Fortune - USA (2020-12)

INVESTOR’S GUIDE • STOCKS FOR 2 021

ClearBridge Investments. That’s good news for

real estate investment trusts like Crown Castle

and American Tower, which Langley expects

will grow earnings at a high single-digit rate for

as much as a decade. Duitz recommends Spain’s

Cellnex, which is also growing through acquisi-

tions as more European cell phone companies

shed their towers to pure-play operators.

HEALTH CARE STOCKS

Wa iting for COVID to release its grip

on the health care system.

T

HE PANDEMIC is a health care

crisis that has been brutal on

some health care companies.

Elective procedures, a big

profit-generator for device

makers and hospitals, slowed

or stopped altogether, while older people in

particular put off medical care of all kinds to

avoid exposure to the coronavirus. But while

COVID-related challenges remain, encour-

aging progress on potential vaccines has led

some investors to double down on companies

ENERGY & INFRASTRUCTURE

As the U.S. builds new economic

backbones, these stocks will benefit.

A

NEW ADMINISTRATION

typically raises investor

hopes of fresh spending on

infrastructure— upgrades

that both sides of the aisle

tend to support. President-

elect Joe Biden campaigned on two particu-

larly timely infrastructure themes: a climate

plan that calls for $2 trillion in federal invest-

ment in “sustainable infrastructure,” and a

$20 billion proposal to invest in rural broad-

band connectivity. Yet even if funding stalls in

a gridlocked Congress, there’s reason to bet on

companies that build these backbones of the

future economy.

Many investors are setting their sights on

renewable sources of electricity. While wind

and solar account for only about 7% of world

electricity generation today, the International

Energy Agency expects that figure could rise

to 40% by 2040. “We’re just in the very early

stages of a multi-decade growth opportunity

within renewables,” says Josh Duitz, a senior

portfolio manager helping to oversee the Ab-

erdeen Standard Global Infrastructure Income

Fund. He’s a fan of utilities known as “yieldcos”

for their high dividends, including U.K.-based

Atlantica Sustainable Infrastructure (with a

5% dividend) and Clearway Energy (yield-

ing 4.6%), which own and operate solar-panel

installations and wind turbines across the U.S.

and abroad. Duitz also likes NextEra Energy,

the biggest renewable-energy utility in the U.S.

NextEra plans to invest $1 billion next year in

the emerging frontier of battery storage. That

innovation is key to taking renewable energy

mainstream, enabling it to be used even after

the sun sets or the wind dies down.

Mobile data consumption was already

growing more than 30% a year in the U.S. be-

fore the pandemic; with the reliance on tele-

conferencing for work and for school, we’re

using even more. That means telecom compa-

nies will need to continue fleshing out their 5G

networks for years to come—in part by putting

more antennae on cell towers. “The physics of it

is, the more bandwidth you require, the shorter

the distance you need to be to a tower,” explains

Nick Langley, senior portfolio manager at

SHARE OF S&P 500 MARKET CAPITALIZATION

ENERGY

REAL ESTATE

MATERIALS

UTILITIES

COMMUNICATION SERVICES***

CONSUMER DISCRETIONARY**

CONSUMER STAPLES

INDUSTRIALS

FINANCIALS

HEALTH CARE

INFORMATION TECHNOLOGY*

FAAMG STOCKS

* WITHOUT APPLE AND MICROSOFT

** WITHOUT AMAZON

*** WITHOUT GOOGLE AND FACEBOOK

15.2%

22.7%

13.5%

10.2%

8.5%

7.7 %

6.7%

5.4%

2.9%

2.6%

2.5%

2.1%

SOURCE: BLOOMBERG

MARKET VALUE AS OF 11/13/20

Atlantica

Sustainable

Infrastructure

(AY, $34)

Clearway

Energy

(CWEN, $30)

NextEra

Energy

(NEE, $78)

Crown

Castle

(CCI, $165)

American

Tower

(AMT, $239)

PRICES AS OF 11/16/2 0

PICKS

THE FOOTPRINTS OF FIVE GIANTS ...

Facebook, Apple, Amazon, Microsoft, and Google

(the so-called FAAMG stocks) now account for

almost a quarter of the value of the S&P 500.