Four Pick And Shovels Stocks

As a company’s stock price rises, more potential investments become non-dilutive, and investments that are already non-dilutive become even more attractive. The company’s private competitors will also benefit. They will find it easier to raise money from investors who use the valuations of publicly listed firms to determine what the firm is worth.  

If clean energy stock prices stay at their current level for a few months, we will see increasing numbers of companies going public through IPOs and Special Purpose Acquisition Companies (SPACs). We will also see more established companies raising money through secondary offerings.

The Gold Rush

As I learned when I took California History in elementary school, the most reliable way to make money in the state’s 1849 gold rush was to sell picks and shovels to aspiring gold miners. Three of the stocks in my Ten Clean Energy Stocks for the 2021 model portfolio are metaphorical picks and shovel suppliers to clean energy industries.

If Tesla’s stock price rise is any guide, there will be significant new investment flowing into manufacturing electric vehicles. Autoparts manufacturer Valeo, SA (FR.PAVLEEFVLEEY) specializes in vehicle electrification, autonomous driving, and comfort systems, so it’s clearly well-positioned to help automakers focus more on Tesla’s specialties: Electric and autonomous driving.

Global water, energy, and waste management giant Veolia (VIE.PAVEOEFVEOEY) is also firmly in the picks and shovels business, although their clients are more often large multinational companies and municipalities rather than clean energy firms. Yet Veolia is a potential beneficiary from the boom in clean energy stocks. They own and develop clean energy and recycling projects which could potentially be sold when acquisitive clean energy companies start bidding up the prices of clean energy projects. They also have access to valuable urban real estate at their municipal utilities where they could develop solar and wind projects for sale to clean energy firms with money to spend.

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Disclosure: Long VLEEF, UMICF, SALT, VEOEF

Disclaimer: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the ...

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