Four Environmentally Friendly Industrial Income Investments to Purchase Amid Peril
By: Paul Dykewicz,
Four environmentally friendly income industrial investments to purchase amid peril from economic ills and Russia’s stepped-up attacks against Ukraine are implementing innovations to enhance their outlooks.
The four environmentally friendly industrial income investments to buy are engaged in missions such as increasing agricultural productivity, manufacturing electric-powered farm equipment and recycling fibers for packaging. With rising social consciousness for the climate, these income investments are aiming for ecological staying power.
Increased inflation, Fed rate hikes, recession risk, shelling of civilians in Ukraine by Russia’s military add to uncertainty, but none of these threats will stop growing environmental awareness. Russian’s onslaught against Ukraine is disrupting the world economy, as Europe and Asia are mired in recession, wrote Mark Skousen, a presidential fellow in economics at Chapman University, in his monthly Forecasts & Strategies investment newsletter.
“The primary negative, of course, is that the Federal Reserve is determined to slow the economy, reduce demand, and thereby bring down inflation,” Skousen opined.
Four Environmentally Friendly Industrial Income Investments to Purchase Amid Rate Hikes
Too much quantitative tightening, too fast, may lead the United States into a recession, counseled Skousen, who uses his analysis of inflation, interest rates and monetary policy in recommending stocks and options to buy in his weekly Home Run Trader advisory service. Economic statistics show a slowdown in the economy, but not recession, he added.
“Even though real gross domestic product (GDP) is slightly negative, second-quarter gross output (GO) — which measures total spending in the economy — grew by 1.7% in real terms,” Skousen stated. “GO includes the supply chain, which is still catching up from the lockdown-induced shortages.”
Mark Skousen, Forecasts & Strategies chief and Ben Franklin scion, meets Paul Dykewicz.
Four Environmentally Friendly Industrial Income Investments to Purchase Despite Putin’s Pummeling
A big question is whether Russia’s President Vladimir Putin will persist in attacking Ukraine and its civilians, in addition to military and industrial targets. On Monday, Oct. 10, Putin-led forces unleashed terror on more than 20 cities across Ukraine with at least 84 cruise missiles and 24 drones, marking one of Russia’s largest assaults against civilians since starting what its leaders call a “special military operation.” The strikes killed at least 14 civilians and wounded dozens of others.
Russia’s shelling of hospitals, schools, residential areas, churches, nuclear power plants, oil refineries, a children’s playground, a park, a German consulate, a business center and a theater used as a shelter have been combined with brutal rapes, torture and outright executions of Ukrainian civilians. Those acts caused many nations to place sanctions on Russia that included scaling back or severing ties with the aggressor as a producer of grain, oil and natural gas.
Investors can consider an exchange-traded fund that offers broad exposure to companies providing industrial automation, as well as environmental awareness, said Bob Carlson, a pension fund manager who also leads the Retirement Watch investment newsletter.
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ROBO Rates as One of Four Environmentally Friendly Industrial Income Investments to Purchase
Carlson named Robo Global Robotics and Automation (ROBO), a fund focused on following an index of robotics-related or automation-oriented companies. The fund attained decent performance until 2022 when it faltered as it hit a downdraft that befell technology and industrial companies.
Both sectors have done poorly in 2022 as interest rates increased, Carlson commented. The fund has fallen slightly more than 40% in 2022, while its three-year return is just shy of an annualized 6%.
Chart courtesy of www.stockcharts.com
The ETF owns 81 stocks and has 17% of its holdings in the 10 largest positions. ROBO’s top holdings recently consisted of Cognex (NASDAQ: CGNX), Intuitive Surgical (NASDAQ: ISRG) and IPG Photonics (NASDAQ: IPGP).
Bob Carlson, investment guru of Retirement Watch, talks to Paul Dykewicz.
Four Environmentally Friendly Industrial Income Investments to Purchase Include AGCO
AGCO Corporation (NYSE: AGCO), an agricultural machinery manufacturer in Duluth, Georgia, is delivering a 20% increase in both farmers’ productivity and profitability, according to Chicago-based investment firm William Blair & Co. In addition, AGCO’s precision products generally offer a two-year payback and, in some cases, a one-year payback, the firm added.
Some of AGCO’s innovation efforts focus on real-time “sense and react” in the field across a full crop cycle, the investment firm wrote. The use of “edge processing” and “advanced sensors” help maximize outcomes by enhancing productivity and sustainability for its customers, William Blair added.
