If you follow the stock market, as I have since April, you’ve seen these last two days of it being in the red. Since Friday it’s down some 900 points at the 5:20 pm close of after-market trading.
I don’t think the bleeding is over, though there may be some weak efforts at a rally in the few days left before election day.
With Covid-19 cases setting new records in the US, due to Trump’s poor response and failure to lead, coupled with the inability to pass another stimulus package, Wall Street investors are converting profits to cash, selling off positions.
When Trump loses the election I expect the stock market to have additional wild swings. Not because Trump lost, but because he will start filing lawsuits to contest it. It may be worse than when Gore contested his loss to G.W. Bush.
Gore finally conceded the election that involved “hanging chads” in the state of Florida, after it was finally decided (kind of) by SCOTUS. SCOTUS decided “time had run out” to devise a remedy, at which point Bush was still ahead in the count and the argument over hanging chads ended.
The DOW dropped 8 percent during the 36 days Gore contested the election and hanging chads went through the court system.
It’s going to be a wild horse to ride, if Trump puts America into a Constitutional crisis. He will expect his now heavily conservative SCOTUS to rule in his favor, if they are willing to get involved in a purely political maneuver by Trump to steal the election from the voters.
So, what’s a stock that may emerge relatively unscathed?
Nextera Energy Partners LP (NEP), a renewable energy business that has tripled in price since Trump was first elected. Not an easy feat, as numerous renewable energy corporations fell by the wayside, while Trump touted oil and coal.
Their dividend has increased every year since its inception and their Book Value is about twice that of their current share price.
NextEra Energy Partners acquires, owns, and manages contracted clean energy projects in the United States. The company owns a portfolio of contracted renewable generation assets consisting of wind and solar projects, as well as contracted natural gas pipeline assets. NEP went public in 2014.
If the Democrats orchestrate a sweep on Election Day and capture not only the Presidency but majorities in both houses of the legislature, it will have substantial ramifications for energy production in the United States.
Biden has promised a push toward developing more renewable energy platforms and unlike Trump, he doesn’t think wind turbines cause cancer. Biden also believes in solar power.
NEP is well positioned to take advantage of future projects supported by a new administration wanting to transition from dependence on oil.
Meanwhile, its cash flow continued its upward trajectory, rising 10% during the quarter and 50% so far in 2020. New projects it acquired last year powered that growth.
One of the highlights this quarter was that NextEra Energy Partners completed its first two organic growth projects. Those investments included repowering a 175-megawatt wind farm in Colorado and finishing a backup compression system to support its gas pipelines in Texas. It completed both on time and on budget despite COVID-19. Meanwhile, it has another 100-megawatt wind repowering project on track to start up by year-end.
In addition to drop-down acquisitions, NextEra Energy Partners could approve additional expansion projects, or complete more third-party transactions. The company has the financial flexibility to continue making more deals, especially after successfully converting $300 million of convertible debt into equity. It ended up issuing 25% fewer shares and saving $50 million in cash compared to selling equity at the time.
More importantly, NEP is strong enough to withstand deep plunges of the DOW, such as just occurred over the last two days. It survived the last two days, relatively unscathed, down only 38 cents from its close on Friday.
With a Book Value of between $117 and $123, depending on the analysts giving their opinions, NEP could be a two-bagger before 2023.
Putting my money where my mouth is, I took some profit from my REIT stocks and bought a large position in NEP, during one of its dips in price.
Notice: Any and all discussion of a stock or investing should not be considered financial advice and is for entertainment purposes only. I often lose my car keys and forget where I parked my car. I am not a financial advisor. Do your own analysis before investing.
Disclaimer: On January 4, 2016, the owner of WestEastonPA.com began serving on the West Easton Council following an election. Postings and all content found on this website are the opinions of Matthew A. Dees and may not necessarily represent the opinion of the governing body for The Borough of West Easton.
