Electricity Is the New Input Cost
James FD@jamesfoxdavies
+1.1%
since Sep 30
The idea
I believe electricity is becoming the economy's core input cost as everything from factories to data centers electrifies, and whoever generates the power, builds the grid, or supplies the fuel behind it collects a growing toll over the next decade. I've spread this across three layers that hedge each other, generators, grid equipment, and fuel, with large-cap ballast in each and a cash reserve rather than a concentrated bet. It's built to hold for years, and I'd rethink it if electrification itself stalls out.
What it owns
- Moving new power to where it is needed requires transformers, cables and switchgear that the grid currently lacks. · GE VernovaIt manufactures turbines and grid equipment purchased during buildouts to add generation capacity and move more power across transmission networks., EatonIt makes electrical equipment and systems inside data centers, factories and the grid itself, collecting across nearly every electrification dollar spent., Quanta ServicesIt builds transmission lines and related infrastructure that move power from generation sites to end users across long distances., HubbellIt manufactures transformers and grid components that are currently in short supply relative to demand from grid modernization and expansion projects., MYR GroupIt specializes in building transmission lines and electrical infrastructure, capturing growth from the shift in spending toward moving power across the grid., Primoris ServicesIt builds power generation and grid infrastructure as a specialized contractor with growth potential if construction spending on electricity buildout runs for years.29%
- The companies that generate electricity gain pricing power when demand outpaces supply across the grid. · Constellation EnergyIt operates the largest nuclear fleet in the US, selling carbon-free power into a market where electricity is becoming a critical input cost for data centers and industry., VistraIt sells power at market prices rather than regulated rates, making it a direct bet that electricity prices stay elevated as demand from electrification outpaces new supply., NRG EnergyIt generates and sells power in Texas, where industrial, data center and population growth are driving electricity demand faster than new supply additions., Talen EnergyIt sells nuclear-generated power directly to data centers under long-term contracts, capturing the premium that large power consumers pay for reliable, carbon-free electricity., Public Service Enterprise GroupIt combines nuclear generation with a regulated utility business, earning from tight power markets while the regulated side moderates earnings volatility.26%
- Whatever fuel sources power the generation side, uranium, natural gas, or enrichment, see increased demand and volumes. · CamecoIt is the largest Western uranium miner, supplying fuel for nuclear plants whether they operate at high utilization or expand through the decade., EQT CorporationIt produces low-cost natural gas that fuels a substantial portion of US electricity generation as power demand rises., Kinder MorganIt transports natural gas through pipelines for a fee, earning revenue based on volumes moved rather than commodity prices., Global X Uranium ETFIt holds a diversified portfolio of uranium miners and nuclear fuel suppliers, gaining exposure to the entire fuel chain if nuclear power expansion accelerates., Centrus EnergyIt is the only US company enriching uranium, offering domestic fuel supply if the country chooses to reduce reliance on foreign enrichment.21%
- Regulated utilities and diversified energy funds provide steady returns through market cycles as electricity's role in the economy grows. · Utilities Select Sector SPDRIt holds a broad portfolio of regulated utilities, capturing the sector's overall growth as electricity becomes more central to economic activity., NextEra EnergyIt builds solar, wind and battery storage capacity at scale, positioning itself to supply electricity if renewables become the primary response to power demand growth., Southern CompanyIt operates a regulated utility serving the fast-growing Southeast, where data centers and factories are relocating, converting demand growth into steady earnings.14%
- Cash10%