Yo, Pit Crazies,
2021 was the year of the green energy stock. Tesla Inc (Ticker: TSLA) market cap crossed $1 trillion and things looked rosy.
That all changed in 2022 when anything with a multiple or a unicorn value got trashed.
I’m going to let you in on a little secret … some of my trade ideas for 2023 will be “boring” companies!
Energy will be sexy again because it was not sexy in the prior years. The pink chart below is the Guggenheim Solar Index ETF (Ticker: TAN) compared to another vanilla energy name.
That vanilla energy name is up 78% while solar is down by 5.3%.
Green was hot, now it is not.
Will this chart invert in 2023?
2023 Will Be the “Show me the Money” Year
The vanilla stock on the chart is ExxonMobil Corp (Ticker: XOM) and it is finishing out the year very strong.
Green energy stocks have gotten all the boost they are going to get from Uncle Sam this year but could not turn in any kind of performance. That is not a good omen.
My guess is that folks piled into the green energy lotto and came up empty from an investing point of view. TSLA was the lone exception and it is now struggling.
The Ukraine invasion was a not subtle reminder that the world still needs energy. 2023 will be more of the same.
The thing about energy is dividends. Energy companies pay huge dividends and that will continue to attract money in 2023 Old will be new again and usually fads take a year or two to get in full swing, so energy will continue to gain popularity.
XOM only trades at a 10x P/E ratio and pays a 3.6% dividend. Hardly crazy town values. Until there is a true breakthrough technology for green energy, it will have a hard time performing. Too many burnt fingers right now from the giddiness of 2021.
To Your Trading Success,
AG