Five Investments to Buy Signaled by National Guard Response to Recent Emergencies 

Paul Dykewicz

Five investments to buy should benefit from the National Guard response to civil and COVID-19 emergencies in the United States that highlight companies expected to receive increased demand for their goods and services.

The five investments to buy in the wake of National Guard activations in 46 states and territories provide products and services such as generators that can operate when other power is out, sell advanced communication and broadband devices, provide online sales worldwide and offer supplies for home renovation and repairs. The emergencies have led to the activation of almost 13,000 citizen-soldiers for COVID-19 response nationwide that is approved through April 1, 2022.

Kentucky took the brunt of damage on Dec. 10 that caused 76 confirmed deaths there when multiple tornadoes struck. Gov. Andy Beshear said on Dec. 21 that no additional Kentuckians currently were considered missing from the storms, adding that search and rescue efforts had ended. 

Post-tornado search and rescue missions occur on Dec. 12 in Mayfield, Kentucky. Photo courtesy of Spc. Brett Hornback of the Kentucky National Guard.

Kentucky Tornadoes and National Guard Response Highlight Five Investments to Buy

The most severe tornado that blitzed Kentucky received a rating of EF-4 from the National Weather Service. That tornado pummeled western Kentucky with winds that hit 190 mph while traveling 165 miles on the ground and causing widespread damage.

Almost 500 members of the Kentucky National Guard are on duty to augment law enforcement and assist with traffic control. A total of 15 tornadoes touched down in Middle Tennessee on Dec. 11 and 12, killing five people and injuring 10 others in the state.

Six workers died when an Amazon.com Inc. (NASDAQ: AMZN) warehouse was struck and severely damage by a tornado in Edwardsville, Illinois. The company received a Dec. 20 letter sent to its CEO Andy Jassy and its founder Jeff Bezos by Democratic lawmakers who claimed the Dec. 10 disaster at the warehouse fits a pattern of Amazon putting “worker safety at risk” in everyday situations and emergencies.

Five Investments to Buy Gain Spotlight Amid Civil and COVID-19 Crises 

The response of National Guard troops and airmen to the emergencies indicate investments to buy when wicked winds, pelting rain and building collapses decimate communities. Governors refrain from activating the National Guard unless a genuine emergency occurs, so such actions give investors an early sign of what to buy and sell.

“These incidents, plus global growth, mean the strong demand for commodities will be sustained,” said Bob Carlson, who heads the Retirement Watch investment newsletter. “Most people are underinvested in commodities. Yet, lumber and other commodities are approaching recent highs and are likely to continue rising.”

Pension fund and Retirement Watch chief Bob Carlson answers questions from columnist Paul Dykewicz.

One way to invest in commodities with a single purchase is to buy shares in an exchange-traded fund (ETF) that offers a diversified basket of such equities, counseled Carlson, who also serves as chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets.

While there are many comparable ETFs and exchange-traded note (ETNs), Carlson recommends the iPath Bloomberg Commodity Total Return (DJP). That ETN is designed to track the performance of the Dow Jones-UBS Commodity Index Total Return.

DJP is about 50% allocated to energy commodities, which is typical of most commodity-focused funds, Carlson continued. The rest of the fund’s holdings are allocated to industrial and agricultural commodities.

Chart courtesy of www.stockcharts.com

Generac Holdings Is One of Five Investments to Buy Amid Civil and COVID-19 Crises

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Generac Holdings Inc. (NYSE: GNRC) is a Waukesha, Wisconsin-based provider of power generators, energy storage systems, grid services and other power-producing products that serve the residential, light commercial and industrial markets. The company is a new recommendation of Bank of America Global Securities. 

At times when local power sources are down, portable generators provided by Generac literally can save lives. The company holds an estimated 80% market share for North American residential standby generators.

