Chris’ note: China’s economy is in the news right now for all the wrong reasons. Its real estate sector is melting down… youth unemployment has topped 20%… and some of its biggest companies are going bankrupt.
Things have gotten so bad that, yesterday, China’s central bank cut rates for the second time in three months. It wants to stimulate spending and pull the economy out of its slump.
And China’s troubles don’t stop there. Today’s dispatch is from income investor and analyst Stephen Hester. He works alongside friend of Legacy Brad Thomas at Wide Moat Research. And as he details below, manufacturing capacity is leaving China and relocating to the U.S.
This is bad news for China. But it’s great news for investors who are positioned to profit from the manufacturing renaissance this relocation is helping kick off in America.
Schneider Electric had a choice to make…
The France-based company is one of the world’s largest makers of electrical and automation products.
And it was looking to open an overseas manufacturing plant.
The two places it shortlisted couldn’t be more different…
One was China. The other was Texas.
Guess which location’s pro-business stance and easy access to Western markets rewarded it with 400 new, high-paying manufacturing jobs?
Schneider Electric is opening a factory in El Paso, Texas, that makes circuit breakers and electrical panel boards.
And it’s not alone.
Consumer electronics giant Apple is moving from Chinese to U.S.-made microchips.
One-third of the chips Apple uses are now made in America.
And it’s not just European and U.S. companies ditching China for the U.S.
Major Chinese companies are relocating to the U.S., too.
Social media app TikTok now has a Los Angeles headquarters. Its Chinese parent company, ByteDance, has leased a 658,000-square-foot building in San Jose, California.
Today, I’ll show you how this trend will boost the industrial renaissance underway in America.
And I’ll share the name of one company uniquely positioned to profit.
From Xinjiang to Jacksonville
Take LONGi Solar. This Chinese company is the world’s No. 1 solar panel producer.
Not far behind it is another Chinese company, JinkoSolar.
These two firms make roughly 75% of the world’s solar panels.
And their newest plants aren’t in Shanghai or Xinjiang. They’re in Pataskala, Ohio, and Jacksonville, Florida.
This makes sense for these firms. The reindustrialization of America requires energy. And solar is a popular source of power.
So, these companies are shipping more and more of their solar panels to U.S. customers.
Figures from the Solar Energy Industries Association show that the U.S. solar industry installed 6.1 gigawatts, direct current (GWdc) of capacity in the first quarter of 2023. That’s a 47% jump from the same quarter in 2022.
That’s enough to power about 876,000 homes for a year.
And U.S. demand for solar energy is expected to triple over the next five years.
So, a couple of extended lockdowns in China… a growing market in the U.S… and LONGi and JinkoSolar saw the writing on the wall.
Building in the U.S. – and avoiding tariffs – was too good of an opportunity to pass up.
These companies powered China’s rapid growth from a poor country to the world’s second-largest economy. Now, they’re helping power America’s economic resurgence.
And we have an opportunity to profit as the trend continues.
6.8% Yield From This Renewable Energy REIT
America’s reindustrialization is a huge driver of demand and growth for the energy sector. That includes fossil fuels and renewable energy.
Cheap fuel and electricity are some of the reasons outside companies are building in America. And they’re crucial to promoting rapid growth with lower operating costs.
One company sits at the intersection of these key themes – Hannon Armstrong Sustainable Infrastructure Capital (HASI).
It’s the best renewable energy-focused REIT I follow.
A REIT (real estate investment trust) is a special kind of company that owns, operates, or finances income-producing real estate. You can buy shares of REITs on major stock exchanges. This allows you to invest in real estate without having to buy property directly.
In the past 10 years, Hannon Armstrong’s dividend has more than doubled. And it’s increased its revenue every year over that time, too.
The company’s expanding portfolio of renewable energy projects allows it to capitalize on economic growth all around the country.
Right now, REITs are out of favor with investors. And Hannon Armstrong is trading near its 52-week low.
And because a lower stock price means a higher yield, all else being equal, it now carries a yield of 6.8%.
It’s an ideal income-producing play to take advantage of the oncoming manufacturing renaissance in the U.S.
A “Fortress” for Your Wealth
This major shift in global manufacturing isn’t the only profit opportunity we’ve got our eye on right now.
In fact, my colleague Brad Thomas has put together an entire “Fortress Portfolio” of investments for protecting – and growing – your wealth… no matter what the headlines are screaming.
It consists of a simple list of “Fortress” investments built to withstand market volatility, recessions, record-high inflation, interest rate hikes, and any other curveball life might throw your way.
That way you can sleep well at night knowing your wealth is secure.
You can go here to learn more.
Stephen Hester, CFA
Analyst, Intelligent Income Daily