5 Innovative Companies That are Driving the Electric Car Boom
LONDON, May 31, 2017 /PRNewswire/ --
We now live in a world where upstart Tesla Motors Inc. is worth more than General Motors (GM).
The new market heroes [http://fortune.com/2017/05/18/donald-trump-best-stocks-to-buy-now ] are heroes of an energy revolution that is putting electric vehicles into the mainstream, building battery gigafactories to power them, discovering and developing new deposits of lithium and cobalt to feed the revolution, and taking futuristic tech over the finish line so we can have things like self-driving cars. Players in the market include amongst others: Ford Motor Company (NYSE:F), Albemarle Corporation (NYSE:ABL), Fiat Chrysler Automobiles N.V. (NYSE:FCAU), General Motors Company (NYSE:GM), NVIDIA Corporation (NYSE:NVDA)
The world not only wants a major change, it's already demanding it.
"When you have 400,000 people sending a company $1,000 for a car [Tesla's Model 3] that hadn't been developed yet, that told me the world wants a different platform, different engineering and they want a green car," Rob Lutts, president and CIO of Cabot Wealth Management was recently quoted as saying on MSN Money [http://www.msn.com/en-us/money/companies/3-stocks-to-own-for-the-coming-electric-and-autonomous-car-revolution/ar-AAolJKu ] .
Bloomberg expects [http://www.csmonitor.com/Business/In-Gear/2017/0102/Electric-car-market-share-in-2020-estimates-vary-widely ] to see a whopping 41 million electric vehicles sold by 2040, and even the autonomous vehicle market looks set to soar-taking things one major step further. Autonomous vehicles sales could reach 21 million sales annually in the U.S. alone by 2035, according to IHS research firm [http://news.ihsmarkit.com/press-release/automotive/autonomous-vehicle-sales-set-reach-21-million-globally-2035-ihs-says ] . Globally, that it could reach 76 million sales.
So while Tesla is definitively leading the EV charge, and Google's Alphabet is leading the artificial intelligence boom for self-driving cars, among other things, the backbone of it all is energy storage and battery solutions that require mega amounts of lithium, for which we've already seen the craze, and cobalt-the next in line for a super-metal breakout.
In this space, looking at everything from EVs, self-driving cars, batteries and metals, here are our 5 top stock picks for a New World that's taking shape RIGHT NOW:
#1 Tesla Motors Inc.
We can't say it enough: Tesla overtook giant GM this year in market cap! And it looks like this isn't just a fluke. Tesla's going to maintain its momentum because they are the future. The internal combustion engine is becoming a dinosaur.
Model 3. Source: Tesla.com [https://www.tesla.com/model3 ]
Eventually, Tesla's electric cars will be more profitable than traditional cars, and easier to produce. Costs will keep coming down, especially now that Tesla's has launched its battery gigafactory in Nevada.
Tesla's Nevada gigafactory. Source: Youtube [https://www.google.com/search?q=Tesla%27s+Model+3&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiJ6s__nofUAhXDeCYKHbl4AxMQ_AUIBigB&biw=1199&bih=758#tbm=isch&q=Tesla's+battery+gigafactory+nevada&imgrc=IPqNAuqBwPOGiM: ]
It is entirely feasible that Tesla will be selling over 2 million cars annually in less 6-7 years from now. For next year already, Tesla will be producing 500,000 cars. Even though shares are already soaring, there's still a long way to go and it's still a good deal right now.
Tesla's share prices seem to defy gravity.
#2 US Cobalt (USCO.V [https://www.google.com/finance?q=USCO&ei=SUwnWanIKdXnjAGevYuQDg ] ; SCTFF [https://www.google.com/finance?q=OTCMKTS%3ASCTFF&ei=TU0nWcCIEpfljAHn8YaYDg ])
US Cobalt (previously Scientific Metals) is one of the most unique stories in this collection-and it's one that flies under the investor radar (for now), so this is a superb way to get in on the ground floor of our energy revolution. There is no more exciting metals story right now than cobalt. Why? Because while the lithium craze was lucrative for many, cobalt will be in deficit already this year, and beyond that we're looking at a 500% deficit [http://www.reuters.com/article/us-cobalt-demand-investors-idUSKBN15T1VR ].
Even better for producers-and new explorers-the cobalt we DO have come from a very controversial supply chain in the Democratic Republic of Congo (DRC), where it's mined by children.
Nothing would be better than a new all-American source of pure cobalt-not the 'accidental' cobalt that is currently mined as a by-product of copper and nickel by the giant miners. Cobalt is now anything but a by-product; it is a central product in the energy storage revolution.
This is one of the best opportunities for a first-in investor.
