Many investors are looking for new ideas that can juice their equity returns now that the 2024 presidential election results are known. With a sweep in the House and Senate, big policy changes are coming. This is a time when strategic investors are looking at stocks and themes that can outperform what has already been a very strong stock market.
On the surface, it looks like Donald Trump has made at least two energy stocks worth looking at for strategic investors. One of the stocks is Liberty Energy Inc. (NYSE: LBRT) as Liberty CEO Chris Wright has been named to be Trump’s Secretary of Energy. The other “strategic” stock is GE Vernova Inc.(NYSE: GEV).
Two bits of caution need to be considered up front. The first issue is that the S&P 500 is currently up almost 24% so far in 2024 alone, and the S&P 500 rose over 4% in the few days after the election before the more recent 2% pullback. Another issue to consider is the reminder that there are no sure bets in life.
These two “strategic trading” stocks are also not predictions or forecasts being issued as recommendations of Oggonomics. Oggonomics has no formal ratings nor does it have any in-house price targets on either stock mentioned.
Oggonomics first featured the “Strategic” side of GE Vernova Inc. (NYSE: GEV) in September as an electric and AI-winner, back when its high was just $240 for its stock. It is now up over $300 as analysts are trying to predict even more upside.
SMALLER FRY — LIBERTY ENERGY
Liberty Energy Inc. (NYSE: LBRT) is a fracking services company for oil and natural gas services with a $2.8 billion market cap after its shares have risen 4.5% to $17.66. Trump’s prior comments on the campaign trail should be a strong signal for natural gas and for fracking. This stock is actually down from the post-election pop, and its performance is still -2.6% YTD and -7% from a year ago. Finiz has a consensus analyst price target of $21.04 for the stock and its 52-week range is $16.57 to $24.75.
Some investors may think Liberty is too small to play when there are so many larger and more established oil and gas operators. Oggonomics is not making the case for or against this stock, but the obvious view is this — if its CEO is set to become the top-watchdog in energy it’s probably not going to be a bad outcome for the company he has been running.
The company’s statement congratulating Chris Wright’s nomination does note that he will remain in his current positions with Liberty Energy until his confirmation occurs. It has also already laid out a succession plan. As of the last known filing, and after selling over $700,000 worth of stock in November, Wright’s ownership was listed as 2.58 million shares (worth about $45.5 million at present time).
BIG CALLS — GE VERNOVA
GE Vernova Inc. (NYSE: GEV) has already seen its shares surge since it became independent of the old General Electric conglomerate that is now broken up. And before any unknowing investors jump in blindly, they should know going in GE Vernoa shares are up 151% since gaining its standalone stock status early in 2024. This would imply logically that any serious gains or disappointments could be expected to be followed with profit taking.
Oggonomics has tracked three very bullish analyst calls on GE Vernova in recent days which all point to the post-Trump victory due to what’s coming for the U.S. energy trends ahead. Donald Trump has said he wants the US to be energy dependent and to be one of the top suppliers in the world. GE Vernova makes wind turbines and power grid technologies. It also makes very profitable natural gas fired power generation turbines, and it is already handily increasing its turbine production.
William Blair analyst Jed Dorsheimer issued a report on GE Vernova saying that renewables will be needed to meet part of the current and future electricity demand growth with nuclear and fossil fuels playing a key role. According to Dorsheimer, GE Vernova is best positioned to benefit from these trends as the energy sector reverts to natural gas while also boosting domestic energy production. William Blair’s official rating is Outperform and two other analysts have chimed in on GE Vernoa in recent days as well.
Last Friday was Morgan Stanley’s day to reiterate its Overweight rating and to raise its price target to $367 from $301 in the call. Despite being deemed in the “clean tech” space that is not favored under Trump. Morgan Stanley believes that the US natural gas market is now on the cusp of another cycle of demand growth that will be driven by liquefied natural gas exports (LNG) and rising electricity consumption. Morgan Stanley sees GE Vernova’s portfolio of power, wind and electrification solutions winning from various secular growth trends in the energy transition:
- growing power demand globally
- increasing renewables development supported by a favorable policy environment and strong unit economics
- growing focus on energy reliability
- upside to margin expectations
- and a potential capital return
BofA Securities also reiterated its Buy rating last week on GE Vernova. The firm’s Andrew Obin has a $380 price objective. His report said that GEV’s orders in the first 9 months of 2024 are the highest in a decade, with large gas turbine orders up 27% over a year ago. Even the smaller gas turbine orders are 15% from a year ago and the U.S. gas fleet utilization is up 3% in electric output versus a year ago. BofA’s $380 price objective is based on 18-times EV/EBITDA of its 2026 adjusted EBITDA estimate. That report said:
Gas turbine orders YTD were up 33% y/y to 42.7GW. On a unit basis, orders rose 19% y/y to 273 units YTD. Overall, for gas turbines greater than 10 megawatts (MW) GE Vernova had a 40.3% market share YTD.
IN THE END…
GE Vernova’s current stock price of $329.25 is actually above the recent consensus price target of $316.89 (per Finviz). That said, its stock is up 21% over the last month and about half of those gains. This was already covered as a strategic winner candidate back in September here on this site and the warning that investors should expect two serious warnings here:
- expect a serious bout of profit-taking if more major gains are seen
- and expect a serious sell-off if GE Vernova hits any performance snags
Those warnings are not guarantees nor are the intended to be predictions. Again, Oggonomics does not have any formal ratings or price targets on the companies mentioned in this reporting.
