globally, the decarbonization process is moving from a research and development stage to an execution phase where sustainable technologies are deployed at an increasing rate. She writes, “Decarbonization will continue to drive growth across sectors including renewables, EVs [electric vehicles], hydrogen, CCS [carbon capture and storage], renewable fuels and energy efficiency for the next 30 years.”
Morgan Stanley sees no specific catalyst for climate change-related investments in 2022 outside of the general secular trend. The analyst expects that individual success stories – best-in-class companies in related subsectors – will outperform significantly next year.
The report includes a table listing the stocks involved with each sustainable investing theme (I posted the table on social media here). Each sector was rated in terms of short-term economic attractiveness, from high to low.
The two sectors with high attractiveness ratings are Renewables and Energy Storage. SolarEdge Tech, Sunrun Inc., TPI Composites Inc., American Electric Power Co., and FirstEnergy Corp. are listed under renewables. SolarEdge and Sunrun are also involved with energy storage, the second theme, along with Quantumscape Corp.
Green Hydrogen is rated high-to-moderate in terms of attractiveness. The names included here start with Canada’s Enbridge Inc., along with New Fortress Energy LLC, Chart Industries Inc., Air Products and Chemicals Inc., Linde PLC, Chevron Corp., Baker Hughes Co. (A) and Schlumberger NV.
I am not in any way suggesting that readers randomly pick a few names from the list and add them to their portfolios. Morgan Stanley, however, has helpfully identified a number of promising candidates for further study, and they are all likely to be propelled by a multi-decade, profit-enhancing, secular growth trend.
-- Scott Barlow, Globe and Mail market strategist
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Stocks to ponder
Yamana Gold Inc. (YRI-T) This is a favourite gold stock of The Contra Guys, and they think it can do better than a double from its current trading price. The company just reported solid third-quarter numbers. Besides success with the shovel, in August Yamana redeemed all of the debt due from 2022 to 2024. Yamana has certainly had bad stretches. But contrarians Benj Gallander and Ben Stadelmann are confident in the company’s future.
Royal Bank of Canada (RY-T) Is this the right time to buy Canada’s biggest banking stock? With its valuation in-line with its historical average and potential catalysts on the horizon, Jennifer Dowty does a deep dive into the investment case.
Goodfood Market Corp. (FOOD-T) The once pandemic stock market darling lost about a third of its value on Wednesday after reporting disappointing quarterly results. The relaxation of pandemic-related lockdown measures caused consumers to eat more meals outside of the home during the quarter, dragging down sales and profits to levels well below what analysts were expecting. As Brenda Bouw reports, the outlook looks challenging from here.
The best way to confront inflation is with a game plan. Here are some investing ideas
Inflation is up, but there could be money to make from well-positioned companies able to pass along price increases. David Berman takes a look at some of them.
Investors hung their hats on Peloton and Zoom last year. What now?
Shares of companies like Peloton and Zoom Video, the online conference software that replaced face-to-face communications for countless schools and businesses, were darlings of the stock market for the better part of last year. But as the economic reopening gains speed — aided by rising vaccination numbers and promising new treatments for those who get sick — some of the stocks at the center of the so-called stay-at-home trade collapsed. As Matt Phillips of The New York Times reports, the pandemic darlings are not finished, even if their most explosive growth has petered out.
Perish the thought - stocks might fall in 2022
You almost have to re-read the small print for a reminder that stocks may ever fall again. The oft-used compliance disclaimer that the value of your investments may go down as well as up seems to be largely ignored by stock investors this days. And after a three-year winning streak, fund managers are clearly betting on another. Mike Dolan of Reuters reports.
- The 2021 Lipper Awards:
- Three small-cap stock picks from a $7-billion outperforming fund manager
- How this Lipper Award-winning portfolio manager is tackling investments in the resource sector
- How a hockey card collecting hobby inspired this $30-billion top-performing money manager
- Where three top-performing fund managers see investment opportunities outside of Canada
- Where a trio of Lipper Award-winning managers are finding fixed income returns
- Tips from Canada’s top-performing real estate fund managers on how play the volatile sector
- Six ways to play the cryptocurrency craze through ETFs
- How to reboot your portfolio with Canada’s ETF guru
- ETFs to own in a rising interest-rate environment
Others (for subscribers)
- Analysts’ forecast returns, recommendations and yields for all stocks in the S&P/TSX Composite Index
- Goldman Sachs forecasts modest rise for S&P 500 index in 2022
- Global investors ending 2021 in a ‘risk-on’ mood: BofA survey
- Number Cruncher: Drilling down into 10 top gold stock valuations
- Tuesday’s analyst upgrades and downgrades
- Wednesday’s analyst upgrades and downgrades
What’s up in the days ahead
- Why have AutoCanada shares gone into reverse? Tim Shufelt takes a look.
- Click here to see the Globe Investor earnings and economic news calendar.
Compiled by Globe Investor Staff