The total market capitalization or value of the company does not change. It will simply be distributed among a smaller number of shares.

A shareholder who has an uneven number of shares, for example, holding 52 shares in a 1:5 reverse stock split, will be given 10 newly merged shares and cash for the remaining 2 shares.

All the shares of the company are subjected to this change. Usually, your broker will notify you and take care of any required changes to your records.

Learn more: Dive into our top picks for the best online brokers and elevate your trading experience to new heights.

Reasons for a Reverse Stock Split

Companies typically use a reverse stock split to increase the per-share price of the company. There are several reasons why a company would do this.

• Avoid a “penny stock” classification. Stocks in the “penny stock” group are often viewed as risky and of low quality. Many institutions will not buy them at all, and some brokers may restrict penny stock trades.
• Increase interest in the stock. More expensive stocks tend to catch more attention.
• Avoid delisting. Some stock exchanges require a minimum share price for a listed stock. If a company’s stock price has declined below this level, a reverse split can be done to avoid a de-listing.

Most of these situations occur because a company’s stock has experienced a significant decline in value.

Learn more: Beginner in investing? Get to know the basics of stocks vs bonds in our latest post.

Are Reverse Stock Splits Bad?

By itself, a reverse stock split is not a bad or a good thing, but it often indicates trouble in a company.

For example, if it happens after a large and persistent share price decline, this could indicate that the company is not doing well, and is losing money and/or the trust of investors.

On the other hand, if this is a way to promote the company and speed up the moment when the stock will trade at a higher level, it can be a good thing and bring the stock onto the radar of institutional investors. This might be the case for a growing company, or a startup that has now developed a viable product and business.

A reverse split can be done because a company currently trading on the OTC (Over-The-Counter) plans to move up to a major exchange with a minimum stock price. In this case, a reverse split could be a positive sign.

How to Profit From a Reverse Stock Split

There is no guaranteed way to profit from a reverse split (or any other stock adjustments), but there are some exploitable situations to watch for.

Short Selling

One way to profit from reverse stock splits is to use them as an indicator of a company in trouble. If the financial metrics match, this could be a good stock to short. as the reverse stock split might trigger more selling and price weakness.

Repeated reverse stock splits are a particular red flag, as they are likely to indicate a continued and drastic loss of value.

Be careful, especially if you don’t have experience with short selling! Short trading strategies can be dangerous and expose traders to almost unlimited losses.

Navigating #reverse-stock-splits? Our guide explains how you can potentially profit from them. #StockInsights

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Reorganization

Reorganization is another way one can profit from a reverse stock split. Some companies, especially large conglomerates, can reorganize their business structure, sell assets, merge departments, and take other steps designed to increase the long-term profitability of the company.

These moments are sometimes also used to do reverse split, in order to put the price per share more in line with competitors and the industry’s standards. A recent example was GE.

The purpose of the reverse stock split was to reduce the number of our outstanding shares of common stock to levels that are better aligned with companies of GE’s size and scope and a clearer reflection of the GE of the future, not the past.

It also marks another step in GE’s transformation to be a more focused, simpler, stronger high-tech industrial company.

GE CEO

In this case, it might indicate a renewed focus, a better strategy, and improved use of capital moving forward. This might indicate a stock with a higher chance to grow in price.

Sneaky Privatization

The last way to profit from a reverse stock split, which occurs rarely but is technically possible, is for a reverse stock split to be used to force the majority of small investors out of the company.

Shareholders who don’t own enough shares to receive at least one post-split share will receive cash instead.

For example, a 1:1000 reverse stock split could be used to force out all small shareholders. When a publicly listed company falls below a certain threshold for its total number of shareholders, it can be forcibly taken private.

This is rare, but it has been known to happen for startups and other companies with some very large shareholders (like early investors or founders) interested in pushing out minority shareholders and taking the company private. This might be quite dubious morally, but will be legal most of the time.

In these cases, this indicates extreme confidence by the majority shareholders in the future prospects of the company. You could decide to ride along and keep the shares.

This can be risky, as clearly the management does not have minority shareholders in mind, and might do other things later on that would reduce the returns on this investment.

Learn more: Delve into our guide on how companies create value for shareholders, enhancing investor understanding and expectations.

Conclusion

Reverse stock splits can be confusing for investors, especially non-professionals. But in most cases, they are not very significant events. Even when they come after a severe stock price decline, it is that decline that matters, with the stock split a mere symptom of the underlying issue.

It could be worth looking at the company website for its official announcement and the explanation for it. Most management teams will clearly specify why they are doing a reverse split. Understanding the reasons behind the move may help you determine the most appropriate reaction.

If you’re looking to profit from a reverse stock split, be careful. You’ll need to examine the situation carefully and reach an accurate conclusion on why the reverse split is happening and what the outcome will be. It’s a potentially profitable strategy, but there are also substantial risks.

The post How to Profit From a Reverse Stock Split appeared first on FinMasters.

There are several ways for small investors to add real estate to their portfolios. One of the simplest is through Real Estate Investment Trusts (REITs). These investment vehicles acquire and manage real estate assets for their shareholders.

Because REITs are publicly traded and handle hundreds or thousands of properties, they are more diversified and more liquid than individual real estate properties.

REITs are required to pay at least 90% of their taxable income to their shareholders, and most investors own REITs for the dividend income.

The Best Real Estate Stocks

Most REITs invest in “classical” properties, like flats, houses, and commercial properties. Other REITs focus on a specific type of real estate, like hotels or warehouses, or even more specialized assets like data centers, hospitals, or cell phone towers.

In this article, we will look mainly at “classic” REITs and then discuss some of the more interesting specialized REITs.

We’ll try to offer a diverse view of the sector and focus on a few of the best real estate stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best real estate stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

Learn more: If you’re new to property investment, our article outlines how to start investing in real estate effectively.

1. Realty Income Corporation (O)

Market Cap	$39.9B
P/E	42.07
Dividend Yield	5.48%

Realty Income is a 54-year-old REIT managing 13,118 commercial properties, primarily retail, with stores and restaurants making up the bulk of the properties. They generate $3.8B in annualized rent from 1,303 clients.

The Company focuses mainly on US properties, with 10% of the portfolio in Europe, mainly in the UK). The largest clients of the REIT are Dollar General, Walgreens, and Dollar Tree.

The company has grown its dividend for 29 consecutive years, achieving a 4.4% compound annual growth rate (CAGR). It has grown its returns at a 14.2% CAGR since listing on the NYSE in 1994. This led to Reality Income being incorporated into the S&P 500 Dividend Aristocrats index in 2020.

The company has no exposure to the office real estate market following its merger with Vereit in 2021 and the spinning off of all office properties.

Reality Income’s stability and relatively high dividends are its main attractions, with most of its income coming from companies with very strong brands and business models. This is one of the best real estate stocks for investors looking for exposure to the retail industry.

Learn more: Explore our curated list of the best books on real estate investing to enhance your knowledge and skills.

2. AvalonBay Communities, Inc. (AVB)

Market Cap	$25.8B
P/E	20.46
Dividend Yield	3.64%

AvalonBay is a REIT specializing in properties in “regions characterized by growing employment in high wage sectors of the economy, lower housing affordability and a diverse and vibrant quality of life”. Or, in simpler terms, high-end apartments in expensive areas. This places AvalonBay among the best real estate stocks for exposure to the most profitable segment of the residential sector.

AvalonBay is looking to grow in selected markets, with 3,600 new deliveries by the end of 2024, adding to the 89,000 apartment homes it already owns in 295 communities and 12 US regions.

This focus on high-end properties has so far paid off for AvalonBay, with an 11.3% CAGR performance since its IPO and a 4.8% annualized dividend growth.

It is also developing AvalonConnect, an integrated Internet, WiFi, and Smart Home offer, increasing the value and convenience of the home it is renting.

This strategy also means that AvalonBay’s results are likely going to be quite tightly correlated with the overall financial health of the US, especially the stock market and tech industry, considering its presence in California and the Northern East Coast.

Learn more: Discover the best real estate investment apps that can help streamline your investment journey.

3. Equity Residential (EQR)

Market Cap	$24.4B
P/E	30.31
Dividend Yield	4.12%

Equity Residential was founded in 1968 by legendary real estate investor Sam Zell, a pioneer of REITs and public real estate companies, providing major tax advantages to its investors.

I did not invent the modern REIT industry, but I helped make it dance…

Sam Zell

The company is currently managing 304 properties with a total of 80,212 apartment units. The company is focused on major US urban centers in California, Boston, NY, Washington DC, and Seattle.

Equity Residential focuses on affluent renters with high levels of education and income, with most residents enjoying an average annual income of $172,000 and paying only 20% of their income in rent. This allows the company to show a very strong 96% occupancy rate and a rent growth rate of 3.9% in April 2023.

Equity Residential has grown returns at an 11.1% CAGR since its 1993 IPO, with dividends growing at a 6.4% CAGR.

The company has also been at the forefront of innovation in real estate, adopting electronic lease signing in 2008 and cloud-based services and self-guided tours in 2012. It is now investing in EV chargers, building-wide WiFi, smart homes, and IoT (Internet of Things).

Since its foundation, Equity Residential has been a leader in innovation in real estate, and it is likely that even with the death of its founder, this entrepreneurial DNA will continue to make this company stand out in the best real estate stocks market.

With a large exposure to the Californian and Seattle markets, the company is likely to do well as long as its tenants working in the tech industry are prospering.

4. Simon Property Group, Inc. (SPG)

Market Cap	$42B
P/E	17.05
Dividend Yield	6.86%

Simon Property is focused on commercial real estate, primarily shopping malls. It holds 250 properties in 37 states and 14 countries. The international exposure is from 34 outlets, 4 malls in Asia, and 22.4% ownership in Klépierre (130 properties in Europe – ticker: LI.PA).

Revenues reached $5.3B in 2022, and the company paid $2.6B in dividends.

Malls have been a troubled sector of the US real estate markets for a while, but quality also plays a role. Occupancy at Simon’s properties was standing at a high level of 94.7% in June 2023, up from 93.9% a year before. So, while some malls might be struggling, Simon does not seem significantly affected by it.

However, the stock price has been affected by the pessimism about US malls, leading to the company’s value per share dropping by almost 50% since 2016, leaving a fairly high dividend yield.

This will make Simon one of the best real estate stocks for investors hunting for higher yield and willing to take a bet that high-quality shopping malls are not going anywhere.

Learn more: Explore practical strategies on how much you need to invest to comfortably live off dividends and secure your retirement.

5. Vornado Realty Trust (VNO)

Market Cap	$4.74M
P/E	– N/A
Dividend Yield	10.5%

Vornado is another one of the best real estate stocks out there. This REIT is focused on Manhattan real estate, with a predilection for office space and retail assets.

It owns 19.9 million square feet (Mqf) of office in New York, 2.5Mqf of retail space, and 1,663 residential units, as well as 3.7Mqf in Chicago and 70% of a 1.8Mqf office complex in San Francisco.

In the context of the pandemic and the work-from-home (WFH) trends, the focus on office space has driven investors away from Vornado in the last few years.

It is also worth noticing that despite financial metric aggregators like Yahoo Finance showing no dividend yield, the company has actually distributed $2.45/share in 2023 so far, with the next ex-dividend date on the 14th of September (used to calculate the dividend yield above).

Despite the downturn in office real estate, Vornado has registered a net income of $0.24/share in Q2 2023 and FFO (Funds from Operations) of $0.74/share.

While WFH & hybrid work formulas are likely here to stay post-pandemic, it is also likely that large corporations like tech and financial companies will still be looking for high-quality, central NYC office space.

Investing in Vornado is a bet that the crisis has driven the company’s shares below their fair value and reflects more uncertainty than permanent impairment to Vornado assets. The redevelopment of the Penn Station area could generate additional upside as well.

Speciality & Industrial REITs

Not all REITs deal in homes, offices, or commercial spaces. More specialized offers can provide investors with exposure to sectors where they could never buy real estate directly themselves.

6. American Tower Corporation (AMT)

This REIT is specialized in cell phone towers and telecommunication infrastructure. They build the towers and then rent the space to multiple telecom companies. Its stock price has grown by 6x since 2009, not including dividend returns. This is one of the best real estate stocks for investors looking to gain exposure to the telecommunications industry.

7. Equinix, Inc. (EQIX)

Another one on our list of best real estate stocks is Equinix. This REIT provides and manages 250 data centers and related infrastructure with an industry-leading 99.9999% uptime. It is planning to open another 57 data centers. It generated revenues from the Americas ($890M in Q2 2023), the EMEA region (Europe, Middle East, Africa – $687M), and Asia ($442M).

