A New Theme to Dominate on Wall Street

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JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, A New Theme to Dominate on Wall Street Here’s the new theme that could dominate the next two quarters in the stock market… Big Tech is poised to (finally) slow down its growth rate. In the first quarter of this year, Big 5 technology companies’ profits soared 50%. The second quarter was respectable with 29%. Analysts expect the rate to slow down to 18% in the third quarter. It’s the worst secret on Wall Street that Big Tech had been responsible for the bulk of the stock market’s rally. So, what happens when the Big Tech’s growth rate slows? Analysts expect other sectors to step up in a big way. Materials are projected to jump 23% in the fourth quarter. Health Care will do slightly better at 24%. (Source: Bloomberg) It will be critical for these sectors to deliver these projected growth rates to make up for the Big Tech’s slowing growth rate. - “I think those sectors are starting to look pretty interesting, and I’m talking about energy, materials, consumer discretionary, industrials, financials,” said Ohsung Kwon, equity and quantitative strategist at Bank of America. - “I think all those cyclical sectors are going to do better in the second half of the year.” Already, Bank of America said clients took out almost $2.2 billion from tech stocks during the week ended May 31 — the second-most amount since 2008. Where did the money go? BoA said the biggest inflow was to the consumer discretionary sector. - “Discretionary is traditionally a huge driver of S&P 500 earnings and a place that typically picks up the slack,” said Michael Casper, equity strategist at Bloomberg Intelligence. Here’s another key point: Investors value Big Tech companies at a lofty level because they offer best growth rates with strong balance sheets. There’s a little comparison with other sectors. However, if other sectors begin to grow, the premiums that investors are willing to pay for Big Tech stocks may lower. Meaning — lower P/Es for tech stocks. - “As those non-tech sectors start to grow earnings, the premium that investors were paying for tech should come down on a relative basis compared to other sectors,” BofA’s Kwon said. This week’s catalysts: The eyes will be on two things — the CPI data and the Federal Reserve’s FOMC meeting. Fed Chair Jerome Powell will host a press conference on Wednesday to discuss the Fed’s rate decision, with the CPI data being out on the same day. A Play on the Upcoming Infrastructure Spending for the Clean Energy Era Today’s Stock Pick: Quanta Services, Inc. (PWR) Young people like to make choices that are flashy and sexy. Style over substance. However, as you get older, you eventually realize the opposite. Do you know what’s sexy? Results! With stocks, “sexy” results would consist of high-return, low-risk investments. Now, going carbon neutrality with clean energy is an important mission for the world. No question about it. However, some sectors reached a speculative level because of its clean energy hype. But I’ve got a boring stock with a proven history of delivering high returns -- and it’s poised to reap even bigger profits from the clean energy era. This is a no-brainer investment. Let me tell you why. Do you know what would be required if clean energy initiatives succeed to meet the United Nations’ goal of carbon net neutrality by 2050? Well, it would require a lot of infrastructure spending to make renewable energy work. Take offshore wind farms, for example. It would need massive underground electricity lines to transfer energy from the ocean into the utility center. Same thing with electric charging stations for electric vehicles. Today’s stock pick is an indispensable player in the transition to clean energy. What Quanta Services does is simple. It is a specialty contractor that provides infrastructure solutions for the electric power, underground utility, and communications industries in North America and Australia. (Source: Quanta) Nearly all key data points to a skyrocketing investment in electric power infrastructure in the next two decades. Let’s look at one data point. Have you heard of the renewable portfolio standard (RPS)? It is a regulatory mandate to increase production of energy from renewable sources such as wind, solar, or biomass. In the chart below, you will see the required increase in renewable energy generation in different regions. This means if an utility company does not meet the requirement, it could be fined by the state government. Right now, TWh is projected to soar from about 40 TWh in 2021 to over 200 TWh in only nine years -- or a 400% increase: (PWR August/September 2021 Investor Presentation) And all of them require billions of dollars in infrastructure spending to install, upgrade, and modernize electric transmissions. In fact, Quanta believes that annual incremental investment in electric transmission would rise as much as 50% from its 10-year average: (Source: Quanta) And that’s right in Quanta’s backyard as the company earns 46% of its revenues from electric power infrastructure solutions: In addition to the future investments, PWR is already growing with their existing customers with top 20 customers boosting their spending on PWR’s services by 21% CAGR since 2019. That’s a phenomenal number. The numbers can go even higher with future electrification investments. (Source: Quanta) Bottom line: Quanta Services, Inc. is a dark horse play on clean energy. The company posted an adjusted EPS CAGR of ~18% from 2010 to 2023. And the future will only get brighter with the greater emphasis on the transition to clean energy.   [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](     © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](