Hey There Income Hunters,
One of the goals of the COP26 summit in Glasgow, attended by 26 nations from around the globe, was to consign coal power to history.
Well, that didn’t happen.
Instead a few coal-reliant countries indicated they will not completely stop using coal until after the 2040s.
Get this, the only thing the COP crowd agreed on was to have better ideas at next year’s event.
The truth is, 1 billion people in China do not even own cars yet.
In India, 1 billion people do not have air conditioners.
Yet their income per capita is rising and the demand for more electricity and coal is still the world’s largest base for electrical power.
The bottom line: There are mathematically unsustainable constraints on fossil fuel supply without even acknowledging the demand side of the equation.
That’s why I want you to meet me on Thursday at 11:30 am for a Power Income Trader Hot Read session during which I’ll dive into the coming energy crisis of 2022.
Keep an eye out as I’ll be sending my Power Income readers a direct link to the event later today.
Then get ready as I’ll show you a systematic approach to trading an out-of-control Fed and US government policy that is driving 70s-style inflation. I’ll also give you trade ideas and a plan to make more money during this inflationary period than you ever thought possible.
Now let’s look at potential profits based on policy backlash …
The ESG Backlash
Environmental, Social and Governance promotion is awesome in theory …
However, to have pushed it so hard with huge energy demand coming in a post-Covid world has created an energy crisis that will last years.
India is still 70% dependent on fossil fuels and the country’s use has doubled since 2000. Energy consumption is projected to grow at three times the global average.
Middle class expansion in India due to urbanization trends will drive a massive surge in air conditioning demand for the next five years.
ESG halting the necessary investment needed to support an increase in production of energy fueled by coal and oil.
You WANT Coal in the Stocking This Christmas
Alliance Resource Partners LP (Ticker: ARLP)
ARLP is an important thermal coal producer. It also carries oil and gas assets. They are a domestic producer headquartered in Tulsa, Oklahoma.
They are highly ranked among peers by industry observers, and ARLP distributes $.80 annually in dividends with a 7.52% yield.
After a 20%+ correction recently they are primed for a run at new highs in the weeks ahead.
As you can see, volume has been low on this correction and the $10 level provides excellent support.
Consider a Jan. 21 10/12.5 call spread for $.90 or better for ARLP. This allows plenty of time for more details on the infrastructure spending bill and new stimulus to hit the market.
The $10 level can be used to stop yourself out of a trade and limit your loss. However, ARLP is a quality company and I think coal producers will resume their bull trend, so now is the time to get in.
ARLP Bull Strategy
I like a Jan. 21 10/12.5 call spread for $.90 or better for ARLP.
I would also consider adding to the trade on a break above the 50-day moving average on higher-than-average volume.
Your return on the trade if target is hit at expiration would be:
Net Profit: $250-$88 = $162
Return on Capital: $162/$88 = 184%
Bring It Home
The Climate Pact in Glasgow came to no pact at all.
Now we return to a green energy revolution that is going to create even more demand for coal, while we wait 3-5 years as the EV industry is built.
Rotation throughout the fossil fuel complex plus nuclear energy powered by uranium will present plenty of opportunities throughout the rest of 2021 and all of 2022.
Don’t forget to join me on Thursday at 11:30 a.m. tomorrow for a special Power Income Trader Hot Read session. Your link is coming later today.
Until then …
Live and Trade With Passion My Friends,