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The EV Boom and How to Trade It (TSLA, FUSEF, NIO, NKLA, ALB)

Without question, one of the most powerful investment themes driving both near-term speculation and long-term investment is the seemingly inevitable transition from gas-powered to electric vehicles. That transition is now clearly underway and anticipated to run its course over the next decade.

As a powerful symbolic statement contributing to the sense of momentum on this theme, LYFT Inc (NASDAQ:LYFT) announced on Wednesday that it would commit to making its entire fleet 100% electric by the year 2030.

We would assume that this is a game of “up the ante”, where we will next likely get word that UBER is making the same commitment, but to be completed by 2025. Then the dam will break and municipal transportation systems, rental car companies, buses, truckers, police, cabs, etc. Everyone will eventually join the parade of commitments.

Why? Because another transition has already happened, with earth-shaping consequences: the birth of the ESG investment paradigm. ESG (Environmental, Social and Governance) investing, according to ADEC, refers to a class of investing that is also known as “sustainable investing.” This is an umbrella term for investments that seek positive returns and a long-term positive impact on society, the environment, and the performance of the investment holding.

That paradigm is beginning to ascend to dominance with powerful implications. And organizations seeking capital will increasingly need to fall in line. The electric vehicle theme is ground zero in this revolution, and we anticipate continued strong growth in capital allocation to related assets.

Here are five interesting stocks that are currently active in the space: Tesla Inc (NASDAQ:TSLA), Fuse Cobalt Inc (OTCMKTS:FUSEF), Nio Inc (NYSE:NIO), Nikola Corporation (NASDAQ:NKLA), and Albemarle Corporation (NYSE:ALB).

Tesla Inc (NASDAQ:TSLA) frames itself as a company that designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States, China, Norway, and internationally. 

TSLA shares have been on fire over the past year as the ESG investment theme has ascended toward dominance. This is the big brand to bet on. As smartphone investors have learned over the years, public brand identity is everything, and Apple has been extremely difficult to bet against.

Tesla speculators are betting the same thing happens with TSLA stock as the EV theme establishes itself as a defining force in the stock market over the next decade.

The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers sedans and sport utility vehicles. 

It also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its company-owned service centers, Service Plus locations, and Tesla mobile technicians. This segment sells its products through a network of company-owned stores and galleries. 

The Energy Generation and Storage segment offers energy storage products, such as rechargeable lithium-ion battery systems for use in homes, commercial facilities, and utility grids; designs, manufactures, installs, maintains, leases, and sells solar energy systems to residential and commercial customers; and sell renewable energy to residential and commercial customers.

TSLA has had a rough past week of trading action, with shares sinking something like -3% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Shares of the stock have powered higher over the past month, rallying roughly 23% in that time on strong overall action. 

Tesla Inc (NASDAQ:TSLA) managed to rope in revenues totaling $6B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 31.8%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($8.3B against $12B, respectively).

Fuse Cobalt Inc (OTCMKTS:FUSEF) is a cobalt producer. It’s an interesting name to cover following Tesla because Tesla just signed a deal with Swiss commodity giant Glencore for 6,000 tons of cobalt per year over coming years because Tesla management is afraid of a supply squeeze on cobalt (according to Bloomberg reporting from inside sources at Tesla).

Cobalt is the key ingredient in EV batteries that gives them stability and a driving range that mirrors a gas-powered car.

And cobalt is very tough to find, especially from ethical sources. According to a report out recently, nearly 75% of the world’s cobalt comes from the Democratic Republic of Congo, and much of that production is tainted by informal makeshift mines where fatalities and human-rights abuses including child labor are all too common.

Pressure on battery makers to avoid Congo-sourced cobalt will only increase as more and more of the world’s investment capital gets routed through ESG funds, where ethical sourcing is a barrier wall to deployment of capital. Get your cobalt from Congo, they might say, and you can forget getting your money from us.

Fuse Cobalt Inc (OTCMKTS:FUSEF) is developing a cobalt mining property with Glencore Bucke property which is located in Canada.

Specifically, Fuse holds a 100% interest in the Glencore Bucke project with two patented mining claims covering an area of 16.2 hectares (ha) located to the east-northeast of Cobalt, Ontario; and an option to acquire a 100% interest in the Teledyne cobalt project with 5 patented mining claims covering an area of 79.1 ha, as well as 46 unpatented mining claims covering an area of 705.99 ha located in the Bucke and Lorrain Townships of Ontario.