8. Prologis, Inc. (PLD)

This REIT is focused on logistics real estate, with most of its assets in the US and Europe and some in South America and Asia. The company has greatly benefited from the growth of e-commerce, which uses almost 3x more logistics facilities than brick-and-mortar retail. Occupancy is at an all-time high of 98%. With rent at just 3-6% of supply chain cost, this is also not the most price-sensitive cost for logistical companies.

9. Welltower Inc. (WELL)

Welltower is a healthcare infrastructure REIT, with assets like senior housing, medical offices, and post-acute care rehabilitation centers (out of hospitals). The company is benefitting from the trend of an aging population and the baby boomer generation retiring and “downsizing” their living space.

10. VICI Properties Inc. (VICI)

VICI is a REIT specializing in gambling real estate (50 properties – 60,300 hotel rooms & 450+ restaurants, bars, nightclubs, and sportsbooks), as well as golf courses (54 locations). Its properties include the Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas. It also owns 34 acres of undeveloped Las Vegas land.

11. Innovative Industrial Properties, Inc. (IIPR)

The industrial REIT specializes in offering greenhouses for the cannabis industry and associated facilities. By doing so, it provides capital to an industry in dire need of it and also provides expertise in cannabis growing and greenhouse management at scale. It has one of the highest dividend yields in the REIT industry, at 9.41% at the time of writing of this article.

12. Farmland Partners Inc. (FPI)

The largest American farmland REIT by acreage, Farmland Partners owns or manages 190,000 acres in 20 states, with a record 0% vacancy across the portfolio. The fund counts on decreasing arable surface combined with rising population and the world’s GDP to increase durably farmland value. 10% of the portfolio (30% by value) is permanent crops like orchards or vineyards.

13. Alexandria Real Estate Equities, Inc. (ARE)

Alexandria rents out facilities for the life sciences industries, like research labs, testing facilities, campuses, etc., already equipped with advanced machinery and equipment. By doing so, it builds clusters of innovation, bringing in one spot: innovation, capital, and human resources. The company has 825 tenants. This is one of the best real estate stocks for investors who are also interested in the life sciences industries.

Best Real Estate ETFs

Investing in the best real estate stocks can carry some risks due to debt or specific sectors and strategies, so investors looking for broad exposure to real estate as an asset class can use ETFs while reducing trading costs.

Looking for stable #investment options? Explore our recommendations for the best #real-estate stocks and ETFs.

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14. iShares U.S. Real Estate ETF (IYR)

This ETF gives a wide range of US REITs, with a preference for niche and specialized industrial REITs like its top 5 holdings of Prologis, American Tower, Equinix, Public Storage, and Crown Castle.

15. Invesco KBW Premium Yield Equity REIT ETF (KBWY)

This ETF is focused on small and mid-cap REITs in order to target a higher dividend yield, currently standing at 8.2%.

16. Green Building ETF (GRNR)

This ETF focuses on companies riding the boom in more energy-efficient buildings. More than half of the ETF is made of real estate companies, with the rest covering equipment and manufacturers.

17. iShares Residential and Multisector Real Estate ETF (REZ)

This ETF includes all types of US real estate, including in its top 10 holdings residential real estate REITs like AvalonBay, Equity Residential, Invitations Homes, and Mid-America Apartment Community. This is probably one of the best ETFs to represent the entire US REIT industry.

18. Pacer Data & Infrastructure Real Estate ETF (SRVR)

This ETF is centered around data centers, mobile towers, and other REITs specialized in telecommunications. This allows investors to invest in the sector as a whole without having to pick which technology or strategy is the best in this highly technical sector.

19. Global X MSCI China Real Estate ETF (CHIR)

This ETF looks at real estate beyond the US and focuses on China. This is a sector that has suffered greatly, as illustrated by the recent bankruptcy of developer Evergrande. So, this is likely an ETF only for contrarian investors looking to bet on a rebound of China’s real estate sector.

20. Vanguard Global ex-U.S. Real Estate ETF (VNQI)

This ETF invests in real estate everywhere BUT in the USA. It is mostly active in Asia, Japan, and Korea, followed by emerging markets and Europe. It can offer diversification from US real estate investments, giving global exposure to real estate markets.

21. Invesco MSCI Global Timber ETF (CUT)

Land can be used for farming, residential, or industrial purposes. Or it can “simply” grow a forest, which turns over time into valuable timber and wood and grows no matter the economic conditions. This ETF allows investors to get global exposure to the timber industry, with most of the land managed with responsible forestry practices in the USA and Europe.

Conclusion

Real estate is an asset class as large, diverse, and complex as stocks or bonds. It is also characterized by extreme illiquidity and substantial management demands.

REITs provide hassle-free returns and liquidity in addition to much-needed diversification. The modern REIT industry provides ample choice for customized exposure to a specific region, real estate type, or economic sector.

Real estate ETFs can provide even more diversification, allowing one to create a real estate portfolio that can be truly customized to one’s needs.

In any case, investors looking for the best real estate stocks will need to be cautious, especially in a rising rate environment that might make refinancing difficult. So, a low level of debt and solid cash flow should be preferred over more leveraged REITs and funds. And, of course, like for any real estate investment, only 3 things will ultimately matter: location, location, and … location.

The post 21 Best Real Estate Stocks & ETFs to Watch in 2024 appeared first on FinMasters.

Natural gas is often described as a perfect “transition fuel”: still a fossil fuel, but acceptable until greener alternatives are ready to replace it. You can read more about it in this in-depth report by the EIA.

The Best Natural Gas Stocks

Natural gas is mostly transported by pipeline or in the form of LNG (Liquefied Natural Gas). This article will cover both.

Natural gas is also often produced in conjunction with some oil, so many gas stocks are also, to some extent, oil stocks, even if the majority of their production is gas.

We’ll try to offer a diverse view of the sector and focus on a few of the best natural gas stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best natural gas stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

Learn more: Interested in the energy sector? Here’s a rundown of some top-performing energy stocks and ETFs.

1. EQT Corporation (EQT)

Market Cap	$15.7B
P/E	4.83
Dividend Yield	1.38%

First on our list of the best natural gas stocks is EQT, the largest producer in the US, with shale deposits in the Appalachian Basin. EQT produces so much gas (5.3 bcfe/d – billion cubic feet equivalent per day) that it would be the 12th largest gas producer in the world if it were a country. Reserves are at 25 TCFE (trillion cubic feet equivalent).

The company’s production has sometimes had difficulties in reaching markets, leaving Appalachian gas at a discount to the national market. The situation could improve with the ongoing construction of the Mountain Valley pipeline, expected to start in Winter 2024 and be fully finished by 2027. The company has also closed a $5.2B deal to buy more pipeline capacity.

Another option for EQT is selling abroad, with LNG prices much higher than domestic natural gas prices. The company is starting to reach this market with a recently signed HOA (Heads of Agreement) with Lake Charles LNG representing 135 MMcf/d. Overall, only 33-37% of EQT gas is left exposed to “Appalachian pricing”.

The company aggressively repurchased its shares when they were trading at a lower price. It also has very high capex efficiency, among the highest in the industry.

EQT’s emissions are also among the lowest in the world, with a target for net zero by 2025. This makes the company uniquely ready for the possible risk of carbon taxes.

Thanks to its scale, EQT is one of the most efficient gas producers in the US, and it is still trading at low multiples, considering gas prices are still relatively low, leaving some potentially large upside for its shareholders. It’s one of the best natural gas stocks for investors who want to focus on US domestic production.

2. Chesapeake Energy Corporation (CHK)

Market Cap	$11.5B
P/E	1.74
Dividend Yield	7.19%

When the shale revolution happened in the 2010s, the first goal of all shale oil & gas producers was growth. The idea was that by improving the technology and reaching a sufficiently large scale, costs would decline and turn the shale companies profitable.

The results were less positive, with the expanded production of the shale industry flooding the world’s energy market, causing durably low prices, and even pushing Saudi Arabia into engaging in a destructive price war. Combined with the pandemic crash in demand, this led to a massive wave of bankruptcy in shale, including the poster child of growth at all costs, Chesapeake Energy. The company emerged from Chapter 11 in 2021.

Today, the company produces 3.7 bcfe/d of natural gas, with 15 years of inventory.

It has a changed focus on dividends and returning profits to shareholders, with $125M of share buyback and $515M of dividends in Q2 2023.

Thanks to its restructuring, the company only has debt maturing in 2026 and 2029, respectively, at 5.5% and 6.5%. This puts Chesapeake in a great position to benefit from rising interest rates, which raise the cost of capital for its competitors while it keeps operations going and distributes a generous dividend.

That makes Chesapeake one of the best natural gas stocks for generating dividend income, very different from its pre-bankruptcy growth profile.

3. Cheniere Energy, Inc. (LNG)

Market Cap	$39.9B
P/E	5.26
Dividend Yield	0.96%

There are two ways to transport gas over large distances: by pipeline or liquefied in the form of LNG. While LNG “wastes” some of the energy in the gas, it also allows gas to be exported anywhere on Earth with special carrier ships, allowing arbitrage between pricing in different regions.

The USA has a lot of gas, while Asian markets are in demand for it. Europe is also now a major LNG market (probably permanently) following the war in Ukraine, the destruction of the Nord Stream pipeline, and the resistance toward dependence on Russia.

When evaluating the best natural gas stocks, Cheniere stands out with a total production capacity of 30 mtpa of LNG from its Sabine Pass and Corpus Christi facilities (in dark red and red below). Furthermore, they have plans to add another 20 mtpa, which is currently awaiting regulatory approval.

In 2022, 70% of Cheniere shipments were to Europe. This newly grown market has grown LNG demand beyond all previous expectations. The reopening of China has also boosted global demand. In the long run, the coal-to-gas switch for power production should keep the demand for LNG high, especially in Asia.

With the US abundance of gas from the shale revolution, LNG from the US is likely to stay a key part of the energy mix of both Asia and Europe, especially since the war in Ukraine. Cheniere is well positioned to benefit from this long-lasting change in the energy markets, taking in cheap US gas and exporting it abroad to higher-priced markets.

4. Tellurian Inc. (TELL)

Market Cap	$714.7M
P/E	– N/A
Dividend Yield	– N/A

Most natural gas companies specialize in a single segment, like production, liquefaction (LNG), or transportation. Tellurian aims to change that, with ambitious plans to become a leading integrated gas company.

The company is planning to build a large LNG terminal (Driftwood) with an export capacity of 27.6 mtpa. The first production is expected by 2026-2027. It is also looking to grow production in Northern Louisiana, in the Haynesville Shale Basin, and build a pipeline to carry this gas to the Gulf of Mexico and Driftwood LNG.

Tellurian will still need to find a partner to raise enough money ($1.8B to $4.3B) to achieve all of these lofty goals and is hoping to sell “only” 55% of its equity for it.

If all goes to plan, Tellurian could see a cash flow of $4.4B by the end of Phase I of the project, with further expansion to full-size finance by the Phase I cash flow, reaching a final cash flow of around $11B.

There are good reasons for Tellurian’s optimism:

• Global demand for LNG is high and likely to stay this way for the foreseeable future.
• US gas production is exceeding local demand, and production could grow further if export facilities were able to absorb this surplus.

Still, investors looking for the best natural gas stocks should be cautious when entering a highly cyclical industry on the basis of cash flow projections 5-10 years in the future. 2020 was definitely a low for the oil & gas industry, so it might work. There are still risks that must be taken into account, with diversification an important strategy.

Exploring the #energymarket? Dive into the best #naturalgasstocks & ETFs in our latest post.

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5. Cool Company Ltd. (CLCO)

Market Cap	$755.4M
P/E	17.37
Dividend Yield	2.91%

In Natural gas, a lot of attention is given to upstream (production) or multi-billion LNG liquefaction facilities. A smaller niche is the actual transportation by sea of the LNG. This requires very specialized ships, custom-built for this exact purpose.

When looking at the best natural gas stocks, one can’t ignore CoolCo, a newly IPOed company formed by bringing together LNG carrier ships from 2 industry leaders, Golar LNG and Eastern Pacific Shipping (Eastern Pacific Shipping owns 58% of CoolCo). It operates a fleet of 13 LNG carriers.

The company has benefitted from the rising shipping rates for LNG ships in response to the increased traffic and global demand following the war in Ukraine.

Most of these profits should be returned to shareholders, with CoolCo’s proposed policy dividends of $0.41 per share in Q1 2023 implying a yield of approximately 14%.

Because of the slump in price in the late 2010s, not many LNG ships have been ordered, and many shipyards went bankrupt, further reducing supply. The newly built ships are going to be partially compensated by retiring older steam turbine vessels due to increasingly stringent environmental regulations.

This should give a lot of pricing for LNG carrier companies and make CoolCo’s fleet a valuable long-term asset. Still, investors will need to be cautious, as the shipping industry and shipping rates are famous for being extremely volatile.