Generac also recently has invested in a backup solar energy storage business that is growing rapidly, while also maintaining a large commercial and industrial business that accounts for about 40% of sales, BoA Global Research wrote in a recent research note. The company stands out for its clean energy strategy and benefits from extreme weather, growth in renewable energy and rising customer demand to protect their lifestyle like a sanctuary amid pandemics, hurricanes and wildfires.

BofA Gives Generac a Price Target of $475 as One of Five Investments to Buy

BofA’s $475 price objective on Generac is based on a 26.5x 2022 estimated enterprise value (EV) / earnings before interest, taxes, depreciation and amortization (EBITDA). The investment firm’s target multiple is at a premium to faster, secular growth industrial peers that trade around 15-20x EBITDA, reflecting Generac’s dominant market position in home residential backup power.

However, Generac trades at a discount to clean tech alternatives that have similar growth trajectories and profitability characteristics. Such clean tech companies are valued at multiples above 30x consensus EBITDA.

Chart courtesy of www.stockcharts.com

Risks to Generac attaining BofA’s price target include supply chain inefficiencies and rising costs that could slow an expected first-half 2022 recovery in margins, BofA wrote. Additional risks entail a possible reduction in power outages, any disappointing home standby orders during the next six month, increased competition in the energy storage market, any large clean energy acquisition that requires the company to issue new shares, unfavorable regulatory changes and any mistakes in trying to penetrate new markets.

Outperformance of the price target may come from another round of severe power outages, growing demand in California and Texas, faster-than-expected demand and margin upside in the clean energy business, stronger-than-expected demand recovery in key commercial and industrial (C&I) markets such as telecommunications and surprisingly strong growth of previously acquired Enbala Power Networks.

Apple Joins Five Investments to Buy in the Wake of National Guard Emergency Responses

For most of 2022, Cupertino, California-based Apple Inc. (NASDAQ: AAPL) has underperformed the S&P 500 index up until the last month when it started to outperform the index. BofA recently wrote that the provider of iPhones, iPads and many other communication and broadband devices offers the safety of a large capitalization stock with good cash flow and a positive outlook for its planned augmented reality (AR) and virtual reality (VR) product.

The civil and COVID-19 emergencies should only enhance the already strong appeal of existing and planned Apple products. Plus, BofA wrote that some portfolio managers that had underweighted Apple may want to own the shares before end-of-the-year holdings are finalized.

BofA forecasts that Apple will introduce an augmented reality/virtual reality headset either by the end of 2022 or early 2023. The investment firm predicts the technology will become an industry “game-changer,” enabling many new applications. 

The product will require high-performance hardware and higher access speeds. The enhanced outlook for Apple caused BofA to upgrade its rating on the stock to “Buy” from “Neutral” and boost its price target on the company to $210 from $160.

Chart courtesy of www.stockcharts.com

Expect a stronger iPhone upgrade cycle in fiscal year 2023, driven by the need for higher connectivity where augmented reality becomes the “killer application” for 5G, BofA predicted. 

Amazon Gains a Place in the Five Stocks to Buy Amid Emergencies

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Despite Seattle-based online retailer Amazon.com Inc. (NASDAQ: AMZN) recently receiving a critical letter from Democrats in Congress who claimed the company sacrificed worker safety in pursuit of profits when tornadoes torn apart the company’s warehouse in Edwardsville, Illinois, the company’s prospects still shine. In fact, Amazon is ranked by BofA as the top FANG stock for 2022. One reason is that Amazon unperformed in 2021 and could and could be poised for a bounce back.

BofA not only advanced its rating on Amazon to a “Buy,” but the investment firm boosted its price target to $4,450 from $4,250. As the calendar moves to the summer and fall of 2022, expect eCommerce strength as online penetration gains renewed momentum, BofA wrote.

The prospects for Amazon should improve during 2022 to end much better than it starts, BofA wrote. The investment firm predicts Amazon will gain a lift from supply chain improvements and infrastructure investments.

