NextEra - Utility Of The Future?

09/10/20 03:19:03 PM

by Matt Blackman

Clean tech companies have weathered the financial downturn splendidly. This candidate also has an impressive long-term track record to boot!

Security: NEE
Position: N/A

In my ongoing search for companies that are helping lead the fourth industrial clean tech revolution, this company popped up that according to its website, is the largest producer of wind and solar energy with "between $50 and $55 billion in new infrastructure investments planned through 2022." As a utility company, NextEra Energy (NEE) stands to benefit in low interest rate environment especially in deploying cheap capital to build and acquire new assets.

Besides generating a 10-year return in excess of 400%, NEE has seen revenues grow 6.3% in the last four quarters, boasts a gross margin of 61% and more than 75% of its shares are owned by institutions according to the latest financial data. Another factor that makes it an attractive portfolio candidate is that it has a trailing dividend yield of 2.2% ($1.40/share quarterly) which has risen more than 5% in the last five years.

Figure 1. Daily chart of NextEra Energy showing the drop from February to mid-March and recovery back to pre-Covid19 levels together with its industry, Utilities � Regulated Electric, and the long-term linear regression line (red).

Graphic provided by: Freestockcharts.com.

Technically, NEE looks to be trying to build a new base in the $270-$280 range. However given how quickly it has risen since early July 2020 and since it is 17% overvalued according to it 1500-period linear regression line, it could also be due for a retracement. The market is also entering traditional September-October weakness and added uncertainty given the upcoming presidential election, which could increase volatility.

Figure 2. Weekly chart of NextEra Energy how it has performed over the last decade.

Graphic provided by: Freestockcharts.com.

On July 24, NextEra announced that it is joining the rush to produce green hydrogen with plans to build a $65 million pilot plant for Florida Power & Light to produce hydrogen from solar power. This hydrogen will replace a portion of natural gas power generation at FPL's Okeechobee gas fired plant. Currently the vast majority (in excess of 95%) of hydrogen is either grey or black produced from natural gas or coal so generate large amounts of greenhouse gas emissions (see articles below).

Unlike a number of companies in the clean energy/technology space, NextEra is not a "one-trick pony" and has a large portfolio and variety of energy generating assets. It is also aggressively moving to clean energy and has proven that it has the experience, technical skills and track record to help it continue to lead the market.

Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. Matt has earned the Chartered Market Technician (CMT) designation. Follow Matt on Twitter at www.twitter.com/RatioTrade

Title:	Author
Company:	TradeSystemGuru
Address:	Box 2589
	Garibaldi Highlands, BC V0N1T0
Phone # for sales:	6048989069
E-mail address:	indextradermb@gmail.com
Traders' Resource Links
TradeSystemGuru has not added any product or service information to TRADERS' RESOURCE.

Click here for more information about our publications!

PRINT THIS ARTICLE

Request Information From Our Sponsors

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

Comments or Questions?	Article Usefulness
	5 (most useful) 4 3 2 1 (least useful)

CHART ANALYSIS

NextEra - Utility Of The Future?

SUBSCRIBE TO OUR FREE EMAIL NEWSLETTER!

SUBSCRIBE TO OUR FREE
EMAIL NEWSLETTER!