AGCO, rated “outperform” by William Blair, intends for Fendt to be its premium brand in both North and South America, requiring a strong precision agricultural portfolio, a diverse array of solutions that work across the entire crop cycle and robust distribution and after-sales support, wrote William Blair. Fent sales are expected to be $700 million in 2022, and then more than double to $1.5 billion in three to five years, with an additional goal to achieve 20% market share in North America.
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The company brings its newest equipment to the market, while the aftersales approach adds the latest technology to an existing piece of AGCO equipment. As for retrofit, the company sells advanced, agronomic solutions to farmers who want to update existing pieces of equipment with modern technology economically.
Former Money Manager Names a Favorite Environmentally Friendly Industrial Income Investment to Purchase
Michelle Connell heads Portia Capital Management, of Dallas, Texas.
Most analysts have AGCO rated to achieve upside of 30-35% in 12-18 months, former money manager Michelle Connell counseled. When AGCO reported results in July, the company beat its revenue and earnings per share estimates. However, it left its estimates for the second half of 2022 at the same levels, continued Connell, CEO of Dallas-based Portia Capital Management.
Plus, the company continues to experience strong demand, with a potent order book into 2023, Connell said. Typically, at this time of year, the company does not have such a strong order base, she added.
Unless some external factors come into play, AGCO should experience strong financials for the end of the year, as well as next year, Connell counseled. Possible risks include economic exposure to the European Union (EU), as well as China, along with supply chain uncertainties. In addition, manufacturing in Europe could be affected by an upcoming energy crisis for the region this winter. But AGCO is expected to have enough alternative energy sources in the EU to remain largely protected. Finally, the company’s stock performance has been tied to economic cycles in the past.
AGCO benefits as the population of the world rises, since it needs to grow quality food amid declining acreage. Companies that manufacture equipment that maximize a farm’s acreage will continue to experience high demand, Connell concluded.
Deere Leaps into Four Environmentally Friendly Industrial Income Investments to Purchase
Deere & Co. (NYSE: DE), an environmentally oriented agricultural machinery company headquartered Moline, Illinois, halted its dividend during the pandemic but reinstituted it with a current yield of 1.27%. Additional evidence of the company’s conservatism is a payout ratio of just 20% to retain cash on hand.
Deere, rated “outperform” by William Blair, also has done an “excellent job” supporting its stock price, Connell said. In the last 10 years, Deere repurchased 25% of its shares outstanding, she added.
The company is known for buying shares when valuations are low and using its cash for the stock purchases, Connell continued. There have been some concerns regarding Deere’s insider sales of approximately $4 million in 2022 but Connell said she is not worried.
“Executives frequently have tight windows for the sales of their shares and estate planning may also be part of the executives’ strategy,” Connell told me. “I like DE because it takes advantage of the fact that that as a population increases, the demand for affordable food increases as well.”
Deere has done a “great job” of utilizing technology with its machinery to maximize crop yield, Connell said. While the stock has held up well in a falling market, potential upside for the next 12 to 18 months could top 20%.
Chart courtesy of www.stockcharts.com
Deal for Kreisel Lets Deere Run with Four Environmentally Friendly Industrial Income Investments to Purchase
Deere & Company signed a definitive agreement to acquire majority ownership last December in Kreisel Electric, Inc., a battery technology provider in Rainbach im Mühlkreis, Austria. Kreisel develops high-density, high-durability electric battery modules and packs. Plus, Kreisel developed a charging infrastructure platform that uses patented battery technology.
Since 2014, Kreisel has developed immersion-cooled electric battery modules and packs for high-performance and off-highway applications. Kreisel has a differentiated battery technology and battery-buffered charging infrastructure to serve a global customer base across multiple end markets, including commercial vehicles, off-highway vehicles, marine, e-motorsports and other high-performance applications.
Deere sees demand growing for batteries as a sole- or hybrid-propulsion system for off-highway vehicles. Products such as turf equipment, compact utility tractors, small tractors, compact construction and road building equipment could rely solely on batteries as a main power source. Deere keeps investing in and developing technologies to innovate, deliver value to customers and foster a future with zero emissions propulsion systems.
A majority investment in Kreisel Electric will let Deere optimally integrate vehicle and powertrain designs around high-density battery packs, while leveraging Kreisel’s charging technology to build out infrastructure for customer adoption.