Best Natural Gas ETFs

Because natural gas is a CAPEX-intensive business in a highly cyclical industry, it is best to have a wide array of company profiles in a portfolio.

Besides investing in the best natural gas stocks, ETFs can help you have a diversified portfolio while reducing trading costs.

1. United States Natural Gas Fund LP (UNG)

This ETF tracks the fluctuation of the price of natural gas instead of investing in companies in the sector. This makes it more of a trading instrument than a long-term holding but might be interesting for betting on natural gas price fluctuations.

2. Global X MLP & Energy Infrastructure ETF (MLPX)

This ETF includes a range of energy infrastructure, including midstream (pipelines) and LNG facilities. Its top holdings are William Cos, Cheniere, and Enbridge. These companies tend to benefit from the volume of natural gas and oil consumption and be less exposed to commodity price fluctuations.

They are also often distributing a rather generous dividend yield, with many of them being dividend-rich MLP (Master Limited Partnerships).

Learn more: Explore the ins and outs of dividends and their potential impact on your investment strategy.

3. SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

This ETF has a strong focus on US exploration companies, as well as land trusts in oil-rich regions. Its top holdings include SM Energy, Texas Pacific Land Corp, Apa Corp, and CNX Resources (among the largest gas producers in the US).

This focus on proven resources and exploration makes it an interesting way to get reserves at a discount compared to international oil majors and to hope for continuous improvement in shale technology.

4. iShares Oil & Gas Exploration & Production UCITS ETF (SPOG)

This ETF includes most of the US shale and Canadian oil & gas producers, with a focus on exploration and growing production. Its top holdings are EOG Resources, ConocoPhillips, and Canadian Natural Resources. This makes it a good bet on the health of the North American energy industry in general.

5. iShares MSCI Global Energy Producers ETF (FILL)

This ETF includes all the largest publicly traded energy companies, including Exxon, Chevron, Shell, TotalEnergies, etc… This gives it a lot of exposure to gas but also to oil, refining, etc. It can be a complement to more natural gas-focused stock picks, bringing exposure to the fossil fuel sector at large.

Conclusion on the best natural gas stocks and ETFs

Natural gas might be as important to our future energy system as oil has since the 1950s. It is currently the best candidate to phase out coal while still producing easy-to-dispatch baseload power.

The shale revolution and the war in Ukraine have brought long-term changes to the natural gas markets, with extra value for US gas and LNG shipments. Investors can benefit from these changes by gaining exposure to the best natural gas stocks across the industry, including production, pipelines, LNG liquefaction facilities, and LNG shipping companies.

This a highly volatile industry, so cautious positioning and diversification are generally preferable. An eye on geopolitics and market cycles will be equally important.

The post 10 Best Natural Gas Stocks & ETFs to Watch in 2024 appeared first on FinMasters.

Sin stocks (alcohol, tobacco, gambling, weapons, etc.) often outperform the broader market. This is because some investors, institutional and individual, will refuse to partake in such activities. They are nonetheless highly profitable, allowing these businesses to reward their shareholders with generous buyback, dividends, and accretive growth.

A new category of sin stock has emerged with the progressive legalization of cannabis.

Cannabis is still illegal at the federal level but partially or fully authorized by many US states. This matches widespread public acceptance. Only 1/10th of Americans think the drug should be fully illegal. 59% support complete legalization.

The Best Cannabis Stocks

Cannabis as a sector went through a massive enthusiasm wave in 2021 when state legalization felt like the first step before imminent federal-level legalization.

The US Congress has failed to pass the SAFE Act (Secure and Fair Enforcement) that would normalize banking, taxation, and investing in cannabis companies. That failure has dragged the sector down, producing an overall 90% decline in cannabis stock prices. This somewhat mimics a previous wave of optimism and disillusion after Canada’s legalization of cannabis.

The focus in cannabis investing should be on high-quality companies that are able to survive the sector’s crises, capture market share, stay profitable in downturns, and benefit from possible future legalization at the federal level.

We’ll try to offer a diverse view of the sector and focus on a few of the best cannabis stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best cannabis stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

Learn more: If you’re new to the scene, our guide on stock investing for beginners can help clarify things.

1. Glass House Brands Inc. (GLASF)

Market Cap	$268.8M
P/E	– N/A
Dividend Yield	– N/A

By far, the largest cannabis market in the US (and the world) is California. It is also the toughest, with low prices driven by intense competition. This has driven local cannabis prices even lower, with the smaller & less efficient producers being forced out of the market.

It is in that context that Glass House has acquired a truly massive 6 million square foot greenhouse facility. Half is already retrofitted to grow cannabis, with the rest to be ready in 2024.

The company is highly focused on having the best unit economics possible. Combined with the almost ideal Californian weather, this makes Glass House one of the most cost-efficient cannabis growers in the USA. Glass House has earned the nickname “Walmart of weed” for its cheap mass production.

The continuous improvement has allowed Glass House to produce at costs below the market price for Californian cannabis since 2021 despite the 2022 crash. It plans to increase production volumes by another 70% by 2024.

In the realm of the best cannabis stocks, Glass House stands out. Thanks to an extremely robust cost structure, the company has been able to weather the lowest price in the whole country and thrive through it. So, for investors worried about cannabis cyclicality and profitability potential, Glass House is a good example of a company embracing a future where cannabis can become a commodity consumer product similar to mass-produced beer or vodka.

2. Innovative Industrial Properties, Inc. (IIPR)

Market Cap	$2.15B
P/E	13.59
Dividend Yield	9.44%

One of the hurdles in cannabis investing can be the difficulty of finding a broker willing to buy shares of companies in the industry. Many investment funds and banks can’t get involved due to the status of cannabis as an illegal drug at the federal level.

This creates a very difficult financing environment, where capital can be very costly. Cannabis companies often pay interest rates of 13-15% or more.

IIPR is an industrial REIT specializing in cannabis production facilities (greenhouses, oil extraction & purification plants, etc.). As a REIT, IIPR is not exposed to the same constraints as a cannabis company, so it can build the infrastructure with a much lower cost of capital. The facilities are then rented out to cannabis companies, usually on 15 to 20-year leases.

IIPR manages 108 properties in 19 states for a total of 8.1 million rentable square feet, with no tenant making more than 13.5% of total invested capital.

The company has grown its net operating income by 119% CAGR since 2017. Leverage is low, only 12% of total assets, and it distributes an almost double-digit dividend yield.

IIPR is one of the best cannabis stocks on the market, as it can provide good exposure to the sector while also generating a decent dividend income. Its large acreage is also likely to be hard to replicate at the same costs, with most materials and supplies having gone up in price since IIPR built its greenhouses, giving it a solid competitive advantage over new entrants in the market.

3. Curaleaf Holdings, Inc. (CURLF)

Market Cap	$2.1B
P/E	– N/A
Dividend Yield	– N/A

The third on our list of the best cannabis stocks is Curaleaf, a massive cannabis company active in 20 US states with 152 dispensaries and a total of 4.2 million square feet under cultivation. It is also aggressively expanding internationally, with existing or developing operations in the UK, Germany, Italy, Sweden, Czechia, Portugal, and Switzerland. This expansion into Europe gives Curaleaf a good chance at becoming the first “global” cannabis company in a sector often very focused on specific geographies.

The company’s product range is very large and covers virtually all cannabis products, including “classic” dried flowers, vaping liquid, gummies, mints, drinks, etc.

Curaleaf’s aggressive expansion allows it to diversify its income stream, with Europe expected to be a serious growth driver for the company.

This makes Curaleaf one of the best cannabis stocks for investors looking to invest in a large cannabis company, with the potential to become, over time, like the big tobacco companies, with a scale allowing it to support global brands and to progressively swallow smaller brands and competitors.

4. Tilray Brands, Inc. (TLRY)

Market Cap	$1.75B
P/E	– N/A
Dividend Yield	– N/A

In consumer goods, brands can make the difference between poor profit and margin and outstanding businesses. A perfect example of the power of branding can be found in Coca-Cola, whose most valuable asset is its brand: people come back, even when cheaper alternatives exist.

There is still an open question of whether cannabis will be a market dominated by bulk, commoditized products or a consumer brand people trust to deliver a consistent taste and effect. This is the strategy followed by Tilray.

The company is well-positioned in Canada, where it ranks #1 for most of the product categories. It is also active in the US cannabis market and has recently expanded into alcoholic beverages.

The expansion into alcohol started with craft distillers and beer makers, followed by the recent purchase of 8 beer brands from Anheuser-Buschfollowing a poor marketing campaign.

Overall, Tilray is working on building an ecosystem of “lifestyle” brands, where their consumers will relax and enjoy life by consuming either cannabis products, beer, whiskey, or even energy drinks.

Tilray is more of a play on building a strong brand in the cannabis space, as well as counting on the normalization of cannabis alongside other addictive substances like alcohol. This should also make Tilray less vulnerable to delay in cannabis reforms, as the alcohol segment can grow no matter when the SAFE Act or full legalization is enacted, making it one of the best cannabis stocks out there.

5. Cresco Labs Inc. (CRLBF)

Market Cap	$370M
P/E	– N/A
Dividend Yield	– N/A

Many cannabis companies rely mostly or exclusively on their own dispensaries to sell their branded product. This allows a strong control of the distribution channel but can also be expensive and limit the reach of their products.

Cresco Labs stands out as one of the best cannabis stocks for investors to consider, primarily functioning as a wholesaler of cannabis products, offering cannabis in almost any possible form, even as marshmallows, resin, etc… The company operates some dispensaries (69 locations) but mostly sells through a network of 1,600 third-party resellers.

This makes Cresco’s business model more akin to Craft’s or Nestle’s, selling their products anywhere the customer might be. Currently, this is not so crucial, as cannabis sales are restricted to highly regulated dispensaries requiring specific licenses.

But if (when?) cannabis becomes fully legal and more accepted, we might find it on sale in the same spaces that sell alcohol and tobacco, from supermarkets to fuel stations. In such a market, Cresco could be at an advantage, having already established strong wholesale processes for and having brands that are widely recognized by customers, thanks to having seen them in thousands of dispensaries all over the USA.

Once again, investors will need to decide what they think is the most likely future of the cannabis market. If generalized acceptance of cannabis is on the horizon, sales will not be limited anymore to licensed dispensaries, and wholesalers might be the winning sub-sector of the industry.

Best Cannabis ETFs

As a very new market, cannabis is still a space where various business models are being tested while dealing with a quickly evolving regulatory landscape.

Curious about the #cannabis sector? Discover the top picks in our latest rundown on the best #cannabisstocks.

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So, besides picking the best cannabis stocks on the market, investors might simply want wide exposure to the sector as a whole. ETFs can help you do this while reducing trading costs.

1. AdvisorShares Pure US Cannabis ETF (MSOS)

This US-focused ETF includes all the largest US cannabis names, including Green Thumb, Curaleaf, Verano, and Trulieve, in its top holdings. The top 5 holdings represent 80.49% of the whole ETF, so investors might want to look at these companies in further detail before purchasing this ETF.

2. Global X Cannabis ETF (POTX)

This ETF is focused on smaller cannabis players, especially in limited license states or medical cannabis with names like Cronos Group or Aurora Cannabis. It is also more diversified, with the top 5 holdings making up “just” 61.19% of the whole ETF.

3. Amplify Seymour Cannabis ETF (CNBS)

This ETF includes cannabis companies like Tilray and Curaleaf but also suppliers to the industry like IIPR and hydroponic equipment supplier GrowGeneration. So, it gives wider exposure to the sector, including not only cannabis sellers but also key suppliers to the industry.

4. AXS Cannabis ETF (THCX)

This ETF is strongly focused on suppliers to the cannabis industry, with the top holdings being commercial real estate companies IIPR & AFC Gamma. The ETF also includes plant growth and equipment companies like Scott Miracle Grow, GrowGeneration, Waters Corps, WM Technology, etc…

This makes this ETF a good “pick & shovel” play on the cannabis industry, counting on the expansion of production and not looking to guess the future winner in the industry.

5. Cambria Cannabis ETF (TOKE)

This ETF is centered on cannabis brands, with Constellation Brands, Imperial Brands, and Tilray among its top holdings. It also includes large tobacco companies with an interest in the cannabis sector, like Philip Morris, Altria, and British American Tobacco. “Big Tobacco” may ultimately acquire or merge with cannabis brands, and this ETF is a good way to get exposure to this possibility.

Conclusion

Cannabis is a widely used and increasingly accepted mild narcotic. It is likely that over the next years, its status will slowly stop being an illegal drug and, more akin to alcohol, expected to be “used with moderation”.

