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Just For You
5 Stocks Showing Why Pricing Power Matters More Than Government MoneySubmitted by Bridget Bennett. Date Posted: 9/29/2026. 
Key Points
- Altimetry's Joel Litman and Robert Spivey argue that a federal stake signals a company that could not attract private capital on its own.
- MP Materials and Lithium Americas carry negative uniform returns on assets and valuations that assume near-total market capture.
- GE Vernova, KeyCorp and ProPetro Holding sit on the deregulation side of the same trend, spanning turbines, bank consolidation and behind-the-meter power.
- Special Report: Your Government Values Gold At $42 An Ounce. It's Really Worth $4,250.
Washington has been writing checks. Equity stakes, loan guarantees and price floors have landed across dozens of companies, from chipmakers to junior miners, and investors continue to read those announcements as buy signals. The price action has argued otherwise. Several names tied to federal capital are down sharply from where the headlines found them.
That disconnect frames a five-stock conversation on MarketBeat, covering two companies to avoid and three positioned on the opposite side of the same trend: deregulation rather than direct government ownership. What a Federal Stake Says About a Company's Access to CapitalJoel Litman, chief investment strategist at Altimetry, and Robert Spivey, the firm's director of research, view government ownership as regulation on steroids rather than an endorsement. The logic is blunt. A business earning a credible return can raise private money. A company that needs the federal government to underwrite it is saying something about the returns it generates on its own, according to Litman. That applies whether the recipient is a small miner or a company as large as Intel (NASDAQ: INTC). Altimetry's cautionary example is not China. It is France, where decades of state involvement produced a roster of protected national champions and almost no economic profit. Across the firm's database of more than 32,000 global companies, corporate France generates roughly $100 million in true economic profit, according to Litman, compared with approximately $1.6 trillion to $2 trillion for U.S. public companies. Bigger is not better. A larger unprofitable company is still an unprofitable company, and federal capital can fund the former without fixing the latter. MP Materials Is a Necessary Business Priced Like a MonopolyMP Materials Corp. (NYSE: MP) is the first name on the avoid list. The Department of Defense took a 15% equity stake and signed a 10-year magnet offtake contract with price-floor protections set at $110 per kilogram of neodymium-praseodymium oxide. Shares trade near $45, roughly half the record close of $98.65 last October. Spivey's objection is arithmetic. MP currently generates a negative uniform return on assets. To justify the current price, he calculates that the company needs roughly three times the average miner's profitability per unit of ore, plus the lion's share of U.S. rare-earth demand at that floor price. That's a bet that a government-granted monopoly will hold for years. The problem is that if rare earths remain expensive, someone will find a cheaper way to produce them. Litman draws the cleaner line. A necessary business and a good stock are different questions. Utilities are essential, too, and most generate mid-single-digit returns on assets year after year. Lithium Americas Faces the Junior Miner Timeline ProblemLithium Americas Corp. (NYSE: LAC) lands on the list for similar reasons. Thacker Pass is underwritten by a $2.23 billion Department of Energy loan. In January 2026, the DOE received warrants for a 5% equity stake in the company, plus a 5% economic stake in the project joint venture. Mechanical completion is targeted for late 2027. Revenue is still zero. Spivey's answer to the five-year bull case is patience. If the mine works, waiting for proof costs investors the first move, not the one that matters. GE Vernova's Backlog Is the Pricing Power StoryThe buy side is instead following deregulation, and GE Vernova (NYSE: GEV) leads the group. Backlog reached $176 billion in the second quarter, while gas equipment backlog and slot reservation agreements climbed from 100 to 116 gigawatts. Management is guiding to at least 125 gigawatts by year-end 2026. New equipment has been priced 10% to 20% above the levels at which the existing book was written. Every unit installed brings a decade of servicing revenue with it. Spivey notes that the business went from a 3% to 5% return on assets at spin-out to nearly 20% last year, roughly double the corporate average. The stock has chopped since summer along with the rest of the AI power complex. Spivey views that as an entry opportunity, though he expects more volatility first. Bank Deregulation Gives KeyCorp 2 LeversKeyCorp (NYSE: KEY) is the financials pick. Kevin Warsh took office as Fed chair on May 22, 2026, and Vice Chair for Supervision Michelle Bowman has been telegraphing capital-rule changes that, according to Spivey, pushed banks out of lending and left quantitative easing to do the work. The second lever is consolidation. Regulators have used the management component of the CAMELS rating as a subjective veto on bank deals. Pulling back that authority would open the pipeline. Key earns roughly 10% on equity, which is low for the group, and the market is modeling that figure to remain flat. Commercial and industrial loans grew by $2.1 billion last quarter, led by utilities, power and renewables. Return on tangible common equity exceeded 13%, compared with a 15% target for late 2027. On rates, Spivey flips the usual worry. Long-term yields are higher largely because corporations are borrowing to invest, which widens the spread and fills the loan book at the same time. ProPetro Turned Frack Fleets Into Data Center PowerProPetro Holding Corp. (NYSE: PUMP) is the least obvious name. Its core business is completion fleets in the Permian, and management realized that hauling mobile power to a remote site is the same job whether the customer is drilling or training models. PROPWR has roughly 350 megawatts committed under contract, with assets operating at a Midwest hyperscaler data center. It is one of the first behind-the-meter power providers serving a project at that scale. The market prices ProPetro's uniform return on assets at near 5%, or about its cost of capital, compared with 15% to 20% during strong completion cycles. Crude near $90, with the Strait of Hormuz conflict in its eighth month, keeps the forward curve well above the mid-$60s level at which shale producers need to hedge. Pricing Power Is the Dividing LineAll five names sit within the same macro story of reindustrialization, power demand and energy security. The dividing line is who had to ask for the money. MP Materials and Lithium Americas have their economics set in Washington through a floor price and a loan agreement. The other three set theirs at the point of sale, and that's the number worth tracking. Investors who want the full research behind these calls can access Joel Litman and Rob Spivey's energy research and stock recommendations at Altimetry. . |
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