US Cobalt [https://www.google.com/finance?q=USCO&ei=SUwnWanIKdXnjAGevYuQDg ] in September snapped up the Iron Creek project in the heart of the Idaho Cobalt Belt, which is THE cobalt mineralization trend in the US. And they've got a great head start because this property has already seen a lot of exploratory work. There are historic indications of 1.3 million tons grading 0.59% of cobalt. And more encouraging indications of up to 10 million tons. At today's prices, that's worth about $1 billion dollars.
And it's right next to the ONLY advanced cobalt project in the U.S.-so it's got 'closeology' in droves.
Capping it off, it's led by top-notch management-one of the most important considerations for a small-cap.
Wayne Tisdale is the CEO, and he's hit some major homeruns in the recent past-the last one was with lithium, and Pure Energy, which launched in 2012 and then saw lithium prices increase 450%. His timing has been impeccable, and he's doing it again with cobalt.
What we like best about US Cobalt is that it's American cobalt, and it's pure, not a by-product. This puts US Cobalt in the extremely unique position of being one of only two pure play cobalt companies in the U.S., and one of only two companies that will put America on the cobalt map to feed the fever pitch EV and battery demand.
#3 Alphabet
Even legendary investor Warren Buffett regrets having missed out [http://fortune.com/2017/05/06/warren-buffett-berkshire-hathaway-apple-google-stock ] on this one earlier on. Alphabet, Google's parent company with a market cap of over $657 billion, is the second-largest by market capitalization in the S&P 500. We love Alphabet because its foundation is intellectual property-not tangible assets (which are so yesterday).
Source: Bloomberg [https://www.bloomberg.com/news/articles/2016-12-13/alphabet-creates-new-self-driving-car-business-called-waymo ]
There is a strong focus on artificial intelligence, and for our purposes, we're honing in on the use of artificial intelligence for self-driving cars. Indeed, many believe this company is behind the most importance human advances since the moon landing.
The catalysts are everywhere and pervasive. Already in 2017 Alphabet has made a $100 billion market gain. Now it's trading at well over 20 times its expected earnings for this year. Growth is explosive.
#4 Ford Motors (NYSE: F)
Ford has been through the ringer-yes; but there may be a catalyst in the recent ousting of CEO Mark Fields [https://www.nytimes.com/2017/05/22/business/ford-ceo-mark-fields-jim-hackett.html?_r=0 ] (he has only been there for 3 years). But what is good here is that Ford sees the future, and the battle for market share. Ford understands that it must kick it into gear and Fields reportedly failed to convince anyone that he was moving fast enough to develop the vehicles of the future (EVs and self-driving cars).
Recently, Ford announced that it would buy self-driving car start-up Argo A1 for $1 billion. The auto giant is clearly ready to dive into the future, even if it's behind the game.
Ford stock has lost 40% of its value under Fields-so this is probably a good time to get in on it. The drive to the future is Ford's key motivator, so we expect forward movement. This is our counterintuitive pick...
#5 Albermarle (NYSE: ALB)
The lithium craze has been phenomenal for producers like Albermarle. It might not be as astounding as the cobalt craze is likely to be due to the tighter supply, but it's an undeniably good bet in any case.
We like chemicals-maker and mining giant Albemarle for its lithium. Catalysts include Australia's recent approval [http://finance.yahoo.com/news/albemarle-double-lithium-production-greenbushes-115711825.html ] of the expansion of the company's lithium concentrate production at its Greenbushes mine-the biggest active lithium mine in the world.
This move will more than double the lithium carbonate equivalent capacity at the mine from 80,000 metric tons per year to more than 160,000 metric tons. Albemarle should start commissioning the expansion in the second quarter of 2019.
Albemarle's big push now is all about lithium-and meeting a massive future demand spike, sparked by an energy revolution that is in part driven by the introduction of electric vehicles to the masses.
This is an $11.74-billion market cap [https://finance.yahoo.com/quote/alb?ltr=1 ] company with a lot going for it.
It's a push that's been very good to Albemarle. Its shares have gained 72 percent in a year, and it has outperformed analyst expectations and earnings for at least four consecutive quarters.
Honorable Mentions:
Fiat Chrysler Automobiles (NYSE: FCAU)
The relevant catalyst here is Fiat Chrysler's partnering with Google spin-off Waymo to work on autonomous driving, which could be 'standard' by the next decade.
General Motors (NYSE: GM)
GM, though it's been surpassed in market cap by Tesla (of all companies) is still the furthest ahead of the Big 3 car makers from Detroit in terms of EVs and self-driving cars. Recently, GM acquired Cruise Automation-a self-driving car company, and it seems determined to forge ahead even faster to play catch-up with the future.
Nvidia (NYSE: NVDA)
You might not have heard of this one, but you should. It's been a great year for Nvidia, which is one of the leading autonomous solutions companies. Word on the street is that this company has the cheapest way to produce an autonomous vehicle, and they have huge revenues from gaming along the way. For artificial intelligence, this is a great bet.
By. Charles Kennedy
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