The uncertain legal status of the product is likely to be a drag on stock values, and there is a strong possibility that values could surge if federal legalization occurs.

This growing acceptance will still likely see cannabis stocks stay in the “sin stocks” category, with both the associated stigma and premium returns that come with that label.

In addition, the industry and the stock prices are now in a deep and brutal downturn caused by slower-than-expected changes in US federal regulations. It is likely that the saving grace of the industry will come from such changes but also from the growing parallel movements for legalization in the EU.

So investors will have to be patient and diversify cautiously to be sure to buy companies able to survive and even thrive in that difficult environment until then.

If you’re looking for more detailed information on the sector and some of the best cannabis stocks, read our detailed industry report!

The post 10 Best Cannabis Stocks & ETFs to Watch in 2024 appeared first on FinMasters.

Let’s find out.

About Biotech

Historically, medicine has been dominated by pharmaceutical companies, an outshoot of the chemical industry, producing drugs to modify the body’s functions.

Since the late 1970s, a new method has emerged. Biotechnology or biotech produces more complex products using living organisms or producing replicas of proteins, cells, and other biological molecules.

These developments have saved countless lives, starting with clean and safe lab-grown insulin that has transformed the lives of thousands of type 1 diabetics.

The sector is undergoing a new phase of explosive growth, thanks to a new wave of treatments using progress in genetics, from gene therapies to mRNA vaccines, stem cells, and innovative cancer treatments, and investors can’t help but wonder what are the best biotech stocks to invest in.

Best Biotech Stocks

Because biotechnology is a very technical field, many investors shy away from it. But with the US spending 18.3% of its GDP on healthcare, this is not a sector to ignore, especially when the pace of innovation is equal to or beyond that of better-known tech sectors like software or EVs.

We’ll try to offer a diverse view of the sector and focus on a few of the best biotech stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best biotech stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

Learn more: If you’re in search of the best stock charting software, our recent article provides a comprehensive review and comparison.

1. Novo Nordisk (NVO)

Market Cap	$414B
P/E	45.13
Dividend Yield	0.97%

Novo Nordisk is a leader in diabetes treatment, which until recently made up a large majority of the company’s business (79% of the total in 2022). This is still an area of interest to the company, with 10 clinical trials ongoing.

The new focus of the company and market is on obesity care, thanks to Wegovy, an injectable medicine (initially a diabetes drug) that appears to help dramatically against obesity.

The drug has been a viral sensation, with even Elon Musk praising it. It has also been regularly sold out, despite Novo Nordisk upgrading its manufacturing capacity regularly. The drug is proving so popular that a Tik Tok-induced mania even increased the shortage.

Learn more: For a comprehensive look at one of tech’s most influential figures, our latest post provides an Elon Musk profile.

The diabetes business is likely now maturing and will be stable for the years to come. So, a lot of the quickly growing stock price and high P/E ratio are based on the optimism for Wegovy. It is also possible that patients might need to keep taking Wegovy if they want to see the weight loss benefits persist.

This is a large and growing market, and it has been only growing in the last decade, with 42% of Americans now classified as obese and other countries quickly catching up.

The only serious competitor in the short term seems to be Eli Lilly (LLY), which is developing Mounjaro, a drug somewhat similar to Wegovy. It is hard to predict if the drug will have better results from its clinical trial and if it will be able to dislodge Wegovy from its first-mover marketing position. In any case, it is possible the market is large enough for both drugs to bring large benefits to both companies.

Like for any biotech company highly reliant on a signal molecule/treatment, there is also the always looming risk of a safety issue, with side effects that can have been missed during the initial clinical trials.

Known side effects can in themselves be significant, including the low probability of thyroid cancer, pancreas inflammation, kidney problems, and gallstones.

Although Novo Nordisk is one of the best biotech stocks on the market, and no matter how promising Wegovy seems to be, investors should be cautious about diversifying their risk and not bet it all on a single drug.

Learn more: If you’re considering adding TikTok stock to your portfolio, our latest article guides you through the process.

2.  Bayer (BAYRY)

Market Cap	$56.4B
P/E	16.34
Dividend Yield	4.57%

Bayer is engaged in biotech, pharmaceuticals, and agricultural biosciences at the same time. It is a perfect example of how biotechnology can be applied beyond the medical field, but also for biomaterials or agriculture.

In the last year, the agricultural segment has been causing the company a lot of headaches following the acquisition of the industry giant Monsanto. Legal actions accusing the herbicide Roundup – a key Monsanto product – of causing cancer have been weighing heavily on the company’s finances and stock price.

The pharmaceutical part of the company is highly diversified, with chemical drugs and biotech products in multiple applications, of which the largest are cardiovascular and women’s health.

Bayer’s legal issues are a concern but also create a potential buying opportunity. The company is rumored to want to separate its pharmaceutical activity from its crop biotech. So investors in Bayer might either want to buy now and decide later which part they are the most interested in or wait and buy only the post-break-up company.

In both cases, the current discount might be exaggerated compared to the actual cost of the Roundup trials, especially considering the already large amount of money put aside by Bayer to pay for settlements.

So, it is possible that Bayer could make for a great turnaround story. It is also obviously a stock with a complex story, and in which investors will want to do more than the usual amount of due research.

3. CRISPR Therapeutics AG (CRSP)

Market Cap	$3.8B
P/E	– N/A
Dividend Yield	– N/A

The 2020 Nobel Prize for chemistry was granted for the discovery of CRISPR-Cas9, a new tool for gene editing. This new technology allows for changing genetic sequences in a very controlled and predictable way.

CRISPR Therapeutics was founded by one of the co-discoverers of CRISPR-Cas9 and is working on applying this technology to cure rare diseases.

At the moment, CRISPR Therapeuticäs flagship clinical trials are for blood disease, in particular, Beta-thalassemia and sickle cell diseases (SCD). It is also working on using CRISPR to create special cell lines that could target cancers.

Lastly, CRISPR is looking to create a potential permanent cure for type-1 diabetes, a disease affecting more than 8 million people in the world.

The blood disease therapies and diabetes cure are developed in partnership with the larger and more established biotech company Vertex (VRTX), which specializes in rare diseases, especially cystic fibrosis.

The endorsement of Vertex and the scientific pedigree of the CRISPR Therapeutic founder are the main arguments in favor of the company.

Other startups are looking to use CRISPR-based gene editing systems but are less advanced in their clinical trials, most of the time years behind CRISPR Therapeutics.

Considering that products are still in development and clinical trials, traditional financial metrics are of little use in evaluating the stock. Instead, investors will need to rely on calculating the potential markets and the likelihood of successfully developing the new treatments.

4. BioNTech (BNTX)

Market Cap	$25.3B
P/E	3.7
Dividend Yield	– N/A

The company behind the most sold mRNA Covid vaccine is a true pioneer in mRNA technology. It is now looking to use the windfall from the pandemic to massively expand the potential of mRNA.

The first part is using mRNA vaccines to create new vaccines and/or replace existing ones. BioNTech is working on mRNA vaccines for shingles, tuberculosis, malaria, HIV, and the herpes virus. It is a leader in the field, with only its competitor Moderna (MRNA) developing more mRNA vaccines than BioNTech.

But the really interesting part is expanding mRNA beyond the vaccine application. BioNTech believes it can be used for cancer therapies, with 12 candidate therapies for cancer treatment in its pipeline. This is a segment where BioNTech’s lead is almost uncontested, with only Moderna (2 candidates) and Curevac (CVAC) (1 candidate) investigating this idea.

In the long run, it is possible that mRNA has even more possible applications or can be improved further, with BioNTech expected to be a key partner for any pharmaceutical company looking into this sector.

The stock was a market darling during the pandemic, and its current earnings still reflect the massive cash flow of the Covid-19 vaccines. So, investors will want to be cautious in extrapolating any financial data from this point.

BioNTech’s value is more likely to be in the long-term prospect of new innovative vaccines, maybe exterminating HIV, malaria, or tuberculosis.

The cancer therapy idea is also promising, and the massive number of ongoing clinical trials reflects the company’s management’s enthusiasm for the idea. Coming from the people who turned a scientific concept into a blockbuster product when it was needed the most, this is one of the best biotech stocks out there.

Best Biotech ETFs

Biotechnology is a sector where 80-95% of R&D efforts fail. It can take several billion dollars to develop a new drug or treatment, and there is no assurance that the product will ever produce revenue, a serious concern for investors. It is also a highly profitable industry overall.

Exploring the #biotech sector? Dive into our latest analysis on the best #biotechstocks to watch.

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So, while looking for the best biotech stocks, it is highly recommended to diversify your exposure to the sector. ETFs can help you do so while reducing trading costs.

1. iShares Biotechnology ETF (IBB)

This ETF is focused on the largest and most established biotech companies, with its top 5 holdings being Amgen, Vertex, Gilead, Regeneron, and IQVIA.

This a good ETF pick for investors looking for biotech exposure and counting on the largest companies to either develop new treatments themselves or partner with or acquire smaller innovative startups.

2. SPDR S&P Biotech ETF (XBI)

This ETF is more “handcrafted”, with a lot of different stocks and none making up more than 2.32% of the whole ETF. Most holdings comprise less than 1.5% of the whole ETF. The top holdings are mostly focused on cancer treatment and rare diseases.

3. ARK Genomic Revolution ETF (ARKG)

ARK ETFs are often at the forefront of promoting “hypergrowth” tech stocks. Their biotech ETF is similar, with a focus on very innovative companies like CRISPR Therapeutics, cancer testing (Exact Sciences), drug development digital tools (Schrodinger), genome sequencing machines (Pacific Biosciences), or telemedicine (Teladoc), among other themes.

This can make ARKG a good complement to more drugs and treatment-focused biotech ETFs, with ARKG more focused on innovation and tools.

4. ALPS Medical Breakthroughs ETF (SBIO)

This ETF includes biotech companies with drugs in development (phase II or III of clinical trials) and capitalization between $200M and $5B. It is mostly focused on DREEN (dermatology, respiratory, eye, ear, and neurology) and rare diseases.

This unusual focus gives SBIO exposure to medical segments and companies ignored by other biotech ETFs. It can be used to diversify exposure alongside direct purchase of specific stocks or more generalist biotech ETFs.

5. China BioPharma ETF (CHNA)

Not all biotech innovation is conducted in Western countries. China is a new challenger and aggressive innovator with a very dynamic research ecosystem. CHNA provides exposure to this sector, with stocks in the ETFs either listed in Hong Kong (86.44%) or the Nasdaq (13.56%), while its own shares are listed on Nasdaq and easy to buy.

It can be a good alternative to more Western-focused ETFs

6. Kelly CRISPR & Gene Editing Technology ETF (XDNA)

While most biotech ETFs contain some exposure to gene editing and CRISPR technology, this ETF is solely focused on this revolutionary innovation.

The largest holding of the ETF is ThermoFisher, a life science lab equipment producer, followed by leading CRISPR startups like Intellia Therapeutics, CRISPR Therapeutics, and Caribou Biosciences.

This makes this ETF a good pick for investors enthusiasts about CRISPR technology as a whole but who are unwilling to pick one specific application or technical choice, a decision that requires a great deal of scientific expertise.

Conclusion

Biotechnology is a complex field, making it challenging for many investors to pinpoint the best biotech stocks to invest in. It is also likely to be the source of most medical revolutions and truly transformative medical technologies. There are also applications in agriculture and other industries. So, this is an attractive sector, but one that requires expertise and disciplined diversification.

Investors might want to go for an array of handpicked stocks based on track records or special situations, offering the opportunity to buy the stock at a discount.

Or they might prefer to take a broader approach, using one or several ETFs to get wide exposure to the sector and simply benefit from the sector’s overall growth and success in developing life-saving treatments.

The post 10 Best Biotech Stocks & ETFs of This Year appeared first on FinMasters.

Banks are also prone to seemingly random panics and crashes. This can be both a risk and an opportunity to buy quality assets at a bargain-basement price. This is especially true when major macroeconomic changes happen, like a war or a quick change in interest rates.

Early 2023 saw a new banking crisis, with a few regional US banks going bust. This does not mean the entire sector is at risk, and some of the best banking stocks might even be on a discount as a result of that panic.

The Best Bank Stocks

Bank stocks are very diverse, from specialized firms to giant conglomerates. Their profile can range from distressed assets to dominant players quickly swallowing smaller competitors.

We’ll try to offer a diverse view of the sector and focus on a few of the best banking stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best banking stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

1. JPMorgan Chase & Co. (JPM)

Market Cap	$449B
P/E	9.95
Dividend Yield	2.59%

Our first pick on the list of the best banking stocks is JP Morgan, as it is active in virtually any segment a bank can be working in, including asset management, commercial banking, investment banking, payments, private banking, and wealth management.

