Roger S. Conrad

There’s no doubt AT&T Inc (NYSE: T) faces some steep challenges in early 2021. Just days before the company announced Q1 earnings last week, a Wall Street Journal piece featured the views of a prominent bear under the headline “Is AT&T a Train Wreck?” 

The company’s Q1 numbers and updated guidance, however, paint a far different picture.

Even without a repeat of the company’s Q1 windfall, the benefits to Kinder Morgan Inc.’s (NYSE: KMI) underlying business and balance sheet are likely to continue flowing throughout the rest of 2021 and beyond.

With companies ramping up investment on everything from renewable energy to storage and grid upgrades, utilities will eventually come back to the debt market. I expect many will favor low-cost green bonds

Yieldcos made their debut in the middle of the previous decade, as renewable energy’s answer to master limited partnerships but waned in popularity as MLPs collapsed, and the Trump administration instituted policies unfriendly to renewable energy. But there are two very good reasons to expect an eventual return of yieldco IPOs.

$274 billion: That’s the staggering sum President Biden’s infrastructure plan would allocate to US utilities, as investment in new transmission lines, renewable energy deployment and electrification of transportation. Bloomberg Intelligence estimates that’s enough to add at least 2 percentage points to utility earnings growth rates. Getting that into rate base would require the assent of Congress as well as state regulators. But even $100 billion of fresh tax incentives and other subsidy would provide a huge lift for earnings and dividends, and ultimately share prices.

Since results of the November 2020 presidential election became clear, shares of Aggressive Holding Kinder Morgan Inc (NYSE: KMI) are up nearly 50 percent.

From range limits to battery costs, electric vehicles have a long way to go before they rule America’s roads. And even the leading name in EV manufacturing Tesla Inc (NSDQ: TSLA) still relies on tax credits and outside capital to fund operations.

Perceived value always sets the price for stocks. And anyone who’s invested a while knows that can shift on a dime, as leaders and laggards trade places. Quality doesn’t change so quickly. That’s the health and growth of companies’ underlying businesses.