The green agenda: deeds really will follow words this time
29th April 2021 |
Climate change.
It is a topic that is on the agenda of arguably every single government around the world.
The Leaders Summit on Climate, a virtual gathering hosted by US President Joe Biden, took place on 22 and 23 April. It brought world leaders from 40 major economies of the world together to discuss plans to reduce carbon dioxide (CO2) emissions and to lessen climate change.
A key objective of the summit was to find a way to limit the rise in average global temperatures to 1.5 degrees Celsius.
Of course, setting targets is one thing. Taking action to achieve them is another.
The climate change discussion is decades old. On the basis of what has happened so far, you could argue all it ever gets is lip service and some short-term political focus.
Over the longer term, though, typically very little happens.
There’s an argument for that being the case this time around as well.
Take China for example. The Chinese are some of the world’s biggest polluters, and there is little sign of them changing their habits. As we speak, they are building more coal plants than ever before to stimulate their economy.
President Xi Jinping has said that the country’s consumption of coal is yet to peak. He anticipates that this will come to pass halfway through the current decade.
You can’t help but feel that for countries like China, India and Brazil, it’s the cost of energy that’s most concerning, not the environmental impact of it all.
Cheap energy trumps clean energy every day of the week for them.
Conversely, some nations are actually doing all they can to tackle the problem of climate change head on and have recently announced new emissions targets to help combat it.
Take the United States, for example. The country is aiming to reduce CO2 emissions by a minimum of 50% by 2030, based on 2005 levels. President Biden intends for the US electricity grid to run completely on clean energy sources such as solar and wind by 2035.
It’s a great political strategy but, as they say, the proof will be in the pudding.
The UK represents another excellent example. The UK government announced the setting of the most ambitious climate change target into law on 20 April 2021.
It will see the UK target a 78% reduction in CO2 emissions by 2035, compared to 1990 levels. It will take the UK to more than three-quarters of the way to reaching its net zero emissions goal by 2050.
We think that this time really is different. Deeds – and enormous and positive change – will actually follow words. There will be meaningful action to reduce CO2 emissions in order to avoid a climate cataclysm.
Put another way, the green agenda to combat climate change is truly going to be put into practice. That is reflected in a number of stocks that currently feature in our portfolio here at Frontier Tech Investor.
Some of these companies even have the London Stock Exchange “Green Economy Mark”. Examples include Blancco Technology Group (LSE:BLTG), Velocys (LSE:VLS) and AMTE (LSE:AMTE).
However, it’s the increasing influence of Meggitt (LSE:MGGT) in helping world economies to reduce their emissions that we’re most optimistic about.
On 13 April, the company announced it has secured a contract with Germany’s MAN Energy Solutions for the supply of printed circuit heat exchangers. These will be used for the first ever commercial application of a MAN electro-thermal energy storage heat pump system.
Using Meggitt’s heat exchangers, MAN will supply the heat pump technology to Danish multi-utility company DIN Forsyning.
It is regarded as a “groundbreaking solution” that offers a carbon-neutral alternative to traditional fossil fuel power plants. The solution itself will utilise wind and hydro power to supply energy to approximately 100,000 local inhabitants. The pump installation is now the largest sea water heat pump in Denmark.
Adrian Tattershall, general manager of Meggitt’s Heatric organisation, said that the contract award helps to support the company’s “ambition to provide optimised heat transfer solutions to the growing green technology market”.
These kinds of contracts often go unnoticed. While Meggitt might not have its “Green Economy” mark, it’s still making a real contribution to lower CO2 emissions.
Meggitt’s extensive range of energy, electronic and engine systems provide a viable option to organisations that are looking to reduce their emissions and adhere to new, changing regulatory standards.
We reiterate our hold recommendation for Meggitt. You can find our original recommendation for the stock here.
Buy list update
Spirent Communications PLC (LSE:SPT)
Spirent Communications has announced some exciting news in the 5G network space. It is a breakthrough that will give the company’s customers an advantage in the race to deploy the technology.
On 22 April, the company revealed the availability of the industry’s first subscription-based, automated 5G core platform.
As organisations look to deploy 5G services, a crucial step in successful deployment is the validation of performance, capacity, and compliance capabilities. Normally, this takes months of testing and can be costly and time consuming.
However, Spirent’s new Landslide 5GC automation package has been developed to automate these processes, bringing time and cost savings to the customer. It will also ensure quality of service and compliance with regulatory requirements.
This new product will undoubtedly help to make the lives of service providers easier. As they continue to face a multitude of deployment challenges in the 5G space, Spirent is offering a viable solution.
For this reason, we believe that Spirent should see increased demand for its new, specialised 5G product.
We reiterate our buy recommendation on the stock up to its 295GBp buy limit. Our original recommendation is here.
Immotion Group PLC (LSE:IMMO)
Immotion Group should be starting to feel good about itself again. The easing of lockdown is bringing increased footfall to the places in which the company’s theatre installations are situated.
In our 1 April update, we hinted at the capacity of the shark reef aquarium potentially being increased from 50%. Now, this has actually happened.
This week, it was announced that capacity of all attractions on the Las Vegas Strip could be expanded from 50% to 80%. Of course, Las Vegas is home to Immotion Group’s flagship VR Theatre installation, “Undersea Explorer” (at Shark Reef Aquarium, Mandalay Bay).
In addition, the governor of Nevada has announced his intention to lift all Covid-19-related restrictions by 1 June this year.
Since its opening in August 2020, it will be the first time that the Undersea Explorer’s capacity exceeds 50%. As a result, the increase in revenue from 1 May and through the summer months could be substantial.
The outlook is starting to look a lot more positive for Immotion after a difficult year. We believe they have substantial value to capture and will seize the pent-up demand in the tourism industry. This story so far is playing out as we predicted – and we’re expecting more from Immotion this year.
We reiterate our hold recommendation on the stock. You can find our original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Kanabo Group (KNB.L) – one of the world’s most controversial investment ideas is around the legalisation of medicinal and recreational cannabis. It’s sweeping across Canada and now the US. Both countries are leaders on the way to legalisation. In Australia a similar path is being followed. And now the UK is on the same track. Kanabo is one of the newest and best plays into this huge investment opportunity. You can find our recommendation here.
IQE – our most recent recommendation, IQE, is a key part of the supply chain getting semiconductors into the world. You can find our latest discussion on IQE here, and a link to the original report here. With a gigantic increase in the demand for semiconductors the world is facing a “chipageddon”. This is a situation where there simply aren’t enough semiconductors to supply the world’s biggest, most demanding companies. IQE is one of the few UK listed stocks that are a play on this theme.
Velocys – there’s no doubt that governments are going to continue to push their “green agenda”. This means that they will do what they can to support industry in ways that will help enable carbon neutral economies. Velocys is a big part of this developing sustainable fuels for transport and logistics (in particular aviation) with pioneering technology. If you’re looking for a great “green energy” play, Velocys is a very good place to start. You can find a link to the original recommendation here.
Until next time,
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