JP Morgan has grown a lot in the last few years, including growing its market share of total US retail deposits from 7.1% in 2012 to 10.9% in 2022 and reaching 22.4% of credit card sales while managing $4T of client assets.

JP Morgan is also investing massively in technology, with total technology investments of $7.2B in 2023, of which $1B is in digital, data, and AI.

Due to its size, JP Morgan is one of the best banking stocks for investors who are looking for exposure to the banking sector but are wary of taking risks. The bank has reinforced its balance sheet significantly since 2019, adding $800B in net deposits and $600B in liquidity sources.

US regional bank trouble might be a good thing for JP Morgan, which has recently absorbed troubled First Republic Bank, leading to record profits. The strong inflow of deposits is equally likely due to bank clients looking for safety.

With a Q2 2023 dividend payout of $2.9B and $1.8B in share repurchases, JP Morgan is focused on delivering value to its shareholders, either through growth or profit distribution. This makes a good banking stock for cautious investors looking for a long-term holding.

Learn more: The dynamic between technology and how we manage money is ever-changing; our latest post delves into this transformation.

2. Citigroup Inc. (C)

Market Cap	$84.9B
P/E	6.99
Dividend Yield	4.62%

Because the banking sector is marked by crises, it is worth checking on companies that have made the headlines in previous crises. Citigroup was at the core of the 2008 banking crisis, with its stock dropping dramatically and getting $306B of government support.

Since then, the stock price has not really gone anywhere. But Citigroup is now highly profitable and trading at a very low P/E ratio while distributing a rather large dividend.

And Citigroup also seems to have learned from its more troubled days in 2008, when risky subprime loans almost took it under. In 2023, Citigroup saw its assets grow by 2%, and its deposit levels and loan growth stayed steady.

The company is refocusing its activity on the US and the Americas and is progressively closing and/or selling its activities in China, Russia, Poland, and Korea.

While larger competitors like JP Morgan or Bank of America are focused on growth, Citigroup is a rather “boring” banking stock, not taking risks like in the old days, and not growing quickly.

This also seems already priced in, and it can make for a good income stock while its shareholders can wait (probably several years) for a repricing to reflect the safer profile and slowly healing reputation of the company.

3. ING Groep N.V. (ING)

Market Cap	$51.5B
P/E	9.53
Dividend Yield	4.19%

ING is an international bank with activities in 40 countries, employing 60,000 people and serving 37 million customers. It is the market leader in the Netherlands, Belgium, and Luxembourg and has a strong presence in Germany, Italy, Spain, and Australia.

The company has steadily grown its income and net results in the last quarter, completely ignoring any US turmoil. Just in Q2 2023, it added 227,000 customers and grew total income by 23% year-to-year. In the long run, the company plans to grow total income by 4-5 % CAGR.

The company’s return on equity is 11.7%. ING has a high level of mobile customers, with 60% using the mobile app at least once in the last quarter. The company’s progress on digital is also showing, with 63% of new customers in the Netherlands coming on board digitally.

ING is profitable, has developed advanced digital banking solutions, and is growing aggressively in new markets beyond its Benelux core region. This diversification provides some safety and also makes it one of the best banking stocks for US investors looking for international exposure in the banking sector.

The quite moderate P/E ratio and relatively high dividend yield also make it a good pick for a banking stock, delivering value, growth, and income simultaneously.

Learn more: Looking to clarify the difference between Value vs Growth investing strategies? Our new post has you covered.

4. HSBC Holdings plc (HSBC)

Market Cap	$157.2B
P/E	7.1
Dividend Yield	6.36%

HSBC is a bank with a long history since its founding in Hong Kong in 1865. It is now active in 62 countries and serves 39 million people.

Its core activity is in Asia, and this will be even more true in the future, with an ongoing strategic repositioning. HSBC plans to sell its French, Canadian, Russian, Greek, New Zealand, and Oman operations to refocus on Asia, including India. This repositioning matches the flow of new assets in the bank, now mostly coming from Asia.

HSBC is less retail-focused and more centered around commercial banking and wealth management.

Beyond the recentering on Asia and its dynamic economies and industries, HSBC is also very active in ESG investing (Economic/Social/Governance), with $255.5B of cumulative investments in the sector. HSBC is also the world’s largest underwriter of GSSS bonds (Green, social, sustainability, and sustainability-linked) while also having room to grow from its current 4.4% market share.

One potential risk for HSBC is the Chinese real estate market, which is undergoing a long-lasting crisis after decades of boom. HSBC’s exposure is $14.3B, down by $2.5B since the end of 2022. So, while not insignificant, this should not in itself be a systemic risk for HSBC. Another risk to look out for is the escalating US-China tensions.

The bank’s stock has somewhat recovered from its pandemic low but still trades at a low P/E and high dividend yield. It is one of the best banking stocks for investors who want to catch Asia’s rebound in industrial and commercial activity.

It is also highly vulnerable to any disruption in the Chinese and Hong Kong economies, so investors in HSBC will want to carefully assess risks in the region, both economic and geopolitical.

5. Nu Holdings Ltd. (NU)

Market Cap	$37.2B
P/E	– N/A
Dividend Yield	– N/A

Not all banks are operating in developed economies. One of the most dynamic regions for banking is Latin America, where a largely unbanked population is now joining the global economy, using smartphones instead of bank branches or computers.

Nu Bank has more than 85 million customers in Brazil, Mexico, and Colombia. Its digital-first approach is more akin to the one you could expect from a startup rather than a bank. So is the explosive growth it displayed in the last 4 years and its 37% year-to-year growth in April 2023.

On all metrics, the company growth is astonishing, with customer growth at a 46% CAGR and both revenue and gross profit growing at a CAGR of over 100%.

The company’s growth might slow down in Brazil, where it already reached 46% of the adult population (171M people). But it has plenty of space to grow in Mexico and Colombia, with a 2% market share of a combined population of 136 million people.

Within Latin America, a region of 660 million people, NuBank has a lot of room left to grow, both in its present market and the region as a whole. Now that the business model has been demonstrated, it can be expanded quickly.

Looking to diversify your #portfolio? Delve into the realm of best #bankingstocks with our guide.

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It is rare for a banking stock to offer a double or triple-digit growth rate. NuBank’s success will also be heavily driven by the economic success of the region where it operates. In turn, this is likely to depend on political stability and global prices for commodities, as well as the region’s industrialization. So, investors will want to keep an eye on all these factors before buying Nu Bank stock.

Best Banking ETFs

When it comes to identifying the best banking stocks, it’s often challenging to evaluate the quality of a bank’s balance sheet directly. To mitigate this uncertainty and diversify your exposure to the sector, considering ETFs can be a strategic move, as they also help in reducing trading costs.

1. Invesco KBW Bank ETF (KBWB)

This ETF invests in all the major banking US corporations, with its top 5 holdings being JP Morgan, Bank of America, Wells Fargo, Morgan Stanley, and Goldman Sachs, combining for 38.7% of the total ETF.

2. SPDR® S&P® Regional Banking ETF (KRE)

This fund specializes in US regional banks, the sector that has been the center of controversy and panic in the first half of 2023. This makes it a good investment vehicle for investors looking to bet the crisis is over, and the stock prices of these banks will rebound. The ETF is highly diversified, with no stock accounting for more than 2.5% of the whole ETF.

3. iShares MSCI World Financials Sector ESG UCITS ETF (WFNS)

This ETF covers the global banking sector while also including insurance groups (AXA, Allianz) and global financial firms (Moodys, American Express). This makes this ETF a good proxy for the world economy, globalization, and the financialization of the global economy.

4. MSCI China Financials ETF (CHIX)

This ETF provides exposure to the Chinese financial sector, with a focus on large banks and regional banks, but also covering insurance, brokers, and service providers. It can be a good pick for investors looking for exposure to the Chinese economy or unsure about the US banking sector.

Conclusion On The Best Banking Stocks

Banks are often said to rule the world, and it often pays to be one of their shareholders. This is still not a monolithic sector. There are multiple options available: large growing banks potentially turning into national oligopolies, troubled regional lenders, international banks expanding abroad, or neobanks with a focus on digital services and the unbanked population of the developing world.

When considering the best banking stocks to invest in, you’ll need to pay special attention to the balance sheet, as rising rates can dramatically reduce the value of bonds held by the bank.

At the same time, the lessons of 2008 have been well learned, and both banks and regulators are taking a much more cautious and proactive approach. So, after a short-lived turmoil and concern of a repeat of the Great Financial Crisis, maybe it is time to bet on banks to stay around and turn handsome profits for their shareholders.

In any case, diversification and careful analysis of individual companies or ETFs is always desirable.

The post 9 Best Banking Stocks & ETFs to Watch in 2024 appeared first on FinMasters.

Despite the attention garnered by major US EV makers, the change is driven by China, where EVs and plug-in vehicles (including hybrids) make up 35% of total sales. China represents 58% of EV sales worldwide. This trend is just getting started in the West, with EVs & hybrids making up only 8.4% of US sales in 2023.

Best EV Stocks

EVs are a radical departure from classical automobiles. The core difference is in the need for a large and complex battery pack, while the engines are relatively simple and easy to maintain.

So, in this sector, success often relies on outstanding battery technology and overall R&D efforts, making pure EV companies a little more like tech stocks and less like classic automakers.

We’ll try to offer a diverse view of the sector and focus on a few of the best EV stocks, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best EV stocks and ETFs is designed as an introduction; if something catches your eye, you’ll want to do additional research!

1. Tesla, Inc. (TSLA)

Market Cap	$810B
P/E	83.02
Dividend Yield	– N/A

By market cap, the largest EV company in the world, Tesla, has been at the center of financial markets’ attention for years. It gathers an almost cult-like following, as well as equally opinionated haters. The lightning rod for all sorts of heated opinions is Tesla’s eccentric CEO, Elon Musk.

Tesla’s largest contribution to the EV market has been to make the sector “cool”, with the Roadster 1.0, with performance comparable to a Porsche (and a quite similar price tag). It elevated the image of EVs from boring green to a gold-plated status symbol.

Tesla is a very tech-driven company and is also active in the energy markets (solar and battery packs) and is looking to become the winner in the race for creating the first fully self-driving cars.

A lot hinges on this latest ambition, with Tesla’s market cap sometimes being larger than the rest of the automotive industry combined.

Tesla stock price and valuation multiples are high, reflecting the equally high market expectations. So investors in Tesla will need to be cautious that at least some of the outsized ambitions of the company and Elon Musk succeed, like the expansion into utility-scale batteries, electric semi trucks, and self-driving “robotaxis”.

The question with Tesla is not the quality of the company but its ability to justify the extraordinary valuation the market has placed on it. Valuation matters, and while TSLA is undoubtedly the most popular EV stock, that doesn’t necessarily make it the best EV stock.

Learn more: If you are interested in investing in Elon Musk’s companies, our recent vlogs offer a straightforward guide to buying Boring Company stock and a practical breakdown of options for investing in SpaceX stock.

2. BYD Company Limited (BYDDY)

Market Cap	$101B
P/E	31.45
Dividend Yield	0.49%

One of the best EV stocks out there is BYD, which is the strongest driver of China’s industry-leading EV revolution, having sold 1,860,000 vehicles in 2022 for €20.3B of revenues, making it one of the largest private companies in China. It started to make EVs in 2003, long before they moved onto center stage.

The company is active in multiple sectors beyond EVs, like trains, buses, trucks, and industrial equipment, even if EVs are the core of the company’s business.

While mostly staying away from the North American market due to the USA/China rivalry, BYD is expanding overseas, especially in Europe, where it is launching €30,000 models with 265-mile ranges. BYD seems set to beat Tesla and other Western manufacturers to the industry’s holy grail, the affordable and “technically good enough” mass-market EV.

This makes BYD one of the most likely winners in the Chinese automakers racing to expand abroad, perhaps in a repeat of the success of Japanese automakers in the 1980s.

BYD was a long-term holding of Warren Buffett, who bought it early. He recently reduced his exposure, potentially wary of geopolitical risks (he sold TSMC shares in the same period). This is something to keep in mind for US investors, with BYD’s US listing a potential target for sanctions in case of escalating trade wars.

BYD is probably one of the best EV stocks of a non-US company, and the ADRTs trade in the US, making them easily accessible. You will still need a careful assessment of geopolitical risk!

3. Toyota Motor Corporation (TM)

Market Cap	$224B
P/E	13.06
Dividend Yield	3.02%

Most classic automakers have been reluctant to turn toward EVs for multiple reasons.

• Costs sunk into internal combustion engine (ICE) technologies and supply chains.
• Initial limitations of EVs (range, safety, costs, etc.).
• Large CAPEX required for battery tech, new assembly lines, etc…

Toyota was slow to embrace EVs. For a long time, it preferred to push for a mix of ICE and hybrid cars instead.