Chart courtesy of www.stockcharts.com

Lowe’s Lands on List of Five Investments to Buy During Emergencies

Mooresville, North Carolina-based home-improvement giant Lowe’s Companies Inc. (NYSE: LOW) should only gain additional business from the civil and COVID-19 crises, based on its past performance with the pandemic and hurricanes. Destroyed or damaged houses and buildings always need to be replaced or fixed, respectively.

Lowe’s sells the home-improvement supplies and tools that are needed to recover from such as calamity. Even before the disaster, the potential of Lowe’s had been brightening, according to BofA.

The investment firm’s September 2021 survey about working from home reported that respondents intend to spend more on home improvement in the next 12 months than they did in the last 12 months. Therefore, even on top of 2020’s unprecedented growth, home improvement spending in 2021 is reaching even higher levels.

Following Lowe’s strong third-quarter results, BofA raised its estimates and price objectives on the stock, as well as affirmed its “Buy” rating on the company.

BofA placed a $292 price target on Lowe’s, giving it a 22x 2022 earnings per share estimate. A valuation multiple above the five-year average of 15x is warranted for Lowe’s due to its solid fundamentals and the relatively defensive nature of the home-improvement industry, BofA opined. 

“In addition, LOW has an opportunity to expand margins for several years through continued productivity improvements and product differentiation,” BofA wrote.

Chart courtesy of www.stockcharts.com

COVID-19 Crisis Spares Five Investments to Buy from Big Fallout

The holiday season of 2021 marks the second straight year COVID-19 has disrupted the plans of families and their friends to gather. Scientists have found that the new Omicron variant of COVID-19 is spreading faster than other coronavirus strains but its severity compared to the highly infectious Delta variant is unclear.

Omicron has become the dominant variant of COVID-19 in the United States, accounting for nearly three-quarters of new infections last week.

Almost 42,600 people tested positive in New York City from Dec. 15 through Dec. 18, compared with fewer than 35,800 in the full month of November. It is the highest number of people to test positive in such a short period of time in New York City since testing became widely available. 

In Britain, coronavirus infections have soared 60% in the past week. That led to Omicron bumping off the Delta strain as the dominant variant there.

COVID-19 Risk Remains a Worry as Cases and Deaths Climb

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The new Omicron variant of COVID-19 and the highly transmissible Delta variant are causing continuing concerns in the United States and other parts of the world. Public health experts and government leaders keep advocating for increased vaccinations and booster shots, as well as indoor mask wearing.

Airman 1st Class Tenzin Dakar, an aerospace medical technician with the 104th Medical Group, and Spc. Michael Major, a unit supply specialist with the 125th Quartermaster Company, help with COVID-19 testing in Massachusetts on Nov. 17.

The Centers for Disease Control and Prevention (CDC) has data that show the variants are boosting the number of people receiving COVID-19 vaccinations. But close to 62 million people in the United States remain eligible to be vaccinated but have not seized the opportunity, said Dr. Anthony Fauci, the chief White House medical adviser on COVID-19.

As of Dec. 22, 241,132,288 people, or 7.6% of the U.S. population, have received at least one dose of a COVID-19 vaccine, the CDC reported. The fully vaccinated total 204,578,725 people, or 61.6%, of the U.S. population, according to the CDC.

COVID-19 deaths worldwide, as of Dec. 22, exceeded the 5.3 million mark to reach 5,369,231, according to Johns Hopkins University. Worldwide COVID-19 cases have topped 276 million, climbing to 276,246,019 on that date.

U.S. COVID-19 cases, as of Dec. 22, hit 51,272,861 and caused 810,045 deaths. America has the dubious distinction as the nation with the most COVID-19 cases and deaths.

The five investments to buy amid the current civil and COVID-19 emergencies should be among the 2022 success stories. The National Guard activations often are the first indicator that a crisis is brewing and investors would be wise to pay attention to find opportunities to pursue without missing the market’s next upturn.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.

 

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