This morning, Bank of America Securities came out with a note declaring that addressing the problem of climate change will be the "key global theme politically and economically for the coming decades," as StreetInsider.com reports. The bank cited the recent explosion of innovation in electric cars and new forms of energy, such as hydrogen electric fuel cells as evidence of the trend.
BofA noted that, so far, much of this innovation has arisen in China but predicted that "the US is preparing similar actions with the proposed green stimulus package under President Biden." Citing an estimated $69 trillion worth of "economic impact" at stake in climate change investments over the next century, BofA highlighted GE's ability to benefit from this trend, particularly through its exposure to wind turbines and energy management technology.
General Electric was already enjoying a tailwind from its successful fourth-quarter earnings report before this note from Bank of America came out. Last week, GE reported better-than-expected sales and close-to-expected earnings in its final quarter of last fiscal year -- and an explosion of free cash flow besides -- and cited strong performance in its renewable energy and power divisions.
Heading into the new year, GE CEO Larry Culp highlighted his company's strong cash performance, predicting that 2021 will see GE produce a further $2.5 billion to $4.5 billion in positive free cash flow. If BofA is right about the future belonging to green energy, GE's finally looking like it's in a good financial position to capitalize on those opportunities.