Jay Woods, CMT, Chief Global Strategist at Freedom Markets joined Benzinga's Premarket Prep team to discuss something he has spotted in the utilities sector. $XLU
Category
đź—ž
NewsTranscript
00:00You know, utilities have always had this, you know, oh, it's boring.
00:04They're there for grandma and grandpa to collect your dividend.
00:08But something big happened last Friday, and it's been brewing before last Friday.
00:12But that Microsoft Constellation news symbol, C-E-G, you know, Constellation, they own Three
00:18Mile Island.
00:19So all of a sudden, everyone's like, wait a second, I remember Three Mile Island.
00:22Aaron, you may not, but other people do.
00:26You know, it was the end of the world when it melted down, and living in Philadelphia,
00:30it was kind of scary.
00:32But nuclear power is what people in the AI space, what these, you know, AI companies
00:39are looking towards to power the grid.
00:43My friend and the CEO of Generac, Aaron Yagfeld, he went around last April making the speaking
00:49rounds.
00:50Generac is, how are they doing with the hurricane?
00:53Usually we get spikes in GNRC.
00:55He was talking about the demands on the grid just because of AI.
00:59When you do a chat GPT search, it takes 17 times more energy than a simple Google search.
01:04And guess what?
01:05I'm changing my habits.
01:06I'm going chat GPT now, too, to search for things.
01:09And you can see, you know, if it's coming from the CEO of Generac, I trust that to be,
01:17you know, an accurate stat.
01:18And then the demand on the grid based on the AI demand is going to be five times greater
01:23than it is now.
01:24So when you see Bill Gates and you see Sam Altman, they are investing in their own, it's
01:31TerraPower for Microsoft or for Bill Gates.
01:33And then Sam Altman, OKLO, it went public via SPAC, it's an $8.50 stock.
01:40This is his way to create his own power company.
01:44This one, Oklo, is based out in Idaho.
01:48There are going to be so many regulatory hurdles.
01:50This will be the next big thing after the election cycle, trying to get Three Mile Island
01:54powered up again.
01:55I mean, it's still online.
01:58This is not the generator that broke down.
01:59They have four.
02:01But this is the one that's going to hopefully power Microsoft and power the grid.
02:06So there's going to be such demand for power.
02:09These utility companies, which, you know, are just slow and steady growers, are now
02:14being turned to by Microsoft.
02:16Amazon's already talked to Vistra, I believe.
02:19And then you've got, let's see, the top four companies in the XLU.
02:24You have, I'm doing this off of memory, it's Nexterra, Southern, Duke and then Constellation.
02:30And that's 35 percent of the XLU.
02:32So we're not talking about your water company.
02:34We're not talking about the boring con eds of the world.
02:38We're talking about companies that do have nuclear power plants already online that are
02:42going to be turned to by these big tech companies.
02:46So when I see a breakout price, I actually confirm it.
02:49This is just the start.
02:51Yes, we missed it.
02:52If I'm buying Chinese stocks now, if I'm buying Vistra now, I'm buying Constellation now,
02:57I missed the big pop.
02:59But I think for a long term investor, the story is just starting to play out.
03:03These won't go online until 2027, 2028.
03:07So it will be hyped up.
03:10And hype is when you generally get most of the meat of a trade.
03:13So when I see utilities breaking out, yes, it's a top performing sector this year.
03:19It's only done that once since these ETFs came into play and that was 2014.
03:25So to me, it's piqued my interest.
03:27I did a little more of a deep dive.
03:29I looked at the companies that have the most nuclear power plants already online.
03:33And those are the top four sectors, the top four stocks in the XLU.
03:37And then Entergy, symbol ETR, I believe, is another one with a lot of nuclear exposure.
03:44Not in the XLU, but it's a company worth watching as well.
03:48So those are the things that piqued my interest.
03:51I'm writing about it this week.
03:53So you're getting a sneak preview of what's going to come out of my newsletter on Monday.
03:58But technically, they have my blessing.
04:01And then you look at the fundamentals, the story behind it, and then you look at the
04:03names investing in it.
04:06Yeah.
04:07This is something to watch.
04:08So therefore, Joel, not your grandparents' utilities anymore.