This has radically changed recently, with the unveiling of plans for a 900-mile battery with a short charging time. This outstanding performance would be made possible by Toyota’s advances in solid-state battery technology, an elusive technology that promises performance leaps ahead of lithium-ion: safer, more charge, quicker charge, less weight, etc…

These solid-state battery EVs should become available in 2027-2028, leaving Toyota enough time to build up the necessary battery factories and ramp up production to a massive scale.

Toyota is one of the best EV stocks for investors skeptical of the mainstream narrative around EVs. The company has been a leading automaker for decades and excels at mass-producing cars efficiently.

The EV market is brimming with attractive stocks, and identifying the best EV stocks can be challenging. Toyota’s slow adoption of EVs was not a mistake but instead an astute business decision. Rather than join the horde churning out technologically similar cars, Toyota may have waited for a battery technology that gives it a technological advantage to match its brand presence, manufacturing capacity, and reputation for quality and durability.

4. ON Semiconductor Corporation (ON)

Market Cap	$44.1B
P/E	25.09
Dividend Yield	– N/A

The technological improvements in engines and batteries for EVs rely on systems called “power electronics”. They allow for massive amounts of energy to be moved around a machine in a controlled and safe fashion.

A leader in this segment is ON Semiconductors, whose equipment uses silicon carbide, a type of silicon compound used for high-energy electric systems. Without it, fast charging and high performance of EVs would be impossible.

ON’s products are also used in other sectors using high power, like telecommunications, computing, green energy, and industrial activities. The energy and EV sectors are where the company expects most of its projected 7-9% CAGR to come from. This makes it a strong contender when considering the best EV stocks for potential long-term growth.

The company’s leadership in silicon carbide allowed it to grow revenues by 26% in the 2020-2022 period and to multiply its free cash flow 10x since 2019, reaching $1.6B in 2022. The company expects its free cash flow to double by 2027.

While very aggressive, this growth target might be achievable, with almost all of the largest corporations active in EV, electronics, tools, telecom, solar, and data appearing on the company’s client list.

This is more of a “pick-and-shovel” type of stock with a very strong growth profile, whose main thesis is the ongoing electrification of the world, from the industrial sector to energy generation systems, heating, and transportation.

Inventors will nevertheless need to be wary of valuation, as the company currently trades at a rather high price to free cash flow multiple.

5. Contemporary Amperex Technology Co., Limited – CATL (300750.SZ)

Market Cap	$141B
P/E	24.60
Dividend Yield	1.27%

In the hunt for the best EV stocks, one cannot overlook China-based CATL, THE world’s uncontested leader in battery manufacturing, producing around half of the world’s total batteries if measured by GWh. This makes it a prime supplier of the EV industry’s most critical component.

CATL started as a battery supplier to the electronics industry and quickly embraced EV batteries, being one of the first suppliers to Chinese automakers and Tesla.

The company has invested a massive amount of R&D efforts into new battery technologies. This gives the company a unique lead in new chemistries:

• Lithium iron/ferrum phosphate (LFP) battery technology, used for cheap and “dense enough” batteries with low costs, is a good candidate for cheap EV designs.
• A 160 Wh / kg Sodium-ion battery, announced in 2021, which uses sodium instead of lithium, cuts costs and removes the risks of lithium shortages and highly volatile prices.
• A 330 Wh/ kg ultra-durable “million miles” battery that charges to 80% in 5 minutes is ready for commercialization, which should definitely address the problem of durability and the “anxiety range” for EVs.

And this is only for soon-to-be commercialized battery tech. CATL has also announced a record-breaking 500 Wh/kg “condensed” battery, which would be as dense as some proposed solid-state batteries while still relying on better-understood lithium-ion supply chains.

The unique production scale of CATL makes it a central supplier for any automaker looking to launch EV models without spending tens of billions in battery R&D.

CATL’s innovation capacity also makes it a prime candidate to benefit from the rising demand for utility-scale batteries, where different battery chemistries, more focused on durability and costs than density, might be a better choice than lithium-ion chemistry.

Curious about opportunities in the #electricvehicle sector? Discover the best EV stocks in our latest post.

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While it’s among the best EV stocks available, purchasing CATL stock has its challenges. The main risk for investors in this company is not business-related but the rising US-China tensions, with the stock only listed in Chinese exchanges.

A repeat of Huawei falling under sanctions and being banned from selling to Western markets is a distant but very real possibility. So cautious diversification is highly recommended despite CATL’s lead in the industry.

Best EV ETFs

The EV sector is rapidly changing, and identifying the best EV stocks for long-term gains can be a challenge. That makes diversification critical. For many investors, especially those with limited funds, that makes an ETF an attractive choice.

1. KraneShares Electric Vehicles & Future Mobility Index ETF (KARS)

This ETF covers most of the EV and battery manufacturers, its top holdings being Tesla, Panasonic, Rivian, and Samsung. It also includes some producers of battery metals (nickel, cobalt, lithium).

2. Global X Autonomous & Electric Vehicles ETF (DRIV)

This ETF focuses on the tech side of the EV industry, with a strong focus on the leader of autonomous driving. So, it includes not only Tesla and Toyota but also AI leaders like NVidia, Apple, Alphabet, and Intel.

This makes it an ETF for investors who believe in the imminence and importance of AI & self-driving but aren’t sure who will dominate these sectors.

3. Global X Lithium & Battery Tech ETF (LIT)

EV growth is driving demand for batteries and for lithium. This ETF is good for getting exposure to these key suppliers of the EV industry whose fortunes will be linked to EV adoption. This ETF is heavily focused on commodity producers, followed by the largest battery manufacturers and EV producers.

4. iShares Self-Driving EV and Tech ETF (IDRV)

This ETF is focused on smaller EV companies, with its top holdings being ambitious startups like Rivian, Xpeng, and Li Automotive. It also includes larger automakers and lithium producers. This should make it a more volatile ETF but also one with more upside potential in case these companies keep growing or are the first to solve self-driving.

Conclusion on the Best EV Stocks and ETFs

EVs are almost certainly going to dominate the transportation sector eventually. The questions are how fast and with which technology. Enthusiasts expect it to happen very quickly, while skeptics believe it will at least require significant progress in battery technology to see mass adoption, like the one promised by solid-state batteries or new chemistries.

The answers to these questions will affect the choices investors will make and their perceptions of what are the best EV stocks for the long term.

The EV sector has also been a very active and popular sector in the past years, often driving valuations to astronomical and possibly unsustainable levels. Attention to valuation metrics and avoiding overpayment might be very important for good future returns.

Lastly, the growing strategic importance of this industry makes it a likely center of focus in a trade war, geopolitical rivalry, and other political interferences. Geographical diversification will be important as well.

The post 9 Best EV Stocks & ETFs in 2024 appeared first on FinMasters.

A key factor is how capital-light the sector can be. Just a few lines of code can change the world. This is also a sector notorious for changing quickly, generating controversy, and producing wildly overvalued bandwagon stocks.

Being cautious not to overpay or ignore changes in the market is as important as correctly finding “the next big thing”.

Best Tech Stocks Compared

Tech is often associated with a few big names, some of which we will discuss below. Sometimes, smaller is better, with much more room for growth and more efficient organization. Some companies seem past their glory days but are reforging themselves into new organizations. Tech also spans a huge range, including hardware, software, services, and more.

We’ll try to offer a diverse view of the sector, but we won’t even come close to covering all the possibly attractive stocks.

This list of the best tech stocks is designed as an introduction; if something catches your eye, you’ll want to do additional research!

Best Tech Stocks. Learn More: Get a fresh perspective on the revolutionary ways technology is influencing our financial habits in our newest article.

1. Apple Inc. (AAPL)

Market Cap	$2,971B
P/E	32.02
Dividend Yield	0.51%

Apple, a frontrunner in the list of best tech stocks, is a company that does not really need a presentation. It is flirting with a 3 trillion market cap and almost every investor is aware of it. This is also a stock that went up x1000 since 1997, and it’s one of Warren Buffett’s top holdings.

But it is also a company whose core markets are reaching saturation, with only so many iPhones that can be sold and a price tag that can only be raised so much.

So, the real question is about Apple’s future. Can the company that partially invented the modern computer and the smartphone continue to change the world? The latest tentative is to take an early start in the VR segment with the recently revealed $3,499 Vision Pro.

VR has been a notoriously hard-to-crack market, with Facebook and its Oculus struggling to turn it into a mass consumer market for a long time now. But if one company can do it, it may be Apple. And maybe this is indeed the new smartphone/office/gaming device/computer/TV/etc.

An alternative option is simply Apple staying Apple, with its record smartphone sales, growing in any country with a growing middle class and a tight and highly profitable app store ecosystem. So, while the future is uncertain, it is likely that Apple is also here to stay, both for Apple fans and investors.

Learn more: Embarking on an investment journey in the metaverse? Our recent post provides a detailed guide to navigating this new frontier.

2. Microsoft Corporation (MSFT)

Market Cap	$2,506B
P/E	36.56
Dividend Yield	0.83%

Ounce the arch-rival of Apple, Microsoft is now in a niche of its own among big tech. It does not rely on smartphones. It doesn’t have a huge social media presence, and it’s not an e-commerce giant. Despite this, it is a highly profitable company.

Over time, Microsoft has become a large conglomerate focusing mostly on “boring” parts of the tech sector. It still relies on Windows being the main OS of the world, it owns LinkedIn, and sells plenty of enterprise solutions, from Cloud to Office 365 to Team and Outlook.

Microsoft has also become a giant in video games through an aggressive policy of acquisition, as well as the growth of its XBOX consoles, to the point where the latest acquisition of Activision/Blizzard came under anti-trust scrutiny, not really a new thing for Microsoft.

This is despite gaming being only its 5th center of revenue, not much ahead of advertising and LinkedIn. This is just how big Microsoft really is, that a secondary and non-strategic department is big enough to trigger monopoly fear.

So even if it is less flashy than Apple, less social than Facebook, and less omnipresent than Amazon, Microsoft is a real tech giant.

Microsoft stands as one of the best tech stocks for growth potential, as it has barely started to monetize LinkedIn, it is still growing in gaming, and it recently essentially bought out AI phenomenon Chat GPT, which might or might not be the future of search beyond the 2-3 decade-old search engines.

Learn more: Curious about the role of AI in the evolving banking landscape? Our latest post sheds some light on this topic.

3. NVIDIA Corporation (NVDA)

Market Cap	$1,025B
P/E	217.24
Dividend Yield	0.04%

NVidia had a rather modest beginning in a narrow niche, being a beloved manufacturer of graphic cards (GPU) for avid PC gamers. With the growth of online gaming and ever more demanding visuals in both gaming and work software, its graphic cards were in high demand but somewhat limited in terms of the total addressable market.

Then came the cryptocurrency craze, with graphic cards proving to be a lot better than CPUs at “mining” crypto. This led to years of depleted inventory, with NVidia unable to produce enough GPUs no matter how quickly it ramped its production. With crypto cooling off in 2021, the situation came back somewhat to normal, and the stock dropped back down from a highly elevated valuation.

But this was before a new application for NVidia high-performance GPUs was discovered: training and running AI. With the surge of interest in Chat GPT, the possibility of self-driving cars, and the idea that we are on the verge of an AI revolution, NVidia stock went back to a vertical climb, more than tripling its stock price since September 2022, becoming one of the best tech stocks on the market.

AI will likely stay at the center of the tech industry for the foreseeable future. Will that be enough to justify the stratospheric rise of NVidia?

On one hand, it is entirely possible. On the other hand, a P/E of 217 for a well-established company with a trillion-dollar market cap poses some uncomfortable questions, especially as this might be reminiscent of the 1999 dot-com bubble. So investors might want to consider NVidia but not lose all prudence about a very volatile valuation.

Learn more: Interested in the AI market? We’ve rounded up the stocks and ETFs that are making waves this year in our recent post.

4. Tencent Holdings Limited (TCEHY)

Market Cap	$408.2B
P/E	15.60
Dividend Yield	0.72%

Looking at trillion-dollar valuations and meteoritic changes in stock price, we could be forgiven for believing that all tech stocks are American. But on the other side of the Pacific, China has nurtured another extensive and impressive tech ecosystem, often centered around its tech capital of Shenzhen.

Tencent is a complex company. It’s little known in the West and absolutely everywhere in Asia. It is:

• the world’s largest investor in the videogame sector.
• the first Asian tech company to pass the $500B market cap mark.
• The manager of more than 1 billion users on WeChat, a super-app for everything: chat, payment, social media, e-commerce, streaming, etc…
• Able to “casually” invest $70B in cloud computing, artificial intelligence, and cybersecurity.
• A massive VC investing firm with participation in almost all parts of the Asian tech sector, as well as overseas.

