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RBC: These 3 Energy Stocks Are Top Picks for 2020

RBC: These 3 Energy Stocks Are Top Picks for 2020

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Big Oil has seen bigger losses in recent months, as the energy industry has been hit by a series of related shocks. In the first half of the year, demand fell sharply. The lockdown policies put in place to halt the spread of the coronavirus had a major part in that – but demand was likely to fall anyway, from a producer perspective, as the global stockpiles were nearing capacity. The combination of both factors delivered a massive one-two punch to the industry.

This doesn’t mean that investors can’t find deals among the oil companies. RBC, Canada’s premier investment bank, has long had its pulse on oil stocks – Canada is the world’s fifth largest crude producer, and what happens to the oil industry will impact our northern neighbor. In response, RBC has reported on its Best Ideas in the global – and North American – energy markets for 2020.

We ran three of the firm’s Best Ideas through TipRanks’ database to get a better sense of the broader analyst community’s opinion. We revealed that the Street is overwhelmingly bullish on all of the names, with each earning a “Strong Buy” consensus rating. 

AES Corporation (AES)

The first company on our list, AES, is a diversified energy provider. The company owns and operates, through development and acquisition, a network of power generation plants and distribution systems in 14 countries. AES has a portfolio of assets worth over $34 billion, and brought in revenues of $10 billion in 2019.

All of this gave the company a solid foundation when the coronavirus hit. AES kept its earnings positive during the first half, and while Q2 EPS was sequentially lower than Q1, the first quarter figure missed the forecast where the second quarter number showed a beat. Looking ahead, AES is expected to see third quarter earnings rise sharply as normal economic activity resumes.

Reviewing this stock for RBC, 5-star analyst Shelby Tucker likes the company’s prospects. He writes, “Generation remains highly contracted and is resilient to near-term demand weakness [...] The company is on track to achieve investment grade ratings from S&P and Moody’s despite the effects of COVID-19, in our view. [...] The pandemic-induced sell-off creates an attractive entry point, in our view. AES currently trades at 7.8x EV/EBITDA relative to 11.3x for utilities."

To this end, Tucker gives AES a Buy rating, and his $20 price target suggests a 14% upside to the stock in the coming year. (To watch Tucker’s track record, click here)

While the stock has a Strong Buy analyst consensus rating, based on 5 Buys compared to 1 Hold, the average price target, at $18.60, implies a modest 5.5% upside from the $17.62 trading price. (See AES stock analysis on TipRanks)

Cheniere Energy (LNG)

The next company on our list of RBC picks is Cheniere Energy. This Texas-based firm is a leading producer of liquified natural gas (LNG), a less volatile and more easily transported form of the natural gas produced in copious quantities by the oil industry. Natural gas is a cleaner-burning fuel compared to other petroleum products, and plays an important role in reducing emissions. The liquified form is the primary way in which it is shipped into the markets.

Cheniere owns and operates the infrastructure needed to liquify the gas and load it for transport. The company owns rail cars and pipelines for overland transport in the US; shipments overseas are loaded at the company’s Sabine Pass and Corpus Christi terminal facilities.

While depressed demand has hurt Cheniere’s stock price, holding it down in recent weeks, the company’s contract for service structure has allowed it to maintain earnings during the corona crisis. LNG beat the forecasts on earnings in both Q1 and Q2 of 2020, despite a 20% fall-off in revenue during the first half of the year.

Elvira Scotto, another 5-star analyst from RBC, is impressed with Cheniere, especially its ability to keep up business. She writes of the company’s business model, “Cheniere has long-term take-or-pay contracts on 85% of its nine-train portfolio capacity. All of Cheniere’s Sale and Purchase Agreement customers are investment grade rated or have investment grade credit metrics. Importantly, utilities or state-owned utilities/oil and gas companies represent 68% of Cheniere’s contracted capacity.”

Scotto believes that Cheniere’s current low share price represents an opportunity, saying “we still see value” in the stock. Her price target of $65 indicates her confidence in a 26% one-year upside to the stock, and supports her Buy rating. (To watch Scotto’s track record, click here)

LNG has a Strong Buy rating from the analyst consensus, and it is unanimous – no fewer than 6 positive reviews have been received in the last three months. Shares are selling for $52.25, and the average price target, $65.83, is slightly more bullish than Scotto’s; it suggests an upside potential of 27% for Cheniere Energy. (See LNG stock analysis on TipRanks)

Enviva Partners LP (EVA)

The last of RBC’s energy picks on today’s list is Enviva Partners, a company squarely in the ‘green energy’ sector. Enviva produces processed biomass fuel, a type of wood pellet sold as power generation fuel to industrial customers. Biomass pellets burn cleaner than coal, and provide a productive way to dispose of sawdust, woodchips, and other common waste from the lumber sector.

