Seven Clean Energy Investments to Buy as Biden Seeks U.S. Supply of Critical Materials

Paul Dykewicz

Seven clean energy investments to buy should be aided by President Joe Biden’s plans to develop domestic supply of critical materials to avoid dependence on China and other countries that may not prove to be consistently reliable trade partners.

The seven clean energy investments to buy are engaged in providing key minerals such as rare earth elements, lithium and cobalt that are needed in products used in computers and household appliances. The Biden administration has been examining U.S. “vulnerabilities” and exploring ways to assure clean energy technologies like batteries, electric vehicles, wind turbines and solar panels have access to the key inputs they need.

The White House projects global demand for these critical minerals will “skyrocket” by 400-600% in the next several decades. The demand for minerals such as lithium and graphite used in electric vehicle (EV) batteries will increase by as much as 4,000%, the Biden administration forecasts.

However, the United States increasingly is dependent on foreign sources for many of the processed versions of these minerals. For example, China controls most of the market for processing and refining for cobalt, lithium, rare earth elements and other critical minerals.

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Critical Minerals Supply Chain Needs Domestic Development

In June 2021, the Biden administration released a supply chain assessment that found America’s overreliance on foreign sources and adversarial nations for critical minerals and materials posed national and economic security threats. However, the seven clean energy investments to buy are positioned to tap into these opportunities.

One is Albemarle Corporation (NYSE: ALB), a specialty chemicals manufacturing company in Charlotte, North Carolina, that operates three divisions: lithium, bromine specialties and catalysts. The company ranks among the largest providers of lithium to meet growing demand for electric vehicle (EV) batteries.

“ALB is definitely one to feature,” said Jim Woods, who heads the Successful Investing and Intelligence Report investment newsletters, as well as the Bullseye Stock Trader and High Velocity Options trading services. 

Albemarle’s share price has risen 6.46% in the past week and 26.45% for the last month, while falling 3.14% for the year to date, after surging 50.99% in the past 12 months. Albemarle offers a current dividend yield of 0.7% and has averaged a five-year return of 14%.

Chart courtesy of www.stockcharts.com

Albemarle is a current recommendation in the Intelligence Report investment newsletter that Woods leads. The stock is part of his Income Multipliers portfolio that seeks to include dividend-paying investments.

Paul Dykewicz meets with Jim Woods, who leads the Successful Investing and Intelligence Report investment newsletters.

Seven Clean Energy Investments to Buy Include Metals & Mining ETF

The SPDR S&P Metals & Mining ETF (NYSE: XME) seeks to provide investment results that correspond generally to the total return of the S&P Metals and Mining Select Industry Index. The metals & mining segment comprises sub-industries that include aluminum, coal & consumable fuels, copper, diversified metals & mining, gold, precious metals & minerals, silver and steel. Although the fund includes many metals and mining stocks that do not encompass those considered critical materials by the Biden administration, Woods still recommends it for investment purposes.

“If you want targeted sector exposure to U.S. companies engaged in the extraction of metals and other natural resources, then you need XME,” said Jim Woods, editor of Successful Investing, Intelligence Report and Bullseye Stock Trader.

“This exchange traded fund, whose full name is the SPDR S&P Metals & Mining ETF, contains the biggest and arguably the best metals and mining stocks in the market today,” said Woods, who also teams up with Mark Skousen on the Fast Money Alert trading service. “And as natural resource prices climb, XME may also serve as a hedge against commodity inflationary.”

The ETF has been ascending during the past year by climbing 0.32% in the last week, 5.10% in the last month, 39.75% for the year to date and 54.80% in the last 12 months. XME also offers a modest dividend yield of 0.4% and has amassed total assets of $3.5 billion.

Chart courtesy of www.stockcharts.com

Seven Clean Energy Investments to Buy Could Strengthen America’s National Defense

President Biden announced on March 31 that he will issue a directive authorizing the use of the Defense Production Act (DPA) to secure American production of critical materials to reduce reliance on China and other countries for the minerals and materials that power clean energy. Specifically, the DPA will be authorized to support the production and processing of minerals and materials such as lithium, nickel, cobalt, graphite and manganese that are used for large-capacity batteries.

