Doc's note: When you think of stocks profiting most from AI innovations, Nvidia, Microsoft, and Tesla would be some of the first to come to mind.
But Marc Chaikin details a surprising industry that's benefiting from AI that many investors are ignoring...
No one worried too much about the yellow smoke until one night in 1948...
By then, it was too late.
Donora, Pennsylvania was an industrial town about 30 miles south of Pittsburgh. It was beautiful – aside from the nasty smoke.
That smoke poured out of the town's two mills – the American Steel and Wire complex and the Donora Zinc Works. U.S. Steel owned both of them. And together, they were Donora's main employers.
However, the mills also pumped toxic waste into the air.
Charles Stacey was a high school senior in 1948. Years later, he described his hometown by saying...
It was a dirty town. But it was a prosperous town.
Folks in Donora could tell what part of the mill was running by the color of the smoke...
The zinc works emitted a noxious yellow fume. The color came from sulfur dioxide.
Workers often suffered from "zinc jitters" after inhaling the smoke. Locals treated the condition with a concoction that included milk and oatmeal. They thought the mixture helped leach the metal from their bodies.
With all the toxins in the air, it was only a matter of time before tragedy struck...
On October 27, a shift in the weather caused a thick fog to cover Donora. It trapped cold air – and pollutants – underneath.
Smog from the mills would usually burn off by late morning. But not this time. Instead, the haze enveloped Donora for days.
Stacey recalled that he couldn't even see his own feet on the sidewalk. He had to step carefully on the walk from school.
By October 28, folks were coughing and struggling to breathe.
Two days later, the toxic smoke claimed its first victim.
Over the next 12 hours, more than a dozen people in Donora and the nearby village of Webster died.
Lois Bainbridge lived in Webster. She immediately wrote a letter to the governor of Pennsylvania. As part of her letter said...
There is something in the Zinc Works causing these deaths... I would not want men to lose their jobs, but your life is more precious than your job.
On October 31, the mill finally received a shutdown order from its superintendent. Later that day, a cleansing rain swept through the town – fortunately taking the smog with it.
But the damage was already done...
Nearly half of Donora's population got sick from the toxic fumes. And 20 of them died.
Autopsy results showed that some victims had fluorine levels as much as 20 times higher than normal in their systems. It was a result of the fluorine gas generated during the zinc-smelting process.
U.S. Steel never took accountability for the Donora disaster. Instead, it claimed that the smog was "an act of God."
The company eventually settled lawsuits from more than 100 Donora residents for around a paltry $250,000. It was barely enough to cover the plaintiffs' legal costs.
Before the deadly smog in the town, America had zero federal air-pollution laws.
Donora helped change that...
Clean-Air Rules Actually Benefit This Type of Company
Just seven years after the smog outbreak, Congress passed the Air Pollution Control Act of 1955. It marked the first federal air-pollution law in U.S. history.
More legislation followed – including the Clean Air Act of 1963.
In 1970, lawmakers amended the Clean Air Act to make it much stronger. Around the same time, the National Environmental Policy Act created the Environmental Protection Agency ("EPA") and gave it authority over national air-quality standards.
If you visit the old American Steel and Wire site today, you can see a historical marker commemorating the disaster. A sign in the town even proclaims that "Clean Air Started Here."
Here's the thing, folks...
Most businesses think of "emissions controls" as a burdensome cost – something a company has to spend money on to avoid a fine.
That gets the picture backward...
For some companies, these types of regulations translate to profits – in some cases, big profits.
Put simply, the current data-center build-outs demand massive amounts of electricity. And our ancient power grid is having difficulty supplying the needed power.
Right now, renewable sources aren't able to meet the continuous demand of these data centers. And traditional nuclear plants, with their low-carbon footprint, can still take more than a decade to permit and build...
That leaves companies turning back toward fossil fuels like natural gas to meet this demand.
You see, the Clean Air Act requires each natural gas plant to install emissions and exhaust-control equipment before it can go on line.
So it makes sense that companies producing this crucial equipment stand to profit.
Many of these "environmentally friendly" stocks fall under the machinery industry. And right now, the Power Gauge sees this industry as strong. Here's how it breaks down in our system...
As you can see, the machinery industry boasts a great ratio of "bullish" to "bearish" stocks in the Power Gauge. So our system sees a lot of opportunity in the space right now.
Remember that the AI megatrend needs new power capacity to keep growing. And the companies meeting all aspects of that rising need stand to benefit immensely.
Good investing,
Marc Chaikin
Editor's note: Marc – founder of our corporate affiliate Chaikin Analytics – has used his Power Gauge system to build a concrete "Hotlist" and "Hitlist" for what he calls the age of "frontier AI."
Frontier AI thinks, plans, reasons, and acts entirely on its own, across any domain, without any human input. And its arrival will cleave the stock market in two, creating enormous gains for companies on the right side of that divide and devastating losses for those that are not.
