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The Long-Term Trade Ideas I'm Excited About for October

The trade ideas I like going into October (with charts)

Author

J.L. Bernstein
October 06, 2024

In partnership with

Happy Sunday everyone.

I did this format at the beginning of September and got a ton of great feedback. The trades I was excited for for September -

September returns:

$TSLA: +22.19%
$AMD: +10.45%
$DIS: +6.43%

Bench-marked against the indices returns:

$SPY: +1.79%
$QQQ: +2.48%
$.DJI: +1.85%

I’d say thats a pretty damn good month - definitely not the normal. I linked the posts from last month at the bottom of this discussion.

If you like the charts discussion and this format, consider going premium. I will be going over charts I like every weekend like this. Th daily market overview will forever be free and open.

Lets dig in…

Overview

To be blunt - I’m very cautious being to bullish in October. Charts and fundamentals have to look great for me to take a bite at this time. My largest position is cash until after election time.

- U.S. presidential elections 1 month away

- Historic seasonal volatility

- Middle East tensions rising

First up is PG&E Corp ($PCG)

A personal ask from me - each time someone checks out today’s sponsor it buys me a sip of coffee. I promise to keep this brief free and rolling every market session!

PG&E Corp Daily

9 reasons why I’m bullish (besides the beautiful technical chart aligning)

  1. Recent Federal Grant Catalyst:

    • Secured $34.5 million DOE grant for 19 hydroelectric projects.

    • Potential for:

      • Enhanced operational efficiency.

      • Increased capacity in clean energy portfolio.

      • Improved grid resiliency and dam safety.

  2. Strong Financial Performance:

    • Q2 2024 results:

      • Revenue up 13.16% YoY to $5.986 billion.

      • Net profit increased 28.08% to $520 million.

    • Management guidance:

      • 10% earnings growth into 2025.

      • 9% annual growth through 2028.

  3. Favorable Regulatory Environment:

    • Recent CPUC approvals:

      • Additional CapEx funding.

      • Net billing tariffs.

    • Implications:

      • More predictable revenue streams.

      • Support for infrastructure plans.

  4. Ambitious Infrastructure Modernization:

    • $60 billion, 5-year CapEx plan includes:

      • “10,000 mile underground program”.

      • Grid modernization efforts.

    • Expected benefits:

      • Enhanced long-term reliability.

      • Reduced wildfire risks.

  5. Robust Demand Growth Drivers:

    • Increasing power demand from:

      • Electric vehicles (EVs).

      • Artificial Intelligence (AI).

      • Data centers.

    • Projection:

      • Grid utilization to rise from 45% to 80% by 2040.

  6. Strong Hydroelectric Portfolio:

    • Second-largest privately owned system in the U.S.

    • Capacity: 3,867 MW across 61 conventional powerhouses.

    • Well-positioned in the renewable energy landscape.

  7. Attractive Valuation Metrics:

    • Forward P/E ratio: 16.8X vs. sector average of 17.85X.

    • Suggests slight undervaluation with potential upside.

  8. Key Financial Metrics (from Q2 ER)

    • Market Cap: $40.7 billion.

    • Liquidity: $3.3 billion.

    • Debt: $60 billion.

    • Capital-to-expense ratio: 0.8 (vs. industry average of 1.6).

  9. Clear entry and exits provided from the bullish flag

    • This flag on the daily could not get cleaner for me riding the 20 EMA.

🚩 Potential Red Flags for $PCG

  1. Debt Burden:

    • $60 billion in total debt vs. $40.7 billion market cap

    • Will impact financial flexibility for sure

  2. Low Shareholder Returns:

    • Dividend yield significantly below sector average

    • 0.21% annual forward yield vs. 3.71% sector average

  3. Regulatory Risks:

    • Fixed charge approvals may face consumer backlash

    • Potential for unfavorable regulatory changes

  4. Execution RiskE

    • Ambitious $60 billion, 5-year CapEx plan

    • Complexity of “10,000 mile underground program”

  5. Environmental Liabilities:

    • Ongoing wildfire mitigation costs and potential liabilities

I’m going to go over charts I like the look of just like this ^ this every weekend - this is a new thing.

Usually it will be more then just one chart for overview. Weekend sends will be for premium subs.

P.S. 
Please fuel my coffee pot with a quick click to our sponsor today. 

Thank you for reading,

- JB

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