Enviva’s production facilities are located in the Southeast, but the company is mainly an exporter. Of the 3 million tons of annual pellet production, most gets sent overseas to the UK and Europe. Plants using the biomass pellets saw an 80% reduction in carbon emissions on average.

Despite a sharp drop in earnings in the first half, Enviva has seen a strong share price recovery from the market collapse of February/March. Shares bottomed out on March 23, but have since nearly doubled. Since the current cycle began on February 20, EVA is up 14%, outperforming the S&P 500 over the same period. Reflecting another good sign for investors, last week, EVA announced its regular dividend payment, of 76.5 cents per share, will be paid out at the end of this month. The move marked the twentieth consecutive increase in the company’s dividend, which currently yields 7.3%.

EVA shares were reviewed by RBC's Elvira Scotto, noted above, who was impressed with the company’s steady production. She wrote, “EVA's production facilities have continued to run normally through the pandemic and EVA has not witnessed any issues in its supply chain. In addition, customers continue to take product…” Scotto adds that, “Based on total contracted revenue backlog of ~$19 billion, EVA plans to more than double its 2019 EBITDA in the next couple of years.”

In line with her comments, Scotto rates EVA shares a Buy. Her $46 price target suggests an upside potential of 9.5%.

Enviva’s recent share appreciation has pushed the stock price right up next to the average price target of $43, resulting in a modest upside potential of 2.41%. EVA is currently trading at $42. The stock has a Strong Buy rating from the analyst consensus, based on 3 Buys and 1 Hold. (See Enviva stock analysis on TipRanks)

To find good ideas for energy stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post RBC: These 3 Energy Stocks Are Top Picks for 2020 appeared first on TipRanks Financial Blog.

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COVID-19 may never go away, but practical herd immunity is within reach

It is unlikely that we will reach full herd immunity for COVID-19. However, we are likely to reach a practical kind of herd immunity through vaccination.

The level of immunity needed — either through vaccination or infection — for practical herd immunity is uncertain, but may be quite high. (Shutterstock)

When people say that we won’t reach “herd immunity” to COVID-19, they are usually referring to an ideal of “full” population immunity: when so many people are immune that, most of the time, there is no community transmission.

With full herd immunity, most people will never be exposed to the virus. Even those who are not vaccinated are protected, because an introduction is so unlikely to reach them: it will sputter out, because so many others are immune — as is the case now with diseases like polio and mumps.

The fraction of the population that needs to be immune in order for the population to have “full” herd immunity depends on the transmissibility of the virus in the population, and on the control measures in place.

It is unlikely we’ll reach full herd immunity for COVID-19.

For one thing, it appears that immunity to COVID-19 acquired either by vaccination or infection wanes over time. In addition, SARS-CoV-2 will continue to evolve. Over time, variants that can infect people with immunity (even if this only results in mild disease) will have a selective advantage, just as until now selection has mainly favoured variants with higher transmission potential.

Electron micrograph of a yellow virus particle with green spikes, against a blue background.
The B.1.1.7 variant of the SARS-CoV-2 virus. Over time, variants of concern will likely continue to emerge. NIAID, CC BY

Also, our population is a composition of different communities, workplaces and environments. In some of these, transmission risk might be high enough and/or immunity low enough to allow larger outbreaks to occur, even if overall in the population we have high vaccination and low transmission.

Finally, SARS-CoV-2 can infect other animals. This means that other animal populations may act as a “reservoir,” allowing the virus to be reintroduced to the human population.

Practical herd immunity

Nonetheless, we are likely to reach a practical kind of herd immunity through vaccination. In practical herd immunity, we can reopen to near-normal levels of activity without needing widespread distancing or lockdowns. This would be a profound change from the situation we have been in for the past 18 months.

Practical herd immunity does not mean that we never see any COVID-19. It will likely be with us, just at low enough levels that we will not need to have widespread distancing measures in place to protect the health-care system.


