Hey There Income Hunter,
Well we all know who the real winners of the Inflation Reduction Act of 2022 are
The IRS, of course!
$80 billion over the next 10-years … Sharpen your pencil – they are coming after you! (I kid, but only sort of.)
Actually, Sens. Sinema and Manchin did OK for themselves, too. … They will enjoy the next few years after Manchin secured a permit to complete the Mountain Valley Pipeline for Equitrans Midstream Corp.
And Sinema not only secured $4 billion in drought relief for western states, she also kept the carried-interest loophole that allows investment managers to shield the majority of their income from higher taxes.
Another winner?
You.
IF you read the Aug. 1 Power Income in which I revealed two of the best stocks to buy in anticipation of the deal’s approval.
Today, we will take a look at where they are and how to play them from here – and I’ll offer a couple of more!
SunPower Corp. (Ticker: SPWR)
SPWR is a top manufacturer in the US residential solar space.
First, it spun off its commercial business and purchased a residential solar installer.
The residential market will now be well incentivised to transition over to solar, and only 5% of this segment is penetrated.
SPWR could grow its direct-to-customer business by 25%, plus it will still tap into its dealer network pipeline.
Here’s the latest on the charts …
SPWR is now overbought after rallying almost 30% since my Aug. 1 letter..
At this point, I would be patient and set a bull strategy on a test of the 200-day moving. We may get a “buy the rumor and sell the fact” correction.
And it’s a fact that I’ve spent 2022 profiting from the Fed in Power Income Trader.
Plug Power Inc. (PLUG)
Plug was a huge beneficiary of supply chain issues and deglobalization. Think about how many all-in, complete domestic supply chains the US will have to build in the years ahead.
As many wean themselves from reliance on China, PLUG has a huge edge because it offers an end-to-end solution for green hydrogen fuel.
Technically, PLUG is in a similar position as SPWR …
As with SPWR, PLUG is overbought. A great place to buy, if you get the chance, would be on a test of the 100-day moving average, currently near the $20.50 level.
Barrick Gold Corp. (GOLD)
GOLD just beat earnings forecasts by 7% yesterday with a big beat on revenues (143%) …
What I really like about GOLD is it has recently focused on copper production, with a 25% increase in the past years
Mark Bristow, GOLD CEO, said on the earnings call that there just won’t be enough copper supply to meet all the electric vehicle production demand for the metal.
So, Bristow will continue to build copper production, plus the company is one of the world’s largest gold producers (what do you expect with a ticker like that?). And the precious metal is growing in popularity for central banks wanting to shore up their reserves.
The chart below shows GOLD turning higher after the earnings announcement. I am looking for just a slight pullback below $16 in the days ahead to buy.
For GOLD, I like buying a DEC16 20-strike call diagonal and selling calls every couple of weeks against it. The Dec.16 call only trades at $.45 and traders can capture $.10 every couple of weeks by selling a dollar higher strike.
Something to think about …
Bring It Home
It’s a big week with CPI and PPI on Wednesday and Thursday, plus nearly $500 billion in bond auctions.
The market is trading in a tight range right now as positive gamma positioning gives the edge to the bulls …
However, the geopolitical environment is getting more dangerous since Pelosi’s Taiwan trip and any headline that hints of China/US tensions could change that in a hurry.
Trade short-term and use stops to limit losses.
Most of all, save some dry powder in case we do get a flush to the downside, and as always …
Live and Trade With Passion My Friend,
Griff