Tencent is hard to understand. It’s as if most of the US Big Tech had merged their most successful divisions into an absolute juggernaut.

If not for foreign investors’ skepticism about any Chinese stock, especially Chinese tech stock, Tencent might be one of the largest companies in the world and one of the best tech stocks out there, rivaling the valuations of Apple, Tesla, and Microsoft.

5. Nokia Oyj (NOK)

Market Cap	$23.5B
P/E	4.95
Dividend Yield	2.87%

Another one of the best tech stocks in today’s market is Nokia. This tech giant was the uncontested leader of mobile phones until it missed the smartphone revolution and almost entirely collapsed. This image of a “failed” tech company still lingers over Nokia.

Nokia has entirely re-invented itself. The company holds strong IP and patents in telecommunications, including in optical fiber networks and 5G, and has been consistently profitable from monetizing its intellectual property into enterprise hardware and services.

This makes Nokia a network-focused, B2B hardware company, already preparing for the arrival of the 6G, VR/AR/Metaverse solutions, optical/photonic computing, setting tech international standards, partnerships with relevant startups, AI & Machine Learning, automation, and even a mobile network on the Moon (yes, really).

This is an impressive turnaround story, and a tech stock that most investors have not realized is now completely different from its legacy public image. And in the current environment, tech stocks trading at a P/E ratio below 5 are a rare occurrence.

Looking to boost your #investment-strategy? Discover the #tech-stocks & ETFs that are shaping the market in our latest post!

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6. Samsara Inc. (IOT)

Market Cap	$14.4B
P/E	– N/A
Dividend Yield	– N/A

The “Internet of Things”, or IoT, is something that tech enthusiasts have been waiting for a while. The goal is a hyper-connected world where every device and machine is transmitting and receiving data.

While this is slow to start for consumer products (does a fridge really need a WiFi connection?), it is quickly becoming a reality in multiple industries, from logistics to e-commerce and manufacturing.

Samsara offers a wide array of solutions for:

• Safety: AI Dashcams, on-site cameras, driver monitoring, health & safety records.
• Machinery: GPS Fleet tracking, fuel management, maintenance and equipment monitoring, fleet electrification.
• Worker management: Workflow reporting, safety procedure checklist, location tracking.
• Data integration: with internal companies’ apps, supplier integration, and third-party software solutions (240 integrations).

The company has highly predictable revenues, with 98% of revenue from 3-5 year subscriptions. Payback for the clients is very quick (saved fuel, lower insurance, maintenance, downtime, etc.), usually just a few months.

Annual Recurring Revenue (ARR) has grown almost 10x since 2020.

Samsara is an interesting candidate when considering the best tech stocks, operating in a very quickly growing industry, with very predictable, lasting, and “sticky” income streams.

Best Tech ETFs Compared

Tech is a diverse and multifaceted sector, making it challenging to identify the best tech stocks on your own. ETFs offer a solution by providing broad diversification without having to analyze the ins and outs of tens or hundreds of technology companies. The largest tech ETFs tend to cover all the same mega-cap stock, while others offer more niche and diverse selections.

1. Investco QQQ (QQQ)

This massive ETF tracks the Nasdaq-100 and, therefore, covers virtually all of the largest US-listed tech stocks in multiple industries. It is often seen as the simplest go-to choice among tech ETFs.

2. ARK Innovation ETF (ARKK)

At times controversial for its extremely optimistic forecasts, ARK and its flagship ETF ARKK are at the center of tech rising as the dominant investing sector in the late 2010s and early 2020s. The ETF is split between genomics, automation, energy, AI, and fintech.

3. Global X Robotics & Artificial Intelligence ETF (BOTZ)

Robotics and automation might be one of the most promising sectors in tech, with radical growth expected in the next decades. With a narrower focus than other ETFs, BOTZ includes stocks often not included in tech ETFs, like robotic surgery specialist Intuitive Surgical or equipment manufacturers ABB or Keyence.

4. VanEck Semiconductor ETF (CHIU)

Almost all tech companies are built around the backbone of semiconductor hardware. This ETF is centered on the designers and manufacturers of this hardware, like NVidia, TSMC, ASML, and Texas Instruments.

5. iShares Cybersecurity and Tech ETF (IHAK)

The more connected we are, the more precious data gets, and the more important cybersecurity becomes. This ETF covers a sector that is full of companies indirectly benefiting from growing connectivity and tech penetration in all sectors.

6. KraneShares CSI China Internet ETF (KWEB)

China is quickly becoming as important to the tech industry as the US, and KWEB tracks companies covering this important 1.4 billion-person market. This is a relatively diversified ETF, with no holding above 10% of the whole. The top holdings are Tencent, Alibaba, Meituan, and Pinduoduo.

Conclusion on the Best Tech Stocks & ETFs

Tech is at the heart of both our daily lives and the global economy, making the search for the best tech stocks a highly relevant endeavor. The sector offers tremendous growth opportunities.

It is also a financial segment that is potentially overvalued after a decade and a half of explosive price action. Investors will need to be cautious and target sub-segments of the industry that are not overpriced and have significant growth potential.

The post 12 of the Best Tech Stocks & ETFs in 2024 appeared first on FinMasters.

It is also a much less volatile sector than many others, as falling sick and needing healthcare is nearly unavoidable. Healthcare is not a discretionary expense. With an aging population, it is likely that the sector will keep growing for the foreseeable future.

Best Healthcare Stocks

When discussing healthcare, many analysts conflate it with pharmaceutical, biotech, and other “medical” sectors. In this article, we will focus entirely on hospitals, insurance, and other “pure” healthcare stocks, excluding the pharmaceutical, biotech, and medical devices sectors.

So, let’s look at the best healthcare stocks.

This list of the best healthcare stocks is designed as an introduction, and if something catches your eye, you’ll want to do additional research!

Learn more: For those wondering where the US stands on healthcare spending, our latest analysis provides clarity.

1. HCA Healthcare, Inc. (HCA)

Market Cap	$82.3B
P/E	15.18
Dividend Yield	0.80%

HCA Healthcare is a massive hospital organization, with 182 hospitals in the US and the UK, treating 37.2 million patients annually, of which 9 million are in ERs.

Thanks to its massive scale, HCA is able to run its operations very efficiently. The company has grown its revenues by a 6.7% CAGR since 2017 and grew its diluted earnings per share by a 23% CAGR. HCA is also very shareholder-friendly, with a massive share repurchase by far larger than its dividend distribution.

HCA invests in growth through the acquisition of existing hospitals and newly built facilities and medical capacities.

It is no secret that Americans as a population are not getting healthier due to general aging and the obesity epidemic. This makes HCA one of the best healthcare stocks to consider, as it’s poised to benefit from continued high levels of healthcare spending. Sustained demand combined with large share repurchases could make HCA’s stock price keep rising.

Learn more: A pressing concern in today’s healthcare debate: How many Americans lack insurance? Our article sheds light on the data.

2. The Cigna Group (CI)

Market Cap	$81.2B
P/E	12.55
Dividend Yield	1.79%

Cigna is an insurance company (Cigna Healthcare) that also provides health services (Evernorth). Cigna’s health services are used by 60% of U.S. health plans for things like fertility assistance, digital formulary, vaccination programs, home-based care/telemedicine, or cost containment strategies.

The company serves 180 million customers in the US and overseas, of which 14 million are in the US insurance segment. Cigna Insurance has significantly outgrown the industry, with revenue growing at 7.1% CAGR in 2018-2021, compared to the industry’s 3.5%.

The company is growing earnings per share at 10-13% CAGR. The company also has a very shareholder-friendly policy, with 4/5th of the available cash flow redirected toward dividends, debt repayment, and share repurchase/acquisition.

When considering the best healthcare stocks, Cigna stands out. Thanks to its service segment, Cigna benefits from the overall healthcare activity in the US and is leading the digitalization of the industry. Together with the insurance activity, this gives Cigna a strong growth profile, something that does not seem fully priced at current levels.

Learn more: Self-employed and on the hunt for quality health insurance? Our guide breaks down the most fitting options for you.

3. Veeva Systems Inc. (VEEV)

Market Cap	$31.4B
P/E	61.42
Dividend Yield	– N/A

Veeva is a provider of cloud-based software for the medical research industry. This includes clinical trials, quality control, safety, confidentiality, medical communications, and data.

The company is so embedded into the medical and pharmaceutical ecosystem that 83% of new drugs approved were launched using Veeva CRM.

The company has been growing its revenues quickly, at a 16% CAGR since 2017.

The business is extremely profitable and benefits from the trend of health digitalization and data mining. The main negative point can be a pretty pricey valuation, as Veeva is a high-quality stock that is well-known among healthcare and biotech investors.

4. DaVita Inc. (DVA)

Market Cap	$8.9B
P/E	18.46
Dividend Yield	– N/A

Another one of the best healthcare stocks is DaVita, which is a network of 3,100+ clinics specialized in kidney disease and related therapies. It treats 241,000+ patients globally, with 65,000 employees. The company is active at all stages of chronic kidney disease, from detection to regular dialysis to transplants.

Kidney failure is a treatable but very serious disease, often requiring more than 10-20 hours of dialysis per week, with 8-10 days in hospital per year.

DaVita’s integrated care model can save up to $8-13k per year per patient in medical costs, of which DaVita captures $2-4k. It achieves this by monitoring patients carefully, leading to 7% fewer hospitalizations and a 4% reduction in mortality.

Besides care, DaVita has invested in kidney-focused startups, notably Miromatrix, which is trying to create transplantable bioartificial kidneys and Neprhosant, which is working to predict transplant failure.

The company is targeting earning growth of 8-14% CAGR until 2025. It has also engaged in an aggressive share repurchase program, reducing the share count from 182 million in 2017 to 90 million in 2023.

5. R1 RCM Inc. (RCM)

Market Cap	$7.6B
P/E	– N/A
Dividend Yield	– N/A

R1 is one of the best healthcare stocks available on the market as it offers software and cloud-based solutions to manage the revenue cycle of patients in the healthcare system. Its solutions allow doctors and hospitals to reduce the collection cost of medical bills, automate tasks, register patients, manage schedules, and overall improve the operations of the medical facilities.

R1 has managed 28% year-to-year revenue growth in 2023, with a 15% CAGR since 2018 for revenues and an impressive 60% CAGR for adjusted EBITDA.

This is a rather “sticky” line of business, as a hospital using R1 services will not want to change and risk disrupting its workflow for marginal gains.

It also gives R1 access to a large treasure trove of medical data, allowing it to further improve its automated solution, including its CouldmedAI, automating 125 million tasks annually for 95% of US payers.

With 70% of spending managed in-house, in a total market of $115B, the company still has large space to grow, as it offers superior results at scale to hospitals compared to home-grown solutions. The same inertia that limited the adoption of third-party providers will play a role in keeping R1’s retention rates high.

Learn more: Medical bills don’t always have to be overwhelming; discover a step-by-step strategy for negotiation in our latest article.

6. Hims & Hers Health, Inc. (HIMS)

Market Cap	$6.2B
P/E	– N/A
Dividend Yield	– N/A

Hims & Hers is a telehealth company focused on a subscription model for men’s & women’s health, as well as mental health and dermatology. The company is also considering the prospects for expanding in new applications like weight, fertility, diabetes, or pain management.

This is a generally poorly addressed market, with “90% of the applicable population yet to seek treatment in some conditions”.

The company puts a strong emphasis on privacy and data safety, as well as personalized care, relying on digital apps, online consultations, and innovative products & formulations. For example, personalized ED formulations with multiple different possible molecules and concentrations to achieve the best result for each patient.

This strategy targets the often embarrassing or private health matters many people might be reluctant to talk about with their family doctor.

The marketing strategy is multi-channeled, with social media celebrities but also ads on streaming platforms and major sports events.

The subscription model allows for repeat sales and overtime cross sales for other health issues. The payback period (time to recover customer acquisition costs) is less than 1 year. Both subscriber count and revenues have grown very strongly, by 87-88% as of early 2023.

The company has turned EBITDA positive in Q4 2022, with a solid cash position and no debt, making it one of the best healthcare stocks on the market.

By using digital tools, the company might be able to grow this market and overcome the reluctance of patients to seek treatment. Unwillingness to talk to or trust family doctors is solved by teleconsultation with specialists. The discretion and “from home” nature of the consultation and treatment delivery allows patients to overcome the idea of being too embarrassed to visit a doctor’s office or go to a pharmacy looking for the treatment.

With the unit economy now proven with the company reaching an efficient scale, this can be an interesting growth story despite a stock price essentially unchanged since 2020.

