Often the biggest winners are companies that use new technologies to improve their bottom lines, rather than front line companies that invent them, suggests Jim Powell, editor of Global Changes & Opportunities Report.
The failure rate among cutting edge tech firms is high. By contrast, the companies that use new technologies can make good profits without exposing themselves to the wars that exist among the developers.
NextEra Energy (NEE) is a successful electric utility that is focusing on renewable power. The company has a market value of over $150 billion — which makes it one of the world’s largest utilities.
NextEra using both wind and solar power to increase its profits. When necessary, the company also uses nuclear, coal, oil, and natural gas to generate electricity.
The company uses whatever power source is the most suitable for each of the markets it serves. In an increasing number of cases, the best sources are proving to be renewable.
Unlike most power companies that have some wind and solar installations — often as show pieces — no electric utility in the US is using them as much as NextEra in its day to day operations. Moreover, as renewable energy costs decline, the company will replace its remaining reliance on fossil fuels.
Within a few years, I think renewable energy installations will be NextEra’s main source of power. NextEra Energy recently increased its growth outlook to 6% to 8% earnings per share through 2023. Dividends should increase proportionately. I think NEE has a bright future.
Sunnova Energy International (NOVA) is a more speculative company that has a renewable energy business with considerable promise. Unlike NextEra, Sunnova primarily serves residential and small business customers by installing and leasing solar systems that it then monitors, maintains, and upgrades as needed.
Sunnova is popular with customers who want solar power but not the hassles that are common with the installations and their often troublesome electronic controls. So far, Sunnova has wisely plowed all its revenues into expanding its business. This year, Sunnova should post its first profits.
Even more importantly, Sunnova also supplies reliable battery storage systems made by Tesla (TSLA) for many of its solar installations. The batteries make solar reliable for 24/7 power — which is greatly increasing its appeal to customers who do not wish to go into hibernation on cloudy days and at night.
Sunnova’s battery systems can also pay for themselves by allowing users to make use of low cost, non-peak electric utility rates. Recharging electric cars, running washing machines, and so on can be done using the batteries during nighttime hours when power costs are at their lowest.
