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This Renewable Energy Play Offers A Hedge Against Economic Risks


With energy stocks having bucked the market trend this year, generally going up as the major indices have collapsed, finding bargains in the sector is just about impossible. It seems like every US based oil and gas company is knocking around its 52-week high. A couple of weeks ago, despite that, I wrote that I am still bullish on big oil based on oil prices that, while choppy, have held up well in the face of a global recession threat, the fact that I’m not sure that threat will materialize, and, most of all, big oil stocks’ low P/Es relative to both index averages and their own recent history.

I still feel that way overall, but in the last two weeks, the risks to those stocks have increased a bit. The missile that hit the territory of NATO member Poland this week, wherever it came from and whatever the intention behind its launch, demonstrates the constant danger of escalation when there is a war close to NATO’s border, for starters. Then there is the fact that according to the UK Chancellor of the Exchequer, their finance minister, that country is already in recession and the reported increase in Covid in China following some easing of their “Zero Covid” policy.

So, while I am happy to maintain long positions in big oil, I am starting to trim them a little on rallies. That, though, presents the problem of what to do with the cash those sales generate. My natural instinct is to shift from those stocks that have posted big gains this year into something that has…

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