Which Energy Companies Rise Over 100% in 2021?
By Dale Gillham |
In the last week, there have been protests around Australia organised by the Extinction Rebellion with the aim of shedding light on environmental issues in an effort to get the government to take action. Regardless of what you think about these protests, I believe as a nation, it is important that we look after the environment, which includes both individuals and organisations.
Supporting the environment through investment
So, what companies are paving the way to support a better environment. While there are many companies, unfortunately not all of them are listed and for those that are listed many are very small and illiquid, which makes it challenging to invest.
For example, Renu Energy, who are involved in geothermal power, has risen 115 per cent this year, yet on average less than $30,000 is traded in the stock each day, which makes it high risk. Other stocks include Mpower, which is up 140 per cent and Carnegie up 150 per cent this year. Mpower are involved in solar farms, battery storage and microgrids while Carnegie harnesses ocean energy but like Renu Energy, both of these stocks are very illiquid, which means they are also high-risk investments.
If you do want to support the environment and you like these types of investments, than you may want to invest directly. In saying that, you need to be conservative with your expectations and the returns you will achieve; therefore, make sure whatever you invest in does not break the bank.
Alternatively, you could invest in these innovative companies through ETFs. While I am not normally a big fan of these investments, in these specialist areas this can be an ideal way to gain broad exposure with lower risk. You still need to do your research, as there are many ETFs ranging from environmentally responsible to ethical, sustainability and more, so you will need to ensure you are investing in the areas you want to support.
In the coming years, I expect environmental companies will gain momentum with certain companies listing, while others will attract capital raisings, takeovers and expansion, which will be exciting to watch. Given this, it is my expectation that ETFs that invest in this area will do well over the longer term.
What were the best and worst performing sectors last week?
Healthcare was the standout performer last week up 5.07 per cent with Sonic Healthcare, CSL and Cochlear all doing well. Utilities was up 3.54 per cent while Consumer services and Consumer Discretionary were both up over 3 per cent. The worst performing sectors included Information Technology down 0.04 per cent followed by Financials and Industrials, which were both just in the green.
The best performers in the ASX/S&P top 100 stocks included Crown Resorts up 19.57 per cent followed by Sonic Healthcare up 9.67 per cent and Ampol up 9.42 per cent. The worst performing stocks included TPG Telecom down 7.37 per cent followed by Appen down 5.45 per cent and Mineral Resources down 5.25 per cent
What's next for the Australian share market?
The Australian stock market looked a little stronger last week, as it closed higher on four out of the five trading days, which we have not seen for some time. More importantly, the All-Ordinaries Index closed near its high for the week and achieved it highest weekly close in five weeks. This may be a positive sign that the market is getting stronger and close to breaking up out of the sideways move it has been in over the last three months.
That said, my opinion has continued to be bearish, as I believe probability suggests that the market should trade lower in the short term although I have not discounted that it may rise. For me to change my mind, the All Ordinaries Index needs to rise in the coming week and trade above 7,200 points.
Right now, there are many good stocks that are setting themselves up for the next bull run. So regardless of whether the market does fall for a brief period, I am confident once this sideways move is broken, the Australian stock market will do well in the second half of 2021. I also still believe that the Energy, Materials and Financial sectors will do well moving forward.
For now, good luck and good trading.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.