It also holds an option to acquire a 100% interest in the Black Rock Desert lithium project with 130 placer claims covering an area of 1,610 ha located in the southwest Black Rock Desert, Washoe County, Nevada.

In other words, FUSEF is establishing itself at the heart of the EV battery theme and the ethical sourcing of rare cobalt.

Nio Inc (NYSE:NIO) continues to gain stability and traction in recent action after serious doubts about the company’s ability to continue given its debt levels with cash levels struggling to keep up with current liabilities ($338M against $1.7B, respectively) during the crash in March. 

However, capital came to the rescue, and NIO is back on its feet and in an envious position in the grand scheme of the EV market theme. That said, the problem for speculative high-growth-potential plays is the mounting evidence of extremes of speculative money in the market. Pullbacks need to remain shallow. We wouldn’t want to see anything under $4.75 from here.

Nio Inc (NYSE:NIO) trumpets itself as a company that designs, manufactures, and sells electric vehicles in the People’s Republic of China, Hong Kong, the United States, the United Kingdom, and Germany. 

The company offers five, six, and seven-seater electric SUVs. It is also involved in the provision of energy and service packages to its users; marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after sales management activities. 

In addition, the company offers charging solutions, including Power Home, a home charging solution; Power Swap, a battery swapping service; Power Mobile, a mobile charging service through charging trucks; Public Charger, a public fast charging solution; and Power Express, a 24-hour on-demand pick-up and drop-off charging service. Further, it provides value-added services, such as statutory and third-party liability insurance, and vehicle damage insurance through third-party insurers; repair and routine maintenance services; courtesy car services during lengthy repairs and maintenance; and roadside assistance, as well as data packages. 

NIO Limited has a strategic collaboration with Mobileye N.V. for the development of automated and autonomous vehicles; and collaboration agreements with various manufacturers for the manufacture of ES8, a six or seven-seater high-performance electric SUV. 

The stock has been acting well over recent days, up something like 9% in that time.

Nio Inc (NYSE:NIO) managed to rope in revenues totaling $196.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -18.7%, as compared to year-ago data in comparable terms.

Nikola Corporation (NASDAQ:NKLA) is something like a new flavor on the menu in the EV space. The stock has become one of the most popular among traders on the RobinHood app as it strives for some of Tesla’s seemingly imperturbable hold on the EV market.

Nikola Corporation is an American hybrid truck design and manufacturing company based in Phoenix, Arizona, where it also has its research and development operations. Naturally, as Tesla is named after Nikola Tesla, Nikola is as well.

Nikola Corporation (NASDAQ:NKLA) bills itself as a company that operates as an integrated zero emissions transportation systems provider. It designs and manufactures battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure. 

The company was founded in 2015 and is headquartered in Phoenix, Arizona.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Albemarle Corporation (NYSE:ALB) frames itself as a company that develops, manufactures, and markets engineered specialty chemicals worldwide. The company operates in three segments: Lithium, Bromine Specialties, and Catalysts. 

The Lithium segment offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties, as well as reagents, such as butyllithium and lithium aluminum hydride for applications in lithium batteries for consumer electronics and electric vehicles, high performance greases, thermoplastic elastomers for car tires, rubber soles, plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets. 

Albemarle Corporation (NYSE:ALB) also offers cesium products for the chemical and pharmaceutical industries; zirconium, barium, and titanium products for various pyrotechnical applications; technical services, such as the handling and use of reactive lithium products; and recycling services for lithium-containing by-products.

The Bromine Specialties segment offers bromine and bromine-based solutions for fire safety, chemical synthesis, mercury control, water purification, beef and poultry processing, and other industrial applications, as well as oil and gas well drilling, and completion fluids applications; and tertiary amines, biocides, disinfectants, and sanitizers. 

The Catalysts segment offers hydroprocessing catalysts together with isomerization and akylation catalysts; fluidized catalytic cracking catalysts and additives; and performance catalyst solutions comprising organometallics and curatives. 

The company serves energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, crop protection, and custom chemistry services markets.

And the stock has been acting well over recent days, up something like 6% in that time.

Albemarle Corporation (NYSE:ALB) pulled in sales of $738.8M in its last reported quarterly financials, representing top line growth of -11.2%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($553.2M against $1.2B, respectively).

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