Although the global push to break away from the internal combustion engine continues to gain traction, this process won’t take place overnight. Widespread adoption of fully electric vehicles will require improvements in driving range, battery cost and charging times. There’s also the need to build out sufficient charging infrastructure.
A large-scale shift toward electric vehicles would also necessitate significant investment in the grid. Simulations conducted by Matteo Muratori, a transportation and energy systems engineer at the National Renewable Energy Laboratory, found that uncoordinated charging of plug-in electric vehicles could present challenges for the grid. Potential solutions to this quandary reside in the application of big data and machine to machine communications to balance the load.
In addition to electric vehicles, the auto industry and leading technology players continue to pursue autonomous driving, an innovation that leverages advances in processing power as well as data storage and transmission. Early efforts in this direction have produced some tragic results, with Tesla possibly overstating—or drivers misinterpreting—the capabilities of its autopilot function.
These developments, coupled with the rise of ride-sharing services such as Uber and Lyft, have contributed to visions of a future where a fleet of autonomously driven vehicles starts to erode individual ownership of automobiles, especially in urban areas.
Speculating and arguing about these potentialities can be a stimulating experience; however, investing based on a concretized view of an uncertain future often results in more pain than profits. We would remind readers that a good story doesn’t always make for a good investment.
The transportation segment appears ripe for disruption, but this evolutionary process will take place over a longer time frame than some overexuberant investors expect.
In picking stocks with exposure to this theme, we aim to identify names that also offer leverage to near-term upside catalysts; the slice of pie on your plate offers more sustenance than the pie in the sky.
In picking stocks with exposure to electric vehicles, we aim to identify names that also offer leverage to near-term upside catalysts.
Despite the market's recent focus on geopolitical risk, the supply-demand balance in the global oil market appears supportive of prices. Does the recent breakout in energy stocks suggest that investors have come around to this reality?
Surging oil production from the Permian Basin and insufficient takeaway capacity means that West Texas Intermediate delivered to Midland, Texas, trades at a widening discount to Brent and Light Louisiana Sweet crude oils. We examine how long this arbitrage opportunity could last and which energy companies stand to benefit.
The past week brought a bumper crop of acquisitions involving publicly traded energy companies, sparking scuttlebutt about a resurrection in M&A activity in the sector—a welcome upside catalyst that could help to bring generalists back to the space.
What does Energy Transfer Equity LP's rejected takeover offer for NuStar GP Holdings LLC tell us about the prospects for mergers and acquisitions in the MLP space?
We run through a number of industries with leverage to the electricification of transportation, highlighting potential pitfalls for investors to avoid and the businesses that offer the most near-term upside.
We examine the relationship between rising penetration of electric vehicles and growth in global oil demand.
We survey the MLP space, highlighting the risks and opportunities in a volatile market.
The names on our Focus List have held up reasonably well in a difficult tape. We take advantage of the selloff in master limited partnerships to add a high-quality name that trades at a sharp discount to its peers and offers exposure to an appealing organic-growth story.
Fourth-quarter earnings season was anything but uneventful for some of our Portfolio holdings.
Elliott and Roger on Apr. 26, 2018
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