The sectors such as transportation that are supported by these large-capacity batteries account for more than half of U.S. carbon emissions, according to the White House. President Biden also indicated he is reviewing potential uses of DPA for more than minerals and materials to secure “safer, cleaner and more resilient energy” for America.

Russian President Vladimir Putin’s invasion of neighboring Ukraine and his troops’ assaults against hospitals, schools, residential areas, churches, nuclear power plants and a theater used as a shelter serve as a reminder of how quickly critical minerals can be cut off. Russia’s invasion of Ukraine led to a shortage of neon gas and palladium, which are crucial to the manufacture of computer chips.

Roughly 45-54% of the world’s semiconductor-grade neon that is critical for the lasers used to make chips comes from two Ukrainian companies, Ingas and Cryon. Plus, Putin’s invasion of Ukraine has spurred economic sanctions from the United States, the United Kingdom, Canada, Japan, South Korea, Australia and the European Union to pressure him to call his troops home and stop killing civilians in acts of violence that recently led President Biden to blast the Russian leader’s brutality.

Carlson Chooses COMT as Third of Seven Clean Energy Investments to Buy

President Biden’s proposal reinforces several recommendations of Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter.

Carlson recommended broad-based commodities investments that he said should do well at this time. One is the iShares GSCI Commodity Dynamic Roll Strategy ETF (NASDAQ GM: COMT). That ETF seeks to track the investment results of an index composed of a broad range of commodity exposure.

The fund gives investors access to commodities across energy, metals, agriculture and livestock sectors through a rules-based futures strategy designed to minimize costs associated with futures investing. The ETF also simplifies tax filings by not requiring K-1 tax reporting. The fund further uses a diverse commodities portfolio to help protect against inflation.

Chart courtesy of www.stockcharts.com

COMT has pulled back lately by dipping 0.42% in the past week and 4.02% in the last month, but it is up 30.60% so far in 2022 and 60.34% in the past 12 months.

DBC is Fourth of Seven Clean Energy Investments to Buy

The Invesco DB Commodity Index Tracking Fund (NYSE ARCA: DBC) is another way to invest broadly in commodities, Carlson commented. DBC edged up 1.65% in the last week, dipped 1.85% in the past month, but climbed 26.12% since the start of 2022 and 27.57% in the past 12 months.

The fund is designed for investors who want a cost-effective and convenient way to gain exposure to commodity futures. The rules-based index followed by DBC tracks futures contracts on 14 of the most heavily traded and important physical commodities in the world. The fund and the Index are rebalanced and reconstituted annually in November.

The fund is not suitable for all investors due to its speculative nature. Futures contracts are inherently volatile. Plus, frequent moves of market prices for the underlying futures contracts may cause large losses.

Chart courtesy of www.stockcharts.com

AAASX is Fifth of Seven Clean Energy Investments to Buy

Another choice is a broader-based real assets portfolio such as DWS RREEF Real Assets Fund (AAASX), Carlson continued. The mutual fund aims to create a holistic portfolio of real assets across real estate, infrastructure, natural resource equities, commodity futures and Treasury Inflation-Protected Securities (TIPS).

Even though the fund does not focus solely on clean energy, its broad nature aids in diversification to reduce risk. The fund has produced returns of 0.44% for the past week, 3.42% in the last month, 4.78% since the start of 2022 and 20.69% in the latest 12 months.

Chart courtesy of www.stockcharts.com

PICK Offers the Sixth of Seven Clean Energy Stocks to Buy 

Carlson also chose iShares MSCI Global Metals and Mining Producers (PICK). He began recommending the exchange-traded fund (ETF) last fall and has seen it rise by double-digit percentages.

