Embracing Uncertainty with Smart Allocations

Global energy markets today sit at the intersection of volatility, policy shifts, and long-term transformation. From the unpredictability of fossil fuel supply to the growing (but not unchallenged) role of renewables, investors face a landscape rich in opportunity but fraught with complexity. Within this complexity, however, lie a number of fundamental certainties: the need for secure energy, resilient infrastructure, and pragmatic decarbonisation.

At TAMIM, we invest in these certainties through companies that combine diversified energy sources with infrastructure expertise. In this piece, we profile three companies, Engie, A2A, and Quanta Services, that embody this balanced approach. These businesses are positioned to benefit not from a single energy ideology, but from the realities of the evolving global energy architecture. As Jensen Huang recently hinted at the Milken Institute, success in the modern era will come from those who build essential infrastructure, both physical and digital, and adapt quickly to systemic shifts.

ENGIE SA (EPA: ENGI): The Pragmatic Decarboniser

Engie, the French multinational utility giant, offers one of the most realistic blueprints for energy transition. With operations in electricity generation, natural gas, and energy services, it combines legacy infrastructure with modern renewables and innovation. Crucially, it has not fallen into the trap of betting entirely on one technology or region.

The firm has doubled down on hybrid energy development, maintaining its natural gas and nuclear backbone while accelerating solar and wind expansion. This balanced energy strategy means it can adapt flexibly to policy changes and demand shifts, an echo of Huang’s point that resilient systems are built through modularity and diversified capability.

In 2024, Engie reported strong cash flow from its thermal and nuclear assets while increasing investment into green hydrogen and energy efficiency solutions. Revenues topped €95 billion, with EBITDA margins improving year-on-year thanks to higher regulated returns and cost efficiencies. It’s this dual-engine of legacy earnings and future-forward investment that gives us confidence in its resilience.

Moreover, Engie’s grid and flexibility services make it a linchpin of the wider energy transition. As electricity networks become more dynamic, balancing intermittent renewable sources with constant baseload power will require infrastructure that can absorb complexity. Engie’s expertise in demand-side management and decentralised energy aligns well with this need.

A2A S.p.A. (BIT: A2A): Local Strength with Global Relevance

Italy’s A2A might not be a household name, but its strategic importance to regional energy resilience and its alignment with broader EU energy trends make it a standout holding. A2A is a vertically integrated utility, managing power generation, distribution, waste-to-energy, and water systems primarily in Northern Italy.

Like Engie, A2A benefits from a pragmatic energy mix: natural gas and hydro provide baseload stability, while renewables like solar and wind are layered in as policy and economics allow. In 2023, A2A reported revenues of €22.2 billion, with net income growing by 11%. Its investment plan of over €18 billion by 2030 is heavily weighted toward decarbonisation and infrastructure upgrades.

What makes A2A particularly interesting is its integration of circular economy principles into core operations, waste-to-energy, district heating, and closed-loop water management are not just ESG window dressing, but contributors to bottom-line stability. This kind of “real asset” infrastructure thinking, layering resilience, efficiency, and regulatory alignment, is the hallmark of companies that thrive in uncertain times.

As Jensen Huang has articulated in broader discussions of industrial transformation, the new economy rewards those who combine physical infrastructure with data and optimisation. A2A’s use of digital grid management, smart metering, and predictive maintenance makes it more than just a utility, it is a systems company, and one that the market continues to underestimate.

Quanta Services (NYSE: PWR): Building the Backbone of the Grid

While utilities produce and distribute energy, someone has to build and maintain the physical systems that underpin it. That someone is often Quanta Services, a North American powerhouse in engineering and construction for power, telecom, and pipeline infrastructure.

Quanta plays a key “pick-and-shovel” role in the energy transition. Its clients include utilities, government agencies, and private developers seeking to upgrade aging grids, deploy renewables, or extend broadband networks. From transmission line upgrades to substation retrofits, Quanta is on the frontlines of infrastructure modernisation.

Its most recent earnings saw revenue grow 9% to $19.4 billion, with a robust backlog of $31 billion. Importantly, Quanta is seeing accelerating demand for high-voltage projects and renewable integration. These projects often stretch over years and offer visibility into earnings and cash flow. The company’s operating margins remain stable despite inflationary pressures, testament to its execution and contractual pricing models.

Quanta’s projects provide the physical conduit for national digital and energy ambitions. It’s hard to digitise a grid, or decarbonise one, without digging, wiring, and integrating. Quanta enables this foundation.

Navigating the Energy Crossroads

Our investment in these three names reflects a view that the global energy market is undergoing a managed, not manic, transition. A few realities support this thesis:

1. “Drill, Baby, Drill” Has Limits: While U.S. political rhetoric often leans toward energy independence via hydrocarbons, capital discipline remains high among producers. Supply is constrained by cost, ESG pressure, and uncertainty about future demand.
2. OPEC’s Dilemma: Recent indications suggest that OPEC, particularly Saudi Arabia, is winding back production cuts to stabilise revenue. With global sporting events and ambitious economic programs underway, these nations need stable cash flow.
3. Renewables Reset: The narrative of 100% renewables is being revised. Spain’s recent grid blackouts and Orsted’s pullback from offshore wind projects highlight the limits of intermittent energy when not paired with sufficient baseload or storage.

In response, Germany’s inclusion of nuclear in its clean energy taxonomy is a signal that Europe is recalibrating. This creates an opportunity for companies with flexible and diversified power generation assets. It also positions companies like Quanta, which stitch these systems together, as essential economic enablers.

The TAMIM Takeaway: Investing Where Real Change Happens

As our PAR (Premium, Action, Resilience) model suggests, energy infrastructure names that score well across risk-adjusted valuation, news flow, and robustness deserve attention. Fundamental due diligence (ASG: Accounting, Strategic, Governance) then ensures we avoid the pitfalls of over-promised transformation. Infrastructure, especially that which enables flexibility, modularity, and adaptation, is the most valuable asset class in an age of systems change.

Our focus on Engie, A2A, and Quanta Services illustrates how patient capital can still earn compelling returns by owning essential businesses in flux-heavy sectors. These are not fads, they are foundational.

Actionable insights for investors:

• Look for energy companies that blend legacy earnings with future-facing strategy.
• Invest in enablers such as businesses that make the system work, not just those who supply or consume energy.
• Embrace policy risk as a source of opportunity: regulation drives infrastructure spend.
• Use macro uncertainty to build positions in quality, cash-generative names with multi-decade tailwinds.

Keep your eyes focused as next week we will be unveiling a new investment solution targeting global infrastructure, tailored to capture precisely this shift. As the global rollout of infrastructure accelerates across digital, transport, energy, and communications, we intend to be front and centre. Let the builders lead the way.

_____________________________________________________________________________________________

Disclaimer: ENGIE SA (EPA: ENGI), A2A S.p.A. (BIT: A2A) and Quanta Services (NYSE: PWR) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time. Source: Company ASX material, discussions with management, Tenva Capital Research.