Read more: COVID-19 variants FAQ: How did the U.K., South Africa and Brazil variants emerge? Are they more contagious? How does a virus mutate? Could there be a super-variant that evades vaccines?


What level of immunity (either through vaccination or infection) we need for practical herd immunity is uncertain, but it may be quite high. The original strain of SARS-CoV-2 was highly transmissible and transmission is thought to be higher still for some variants of concern.

Empty vials of Pfizer's COVID-19 vaccine
To achieve two-thirds immunity, 90 per cent of the eligible population would need to be vaccinated or infected naturally. (AP Photo/John Locher)

The amount of immunity we need will also depend on what level of controls we are willing to maintain indefinitely. Continued masking, contact tracing, symptomatic and asymptomatic testing and outbreak control measures will mean we will require less immunity than we would without these in place.

Some estimates suggest that we may need two thirds of the population to be protected either by successful vaccination or natural infection. If 90 per cent of the population is eligible for vaccination, and vaccines are 85 per cent effective against infection, we can obtain this two thirds with about 90 per cent of the eligible population being vaccinated or infected naturally.

The United Kingdom has already exceeded these rates in some age groups. Higher rates are even better, because there is still uncertainty about the level of transmissibility and vaccine efficacy against infection (although research shows they are very good against severe disease). We don’t want to discover that we do not have enough immunity through vaccination and have another serious wave of infection.

Emerging variants

A sticker reading 'I'm COVID-19 vaccinated' from Vancouver Coastal Health
Booster vaccinations will hopefully allow us to maintain long-term practical herd immunity against future variants of COVID-19. THE CANADIAN PRESS/Jonathan Hayward

Higher vaccine uptake will mean there are fewer infections before we reach practical herd immunity. The remaining unvaccinated individuals will be safer, protected indirectly by the immunity of those around them. Outbreaks will be smaller and rarer, and there will be fewer opportunities for vaccine escape variants to arise and spread.

That said, variants of SARS-CoV-2 will continue to emerge, and selection will favour variants that escape our immunity. Vaccine developers will continue to broaden the spectrum of the vaccines that are available, and boosters will hopefully allow us to maintain long-term practical herd immunity.

It’s possible that an immune escape variant will emerge that is severe enough, and transmissible enough, that it will cause a new pandemic for which we do not have even practical herd immunity. But barring that, while we may not be free of COVID-19, we can be confident that in the not-too-distant future it will be manageable when we return to near-normal life.

Caroline Colijn's research group receives funding from the Natural Sciences and Engineering Research Council of Canada, Genome British Columbia, the Michael Smith Foundation for Health Research, the Public Health Agency of Canada and Canada 150 Research Chair program of the Federal Government of Canada.

Paul Tupper's research group receives funding from the Natural Sciences and Engineering Research Council of Canada.

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UK Government Adviser Says Mask Mandates Should Continue “Forever”

UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should…

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UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should continue “forever” and that people should adopt such behaviour just as they did with wearing seatbelts.

Michie, who is a Professor of Health Psychology at UCL and a leading member of SAGE, said such control measures should become part of people’s “normal” routine behaviour.

"Vaccines are a really important part of pandemic control but it is only one part. [A] test, trace and isolate system, [as well as] border controls, are really essential. And the third thing is people’s behaviour. That is, the behaviour of social distancing, of… making sure there’s good ventilation [when you’re indoors], or if there’s not, wearing face masks, and [keeping up] hand and surface hygiene."

"We will need to keep these going in the long term, and that will be good not only for Covid but also to reduce other [diseases] at a time when the NHS is [struggling]… I think forever, to some extent…"

"I think there’s lots of different behaviours that we have changed in our lives. We now routinely wear seatbelts – we didn’t use to. We now routinely pick up dog poo in the parks – we didn’t use to. When people see that there is a threat and there is something they can do to reduce that [to protect] themselves, their loved ones and their communities, what we have seen over this last year is that people do that."

Michie’s comments once again emphasize how many scientific advisers have become drunk on COVID-19 power and never want to relinquish it.

“Unsurprisingly, Channel 5 News made absolutely no effort to scrutinise these claims. The programme’s presenter raised no objection to the idea that mask-wearing and social distancing could continue “forever”, resorting only to friendly laughter,” writes Michael Curzon.