PICK has climbed 1.53% in the past week, 3.61% for the last month, 21.07% so far in 2022 and 25.58% in the past 12 months. The ETF tracks an index of global mining companies that excludes gold and silver miners.

Chart courtesy of www.stockcharts.com

The index consists of 216 stocks, but its capitalization weighting means 50% of the fund is in its 10 largest positions. Top holdings recently consisted of BHP Group Ltd. (NYSE: BHP), Rio Tinto Limited (OTCMKTS: RTNTF), Vale S.A. (NYSE: VALE), Freeport-McMoRan Inc. (NYSE: FCX) and Anglo-American plc (OTCMKTS: NGLOY).

“I was attracted to this ETF even before the invasion of Ukraine,” Carlson commented. “The mining companies had gone through a long bear market. They worked to reduce debt and otherwise clean up their balance sheets. Their more efficient operations mean most of them can profit at relatively low prices for their commodities and will earn strong profits as prices rise. The strong global demand, combined with the recent supply shocks, make them more attractive.”

Bob Carlson, head of Retirement Watch, talks to author Paul Dykewicz.

Roughly 23% of the fund is in North American-based companies. Other leading regions in the fund are the United Kingdom, 13%; Developed Europe, 9%; Emerging Europe, 4.9%; and Africa/Middle East, 4.9%.

Portia Capital Management President Prefers PICK to Provide Mining Diversification

Michelle Connell, a former portfolio manager who now is the president and owner of Dallas-based Portia Capital Management, said she also likes PICK to diversify beyond a pure play mining stock through a single investment.

Michelle Connell, CEO, Portia Capital Management

“There are several reasons for my rationale,” Connell said.

One, PICK holds a “plethora of companies” that have strong fundamentals, Connell counseled. Second, PICK’s dividend yield is compelling at nearly 5%, she added.

PICK provides exposure to worldwide mining and production of diversified metals, except for gold and silver. The investment rationale is to buy a basket of diversified metals — many of them necessary for manufacturing — as an inflation hedge.

One point of caution is that PICK is market-cap-weighted, with its top 10 stock holdings comprising more than 50% of the ETF’s portfolio. As a result, underperformance by any of those key positions could crimp the fund’s returns, Connell continued.

Freeport-McMoRan (NYSE: FCX), of Phoenix, Arizona, ranks near the top of the ETF’s biggest positions. The company owns copper mines across the globe. With copper in short supply and used in many manufacturing processes, including green technology and electric vehicles, Freeport-McMoRan is strong fundamentally and its 12-month upside is 30-40%, Connell continued.

Green Metals Fund Is Seventh of Seven Clean Energy Stocks to Buy 

Connell further proposed buying the VanEck Green Metals ETF (NYSE ARCA: GMET) that launched November 9, 2021. She praised its “basket approach” of owning high-risk investments and metals/materials as commodities that could be regarded as high risk.

GMET seeks to track the price and yield performance of the MVIS Global Clean-Tech Metals Index (MVGMETTR). The fund aims to mirror the performance of companies involved in the production, refining, processing and recycling of green metals that are used in the applications, products and processes that enable the energy transition from fossil fuels to cleaner energy sources and technologies.

The ETF has $28.5 million in total net assets and offers dividend income, too. Key selling points for the ETF include the fact that certain metals are critical to energy transition. Its holdings offer comprehensive global exposure, and demand for “green” metals is outstripping supply.

A transition to a low-carbon economy cannot happen without green metals such as cobalt, copper, lithium, rare earths and zinc. The fund’s portfolio provides access to companies involved in the production of green metals globally, including China A-shares. Part of the investment case is that future production of key minerals may not be sufficient to meet supply.

Chart courtesy of www.stockcharts.com

President Biden Calls Putin a ‘War Criminal’ for ‘Brutal’ Acts in Ukraine

The need for sourcing critical materials domestically for clean energy was underscored when President Biden said on Monday, April 4, that he regards Putin as a “war criminal” for ordering Russian soldiers to invade Ukraine, where news reports have documented the rape of women and girls, as well as the execution of some of them and those of many civilian males. With the documented killing of civilians who were bound and shot in the heads and chests, President Biden said he is planning to add further sanctions against Russia.