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Best Healthcare ETFs

For many investors, healthcare is attractive for the sector’s general attributes rather than any company in particular. An ETF can provide a high level of diversification while still capturing the investing performance of the healthcare industry.

1. SPDR S&P Health Care Services ETF (XHS)

This ETF focuses on healthcare providers, like hospitals, clinics, etc. This makes it one of the rare ETFs without any exposure to the biotech/pharma sectors and solely focused on pure healthcare providers.

2. Vanguard Health Care ETF (VHT)

This ETF is focused on healthcare at large, with a focus on managed healthcare, biotech, pharmaceutical, and equipment. This makes it a good pick for betting on healthcare spending in general and no company in particular.

3. Invesco S&P SmallCap Health Care ETF (PSCH)

Most healthcare ETFs focus on the largest companies in the sector, from big pharma to mega-insurance companies. For investors looking for more growth potential, even at the cost of more volatility, small caps might be more attractive.

The focus is on healthcare providers and equipment and technology/service providers to the industry, with biotech/pharma taking a back seat, combining for only 33% of holdings.

4. iShares U.S. Healthcare Providers ETF (IHF)

This ETF includes healthcare providers but also insurance companies like Cigna, its 5th largest holding, and laboratories performing medical analyses. That gives this ETF a wider selection of healthcare providers while still not including biotech and pharmaceutical companies.

Conclusion on the Best Healthcare Stocks & ETFs

Healthcare is something we may not think much about when we and our family members are healthy. It’s also the most important thing we think about if anyone gets sick. This is unlikely to change in the future and makes the industry one of the most resilient in the entire economy.

Investors might want to diversify their healthcare-related holdings to include some of the best healthcare stocks on the market, growing startups upending the status quo, and service providers that are at key junctions of the industry.

Whether to include or not biotech and pharmaceuticals depends in large part on the level of volatility an investor is willing to accept.

The post Best Healthcare Stocks & ETFs in 2024 appeared first on FinMasters.

The energy sector has been out of favor for a long time, with investors preferring the high growth potential of the tech sector. The sector rotation from bits (tech, software) to atoms (manufacturing, mining, energy) might be only getting started, given the relatively low P/E ratios and high dividend yields offered by many energy stocks.

Best Energy Stocks in 2024

The energy sector is very diverse, including renewables, oil, gas, coal, and nuclear, along with resource extractors, utilities, service providers, manufacturers, and more. The profiles of major companies vary, with focuses on growth, returning profit to shareholders, and developing new technologies.

So, let’s look at some of the best energy stocks.

This selection is focused on giving an overview of the sector and interesting companies in it, but cannot cover everything.

This list of the best energy stocks is designed as an introduction, and if something catches your eye, you will want to do additional research!

1. Petróleo Brasileiro S.A. – Petrobras (PBR)

Market Cap:	$89.9B
P/E:	2.54
Dividend Yield:	41.75%

Petrobras, the national oil company of Brazil, is becoming increasingly significant in the world of best energy stocks, as the company is on its way to becoming the world’s 4th largest producer of oil.

The company has a profile with extreme contrasts. On one hand, the business itself has performed well, with steadily growing oil production and solid profitability, allowing for record-breaking dividend yields. The company is mostly producing from offshore oil fields, with 3.74 boed (Barrels of Oil Equivalent per Day) in Q1 2023.

The company has also used this profitability to reduce its debt from $79B in 2019 to $37.6B in Q1 2023.

On the other hand, Brazil is a country with serious reputation problems among investors, and the recent election of socialist Lula to the presidency has spooked markets. Riots storming several government buildings by his opponent’s supporters did not help either. Finally, the costs of decarbonization plans and expanding petrochemical activities could reduce the company’s profitability in the long term.

So Petrobras is a great oil company IF the political situation stays stable enough. And that could be a big ‘if”. This should make any investors cautious and looking to diversify despite the handsome dividend.

At the same time, the dividend is large enough that if Brazil stays together for even three years, an investment would be profitable based on dividend yields alone!

Learn more: Explore our recent analysis for an overview of notable oil stocks and ETFs in the current market landscape.

2. EQT Corporation (EQT)

Market Cap:	$14.1B
P/E:	3.38
Dividend Yield:	1.54%

EQT is the leading producer of natural gas in the US, with operations in Pennsylvania, West Virginia, and Ohio (Appalachian Mountains). Or as the company puts it, “If EQT were a country, it would be the 12th largest producer in the world of natural gas“.

Thanks to a warm winter and a softening of the global energy crisis, natural gas prices have gone down a lot in the USA. So far, this has not hurt EQT’s free cash flow generation, which hit $774M in Q1 2023.

After a period of pursuing growth at all costs, like most of the rest of the shale sector, EQT is now focused on reducing debt ($1.5B by the end of 2023) and improving returns to shareholders, notably in the form of share buybacks ($1B in 2023).

EQT is one of the best energy stocks to consider if you’re betting on the ongoing boom in shale gas production. Its prospects look promising due to currently low gas prices in the US rebounding, coupled with a stable or growing global demand for LNG exports and industries from Europe relocating to the US.

3. S. N. Nuclearelectrica (SNN)

Market Cap:	$2.9B
P/E:	4.64
Dividend Yield:	11.9%

The sole national operator for nuclear power in Romania, Nuclearelectrica has one of the world’s best nuclear safety records. It is owned in the majority (82%) by the Romanian state.

The company relies on its Units 1 & 2 for power production, which together have a nominal capacity of 1.4 GW. Unit 1 should be refurbished from 2027-2029 to provide it with another 30 years of operational life after that date. Unit 2 should be refurbished in the same way after 2037.

The company is also planning to build 2 new reactors, Units 3 & 4, which would bring Romania’s energy mix to 36% nuclear and double Nuclearelectrica’s production. They are expected to be commissioned by 2030 and 2031.

Lastly, Nuclearelectrica should be the first European company to implement the SMR (Small Modular Reactor) technology, thanks to an agreement with US-based NuScale. This project should add 462 MW to Nuclearelectrica capacities. This project already has $275M in funding from a coalition of international partners.

Nuclearelectrica is a very high-performance nuclear operator in a nuclear-friendly country. It offers a generous dividend and plans to extend its capacity massively by the end of the decade.

Thanks to the refurbishing of Units 1 & 2 and the new production planned, the company is emerging as one of the best energy stocks fit for an income portfolio with a long holding period, with stable baseload energy production expected for the foreseeable future.

Learn more: Understand the contemporary landscape of the nuclear world with our breakdown of the industry and its key players. Discover why nuclear is back in the spotlight.

4. Brookfield Renewable Partners L.P. (BEP)

Market Cap:	$13.2B
P/E:	– N/A
Dividend Yield:	4.53%

BEP is the renewable utility branch of the asset management giant Brookfield. It holds $625B in assets and manages 25 GW of power production, with plans to add a staggering 110 GW of new capacity.

Its current production is a mix of various renewables, with most of the planned expansion being in solar.

In 2023, BEP purchased 51% of Westinghouse (together with uranium miner Cameco), the leading builder of nuclear power plants in North America and a designer and parts & service supplier for most of the West’s existing nuclear power plants.

BEP’s distribution to shareholders has grown by 6% annually since 1999. Together with the stock price growth, it generated annualized returns of 16% for its shareholders in the same period.

BEP combines a focus on renewables, a newly added presence in the nuclear OEM (Original Equipment Manufacturer) business, and aggressive energy production growth in the next 5-10 years.

This makes it one of the best energy stocks for investors looking to bet on the energy transition and a speedy turn to a low-carbon energy mix (including nuclear) in Western countries.

5. Transocean Ltd. (RIG)

Market Cap:	$4.8B
P/E:	– N/A
Dividend Yield:	– N/A

While the whole energy/fossil fuel sector suffered in the 2010s, none did as badly as the oil & gas services sector, especially the offshore sub-segment. With oil & gas prices down, most producers cut severely on capital expenditure. And while onshore spending in the US remained robust with the shale revolution, very few offshore projects were approved.

This led to a mass wave of bankruptcies in the entire offshore drilling sector, affecting many companies but not Transocean. At its lowest point, when the survival of the company was in question, the stock fell to $0.67/share, or 1/253th of its peak value in 2007.

With a focus on ultra-deepwater and newer generation drillships, Transocean has consistently achieved among the highest dayrates (the standard metric for the industry) for new contracts in 2022.

The company now has an $8.5B backlog for future work contracts, twice that of the nearest competitor. The company is currently focused on repairing its balance sheet, as well as putting multiple drillships that were put in long-term storage (“cold stacked”) back to work.

Transocean stock is a bet on the continuous need for new oil & gas resources, and especially offshore resources, one of the lowest-cost sources of new supply. If you’re looking to diversify your portfolio, this could be one of the best energy stocks to consider.

The largest risk would be a major recession or any other event sending oil into a sustained low price range, which could hit the demand for offshore drilling. In such a scenario, Transocean could struggle to manage its still heavy debt load.

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6. Peabody Energy Corporation (BTU)

Market Cap:	$2.9B
P/E:	1.91
Dividend Yield:	0.37%

Peabody is a coal miner with operations in the USA and Australia. If you’re interested in the best energy stocks, understanding companies like Peabody can offer valuable insights. They produce a mix of thermal coal (for power production) and coking/metallurgical coal (indispensable for steel production, in green on the map below).

Thermal coal experienced a boom followed by a bust during the 2022 energy crisis. Prices have already risen back up in 2023. Overall, Peabody made a little more than half of its 2022 revenues from thermal coal.

2022 has shown that when facing energy shortages, even countries committed to reducing carbon emissions, like Germany, turn back to coal to keep the power grid stable. With the demand for energy growing, it is likely that coal will stay in demand for power generation, especially in Asia and developing countries.

There is no ready substitute for metallurgical coal in steelmaking, so its demand should stay stable in line with overall steel demand.

Due to these factors, Peabody can be a good bet on the durability of coal demand, while the market somewhat dismisses the long-term value of the company’s assets, as illustrated by the low valuation multiples.

Still, investors will need to be cautious. The company’s stock has risen substantially since its 2020 lows, and coal markets are notoriously volatile, even when compared to other commodities.

ETFs (Exchange Traded Funds)

If you’re looking to diversify your portfolio and considering some of these best energy stocks we’ve featured above, you may also want to explore the sector as a whole. There are several energy-focused ETFs available, providing different levels of exposure to the various segments of the energy industry.

1. Energy Select Sector SPDR Fund (XLE)

With a focus on “Big Oil”, this ETF includes all the big international fossil fuel majors, like Exxon, Chevron, ConocoPhillips, etc. It provides direct and diversified exposure to oil & gas production.

2. VanEck Oil Services ETF (OIH)

This ETF is focused on services companies for the fossil fuel industry. Its top holdings are industry leaders Schlumberger, Halliburton, and Baker Hughes. It also includes Transocean as its 8th largest holding. The ETF is primarily focused on US-based companies (90%), with only 5% in the UK and 5% in Bermuda.

3. Alerian MLP ETF (AMLP)

This ETF is focused on the so-called mid-stream sector, the gas and oil pipelines that transport energy throughout the USA. This is a sector that tends to be less volatile than energy producers and also distributes generous dividends, relying on its quasi-monopoly and the high value of its transportation assets.

4. Global X Renewable Energy Producers ETF (RNRG)

This fund is almost exclusively investing in utilities producing power through renewables. It is very geographically diverse and includes BEP in its 6th largest holdings, with the largest holding being Danish wind farm leader Orsted.

5. VanEck Low Carbon Energy ETF (SMOG )

This ETF focuses on low-carbon energy and is more diverse than RNRG, with only 39% invested in utilities. It also covers consumer goods, IT, industries, and materials with companies like Tesla, Samsung Sdi, BYD, and First Solar.

6. Utilities Select Sector SPDR Fund (XLU)

If you think energy will be in high demand but have no opinion about the best energy source, XLU, with a wide selection of utilities relying on hydropower, nuclear, fossil fuel, and renewables, might be best. It is also likely to provide steady dividend income.

7. VanEck Uranium+Nuclear Energy ETF (NLR)

This ETF provides exposure to nuclear power overall, from large utilities to uranium miners and technology companies. It can be a good pick for investors optimistic about nuclear energy or in complement to other energy ETFs.

Conclusion on the best energy stocks

Energy is a complex sector and can also be a very profitable one. It is also a very diverse industry with many different profiles and technologies.

For this reason, investors will either need to learn a lot about a specific sub-segment or take a diversified approach to cover the sector as a whole and find the best energy stocks on the market.

It will also be highly recommended to take an apolitical approach, even if energy, fossil fuels, nuclear power, climate change, and afferent technologies tend to be very hotly debated topics. The future energy mix will probably be as diverse as the current one, and an energy portfolio should reflect this fact.

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