“Professor Michie’s co-panellist, a fellow scientist at UCL, Dr Shikta Das, said:

“I think Susan has made a very good point here,” adding that the vaccine roll-out has created a “false sense of security”.

She concluded:

“I don’t think we are yet ready to unlock.”

How’s all that for balance!

Perhaps unsurprisingly, Michie is known to be a long-time Communist hardliner and was so zealous in her beliefs she garnered the nickname “Stalin’s nanny.”

Her sentiment echoes that of fellow government adviser Professor Neil Ferguson, who once acknowledged that he was surprised authorities were able to “get away with” the same draconian measures that Communist China imposed at the start of the pandemic.

“[China] is a communist one-party state, we said. We couldn’t get away with [lockdown] in Europe, we thought… and then Italy did it. And we realised we could,” said Ferguson.

*  *  *

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In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, I urgently need your financial support here.

Tyler Durden Sat, 06/12/2021 - 11:30

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Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financia

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Venezuela Says US Sanctions Blocking COVID Vaccines: 'Global Health System' As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financial system of blocking the country's access to Covid-19 vaccines under the COVAX program, even though Venezuela has paid all but $10 million of the $120 million it owes.

Appearing in a televised address, Rodríguez said Venezuela was unable to pay the remaining $10 million because it was being blocked from transferring funds to the Switzerland-based GAVI Vaccine Alliance, which directs COVAX. "The financial system that also hides behind the U.S. lobby has the power to block resources that can be used to immunize the population of Venezuela," she said.

Via Reuters

Venezuelan Foreign Minister Jorge Arreaza tweeted a letter from COVAX stating that it "received notification from UBS Bank" that four payments, totaling just over $4.6 million, were "blocked and under investigation."

Arreaza said that "Venezuela has paid all of its commitments," adding that "the bank has arbitrarily blocked" the country's final payments and calling the situation "a crime."

The vice president and foreign minister's remarks follow accusations from Venezuelan President Nicolás Maduro last week that "organizations of US imperialism" are engaged in an effort to stop vaccine producers from selling doses to the country.

"Venezuela might be the only country in the world that is subject to a persecution against its right to freely purchase vaccines," said Maduro, according to Venezuelanalysis. "Venezuela is besieged so that it cannot buy vaccines."

A mural in Caracas symbolically shows Venezuela and Russia uniting to defeat the coronavirus, with the caption: "We will beat Covid-19 together." Image: AFP via Getty

Successive US administrations have targeted Venezuela with economic sanctions that critics say have devastated the nation's once-thriving economy and have caused tremendous suffering for the poor and working-class people whose dramatic uplift was once hailed as the great success of the Bolivarian Revolution launched under the late President Hugo Chávez. 

According to a 2019 report from the Center for Economic and Policy Research, a progressive think tank based in Washington, D.C., as many as 40,000 Venezuelans have died due to sanctions, which have made it much more difficult for millions of people to obtain food, medicine, and other necessities. 

Maduro also denounced the World Health Organization (WHO) for its role in delaying vaccine delivery to Venezuela. The president had expected "many millions" of the Covid-19 jabs to be delivered in July and August. "The COVAX system owes a debt to Venezuela," asserted Maduro. "We made a deposit in April and we are waiting for the vaccines."

That $64 million deposit to GAVI came after a rare deal between the Maduro administration and Juan Guaidó, the coup leader recognized by the United States and dozens of other nations as Venezuela's legitimate head of state despite never having been elected.

Adept at circumventing US interference in its affairs, Venezuela turned to China, Russia, and Cuba to launch its mass vaccination program, which aims to inoculate 70% of the population this year. Earlier this month, the country reached a deal to buy and locally manufacture the Russian EpiVacCorona vaccine. Venezuela has also already acquired about three million doses of the Russian Sputnik V and Chinese Sinopharm jabs, and last month began clinical trials on Cuba's Adbala vaccine.

Compared to other nations in the region, Venezuela has reported a very low rate of coronavirus infections and deaths. According to Johns Hopkins University's Coronavirus Resource Center, there have been nearly 248,000 reported cases and 2,781 deaths in the country of 28.5 million people during the ongoing pandemic. Neighboring Colombia, with just over 50 million people, has reported more than 3.6 million cases and over 94,000 deaths.

Tyler Durden Sat, 06/12/2021 - 16:30

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