Putin is “brutal” and the killing of civilians by Russian troops needs to be documented for a potential “wartime trial,” President Biden said. Meanwhile, Ukraine further should be provided with the weapons it needs to “continue the fight” to defend against Russia’s invasion, he added.

The killing of many civilians in Bucha, Ukraine, and other cities in the country is “outrageous,” said President Biden, who previously announced economic sanctions against Russia and called Putin a “butcher” for ordering his troops to attack Ukrainian men, women and children in hospitals, schools, residential areas, churches and a theater used as a shelter. Putin’s forces also attacked Ukrainian nuclear power plants and reportedly were exposed to significant levels of radiation by taking control of them at gunpoint.

Czech Internet Businessman Responds to Horrific Treatment of Ukrainians With Big Donation

Bodies in mass graves, strewn on streets or hidden in homes have shown firsthand the horrors of Russia’s war against Ukraine. The latest corporate leader to speak out against the killings came forward on Monday, April 4, when Ivo Lukačovič, a Czech businessman and founder of internet company Seznam.cz, announced he would send 100 million Kc (roughly €4 million) of his own funds to assist Ukraine.

He cited horrific footage from the town of Bucha that first appeared on April 1 after the retreat of Russian troops from the area. The videos documented corpses of hundreds of dead civilians where the Russian forces had just left.

Fears are high among Ukrainian leaders and others that such atrocities could occur or may already have taken place in other towns and cities still occupied by Russian forces in violation of international law.

The 48-year-old entrepreneur and billionaire posted on Twitter that the video evidence of inhumanity by the Russian troops appalled him. As a result, Luckovich pledged to dedicate part of his private wealth to buy weapons for the Ukrainian army.

In early March, Seznam announced it would allocate up to 100 million Kc to donate to non-governmental organizations (NGOs) and associations helping Ukrainian refugees. In February, Lukačovič personally committed to donate 23 million Kc for that same purpose.

COVID-19 Cases Surge in China, Cause Lockdowns, Take Children from Parents

COVID-19 has caused cases to surge in China, with Shanghai now the country’s hotspot. All 25 million residents there were placed in lockdown, as the Chinese military and extra health workers were sent to assist in the response.

China reported more than 20,000 new cases on Tuesday, April 5, setting a record in the country where the virus originated in Wuhan during 2020 when the global pandemic began. Young children with COVID-19 have been separated forcibly from their parents, fueling public dissent, as Chinese leaders seek to stop the spread of a new, highly contagious subvariant of Omicron, BA.2. The variant also is spreading a new wave of infections in Europe, where COVID cases are climbing in Germany, the Netherlands and Switzerland.

COVID-19 deaths worldwide exceeded 6.1 million to total 6,159,056 on April 6, according to Johns Hopkins University. Cases across the globe have jumped by more than 8 million in the past week to 493,710,804.

U.S. COVID-19 cases, as of April 6, hit 80,209,028, with deaths rising to 982,585. America has the dreaded distinction as the nation with the most COVID-19 cases and deaths.

As of April 5, 255,838,817 people, or 77.1% of the U.S. population, have obtained at least one dose of a COVID-19 vaccine, the CDC reported. Fully vaccinated people total 217,955,850, or 65.6%, of the U.S. population, according to the CDC. In addition, 98,168,087 people have received a booster dose of COVID-19 vaccine, up about 750,000 in the past week, compared to roughly 300,000 during the prior week.

The seven clean energy investments to buy offer one stock and six funds that provide exposure to the shift away from fossil fuels that the Biden administration is advocating. However, many of the funds are diversified in a variety of metals and mining activity to enhance investment returns while the clean energy movement slowly gains ground, as many European countries seek to stop buying oil and natural gas from Russia but need alternative sources of fossil fuel production to fill the void.

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, Guru Focus 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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