World’s largest fund manager says energy stocks are positioned for an ‘investment boom’

The market is terribly volatile lately. One day, stocks skyrocket. The next day they fall. And ultimately, they seem to be going nowhere as inflation and gas prices soar. Not to mention that a war is raging in Europe and China is struggling with a new wave of Covid-19 lockdowns.

Granted, that’s an ugly backdrop for stocks.

But to InvestorPlaceand, we like to say that it is not so much a stock market as it is an equity market. The fact is that even in a choppy market, certain sectors can reverse the general trend and head higher. Some may even explode while the market stagnates.

A space that could explode in the coming quarters? Energy values.

At least that’s how the world’s largest fund manager sees it. Larry Fink, CEO of black rock (noir) – an investment management firm that oversees $10 trillion in assets – believes today’s price hike will “create an investment boom” in the energy sector.

We are inclined to agree. Although the market may be stuck in neutral, some energy stocks could absolutely soar over the next few months.

Which actions in particular? Let’s find out.

Short-term spending boom in fossil fuel stocks

Larry Fink believes there will be of them energy spending will soon explode, both triggered by today’s high oil and gas prices. And we agree. The first will take place in the coming quarters. And the second boom will play out over the next few years.

The first boom to come is an increase in near-term spending on fossil fuel production, which should benefit oil and gas stocks.

Historically speaking, whenever oil and gas prices go up, you see these exploration companies start to ramp up their operations.

This is because oil exploration is inherently a low-margin and very expensive business. Therefore, many exploration projects are only profitable if oil costs exceed a certain level. So when those prices go up, you see oil and gas exploration companies bringing more projects online. This is when these projects really pay off.

The current price spike is unlikely to play out any differently.

In fact, it should happen on an even greater scale. After all, the current rise in oil prices is the fastest we have seen in over 15 years. As a result, exploration and production growth is also expected to grow at its fastest pace in 15 years.

If this is the case, the shares linked to this increased operation will increase in the short term.

Companies will produce much more oil and gas at much higher prices, which means more revenue, bigger margins and more profits. And all of this should lead to higher stock prices.

For oil and gas investors, this is an exciting prospect. But this cannot affect the profits to be made from the second wave of spending boom in energy stocks.

Boom in long-term spending on climate technology

The oil and gas investment boom won’t last a very long time.

Indeed, as exploration and production operations intensify, supply will increase. As supply increases, prices go down. And as prices fall, many projects will become unprofitable. They will have to disconnect. And suddenly, an increase in revenue and profit in the oil and gas industry will turn into a huge drop. These stocks will collapse.

That’s just the pattern here, folks. It’s tried and true. This time will be no different.

So, for investors looking for a long-term way to play an energy investment boom, consider its second wave.. We’ll see aAccelerating investments in the clean energy transition.

In Fink’s own words:

“…recent events will accelerate the long-term transition to greener energy sources in many parts of the world. And we will see huge changes in the energy transition… This represents a significant long-term opportunity for investment in infrastructure…renewable and clean technologies on behalf of our customers.

Essentially, the Russian-Ukrainian war underscored the fragility and vulnerability of a globalized energy ecosystem based on non-renewable energy. The most sustainable economic solution to reinvent the global energy ecosystem is to replace fossil fuels with renewable sources. But the infrastructure needed to support a clean energy ecosystem is not yet in place. So over the next few years we will see a massive explosion in spending to build this foundation.

Fink is 100% right.

Russia’s invasion of Ukraine has accelerated the global transition to clean energy. As a result, companies and countries will invest billions to build solar parks, electric vehicle charging infrastructure, and more.

Companies that manufacture these products will obviously benefit from this spending boom. Their revenues and profits will skyrocket. And unlike the short-term spike in oil and gas profits, the rise of these climate-tech companies will continue.

Therefore, climate technology actions are fantastic investment opportunities today. They will skyrocket over the next 12 months, five years, or even more than 10 years.

These are long term compounds in the early innings of their growth stories. And they will pay patient investors many times their money over the long term.

The Final Word on Energy Stocks

The world’s largest fund manager believes the Russian-Ukrainian war will trigger a huge investment boom in the clean energy sector.

And he’s 100% right.

That is why, in our investment research consultancy Innovation Investor, we’re backing the truck on climate tech stocks right now. We are talking about solar energy, energy storage, hydrogen, battery, electric vehicle and much more. By investing in these today, we expect to earn many times our money’s worth in the next few years alone.

In particular, there is a small stock of $3 that we have our eyes glued right now. This company is working on next-generation battery technology that will likely be at the epicenter of the clean energy investment boom.

The upside potential for this stock is huge. He’s so big, in fact, that I can’t write his name in this post.

But I recently did a presentation on this stock, where I told a group of 60 people all about it.

I will draw the curtains on this event to give you the same deadly opportunity. All about the stock in the center what Larry Fink says will be a massive investment boom.

As of the date of publication, Luke Lango had (neither directly nor indirectly) any position in the securities mentioned in this article.

Comments are closed.