Kreisel’s battery technology can be applied across a broad portfolio of Deere products to ramp up the latter company’s battery-electric vehicle portfolio. Deere will provide the global footprint and funding to enable Kreisel to continue its fast growth in core markets, said Pierre Guyot, senior vice president of John Deere Power Systems.
Kadant Cavorts Among Four Environmentally Friendly Industrial Income Investments to Purchase
Kadant Inc. (NYSE: KAI), a Westford, Massachusetts-based global supplier of technologies and engineered systems, offers sustainable industrial processing engineering services and technologies to help its customers add value with fewer inputs. On the horizon is a new recycling market for Kadant Inc.’s fiber repurposing business. Indeed, fiber-based packaging for beverages and food for consumer goods have undergone extensive trials in Europe and the United States.
In 2023, two private European (Paboco and Pulpex) companies and one North American (Footprint) fiber-based consumer packaging business are expected to materially accelerate the commercialization of environmentally friendly fiber-based packaging, according to William Blair. As adoption of fiber-based food and beverage packaging becomes more widespread, it will create an entirely new market for Kadant’s IP business, the investment firm wrote in a recent research note.
“Full-scale global conversion to fiber and cellulose-based packaging will take several years to become mainstream but the estimated $315 billion market for fiber to replace plastic for food and beverage packaging will create an entirely new segment for the worldwide fiber recycling market, in which Kadant holds 60-70% global market share, according to William Blair. Kadant is benefiting from three capital expansion cycles for its core businesses. They are modernization of sawmills for Industrial Processing (IP); a conveyance refurbishment and expansion cycle for aggregates, ore and agricultural producers at Material Handling (MH); and a new emerging market that expands fiber recycling as cellulose and fiber packaging to replace plastic containers for Flow Control (FC).
“To meet rising demand across all its end-markets, Kadant is expanding capacity in India, Finland, Mexico and Ohio, while the government in China is building Kadant a new modernized replacement plan,” William Blair wrote. “Kadant is also improving its supply chain resilience by near-shoring capacity closer to some of its largest markets such as North America and Europe. Given the company’s strong recurring revenue from parts and consumables sales — approximately 65% of sales — management noted that it would anticipate a 5% to 10% decline in parts and consumable sales in a recession, with potentially 10% to 20% lower capital equipment sales, skewed to large projects.”
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The Russian invasion of Ukraine has shifted where fertilizer and grains are transported around the world, with incremental demand coming from the EU to boost capacity for material handling equipment to replace Russian exports of grain, wood, mineral and more, William Blair wrote. Valuations for food production equipment businesses are elevated due to their stability but Kadant expects moderation due to increased interest rates. Expanding Kadant’s industrial business market reach and geographic penetration could further help it to leverage a capital spending renaissance that could extend until late this decade.
Four Environmentally Friendly Industrial Income Investments to Purchase Should Benefit from Bivalent Booster
Experts at Dartmouth Health recommend that everyone eligible for a new bivalent COVID-19 booster receive it to increase protection against the omicron BA.5 variant, which has become the predominant strain in the United States. As a resident of Maryland, I received a phone call from the state’s health department on Tuesday, Oct. 11, advising me of the booster’s availability at pharmacies near my home. I wasted no time in scheduling a bivalent booster vaccination.
Even though COVID cases and deaths can hurt supply and demand for environmentally friendly industrial stocks, availability of a new booster to enhance the vaccine’s efficacy is a plus for these stocks. U.S. COVID-19 deaths rose more than 3,000 in the past week but less than the 4,000-plus in the previous week.
Cases in the country totaled 96,939,034, as of Oct. 14, while deaths jumped to 1,065,260, according to Johns Hopkins University. America has amassed the most COVID-19 deaths and cases.
Worldwide COVID-19 deaths totaled 6,566,234, as of Oct. 14, according to Johns Hopkins. Global COVID-19 cases reached 624,187,937.
Roughly 79.9% of the U.S. population, or 265,111,489, have received at least one dose of a COVID-19 vaccine, as of Oct. 12, the CDC reported. Fully vaccinated people total 226,200,755, or 68.1%, of the U.S. population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to almost 110.8 million people.
The four environmentally friendly industrial income investments to purchase are available at discounted prices after the market’s fall in 2022. Even with high inflation, Russia’s war in Ukraine and rising recession risk after 0.75% rate hikes by the Fed in June, July and Sept. 21, the four environmentally friendly industrial income investments to buy seem more resilient than economically sensitive cyclical stocks.