Electric vehicles (EVs) will inexorably continue to increase their share of the global automobile market in the coming years.
But how to profit from that?
Buy stocks of EV makers?
Buy shares of firms that mine the metals and minerals such as lithium, copper, and cobalt needed to make batteries?
Or how about buy stocks of large technology companies that are supplying the EV sector but not solely reliant on it.
Here are two investment ideas.
by Louis Navellier, InvestorPlace
Analysts with Allied Market Research expect the value of the global EV market will increase from $162.3 billion in 2019 to $802.8 billion by 2027, increasing at a rate of about 22.6% per year over the timeframe.
While a Wedbush analyst recently said he expected the EV market could worth as much as $5 trillion over the next decade.
It’s little wonder that 18 of the world’s 20 largest automobile manufacturers said they plan on increasing their EV offerings this decade.
And many are setting up new production lines that will only produce EVs, including Volvo, Ford, Volkswagen and Stellantis.
Most EVs are charged at home or work, but public charging stations will be a key factor in making EVs more user-friendly.
In 2020, there were 1.3 million public charging stations in the U.S., which was 45% more than in 2019.
But that was a fraction of the 85% growth in charging stations the year prior.
The pandemic certainly weighed on new installations in 2020.
The rates of both slow and fast public charging stations have also been rising by double digits in China and Europe.
As you can see, the industry is fast approaching its lift-off phase, when the potential for growth and adoption reaches exponential proportions.
So, there’s also a lot of EV opportunities for investors.
Here’s a look at two of the safer, indirect EV bets:
NVIDIA Corporation (NASDAQ: NVDA) is a major player in the computer hardware arena.
It is a leading computer graphics company, making graphic processing units (GPUs) for consumers and businesses.
Nvidia has over 7,000 patents relating to computer graphics, the largest portfolio of its kind.
The company has been in the computer graphics business for more than two decades – it invented the GPU in 1999 – so it is a well-established player.
Since 2014, the Nvidia has shifted its focus to five major markets – gaming, professional visualization, data centres, auto and artificial intelligence.
NVIDIA has experienced explosive growth over the years.
In fact, the most-recent quarter was another one for the record books.
Company management commented:
“We had a fantastic quarter, with strong demand for our products driving record revenue.”
First-quarter revenue soared 84% year-over-year to $5.66 billion, which topped analysts’ estimates for total first-quarter revenue of $5.41 billion.
Gaming revenue accounted for $2.76 billion, or a 106% year-over-year increase, and data centre revenue accounted for $2.05 billion, or a 79% year-over-year rise.
First-quarter earnings surged 103% year-over-year to $3.66 per share, up from $1.80 per share in the same quarter a year ago.
NVIDIA also noted that it paid $99 million to shareholders in the form of dividends during the first quarter.
The company will pay another quarterly dividend of $0.16 per share on July 1.
Looking forward to the second quarter, NVIDIA expects revenue of $6.3 billion, which is up from $3.87 billion in the second quarter of fiscal year 2021.
Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was the first dedicated semiconductor foundry in the world when it was founded in 1987.
TSM does not develop or market any semiconductor products under its own brand.
So, the company is never in direct competition with its customers.
TSM is the largest semiconductor foundry in the world, with a 56% market share.
The company manufactures more than 10,760 products that use 272 unique technologies for its nearly 500 customers.
TSM manufactures semiconductors that are used for computers, consumer, industrial, communications and standard markets.
In 2019, Taiwan Semiconductor’s total managed capacity reached more than 12 million 12-inch equivalent wafers.
In U.S. dollar terms, first-quarter earnings were $4.93 billion, and revenue was $12.92 billion, growth of 19 per cent and 17 per cent, respectively.
First-quarter earnings per American Depository Receipt (ADR) jumped 28% year-over-year to $0.96.
The company noted that the global shortage could ease a bit in the third quarter, but TSM expects overall demand to remain high and the shortage to persist into 2022.
As a result, TSM boosted its spending targets to $30 billion to expand manufacturing capacity and upgrades for this year.
Looking ahead to the second quarter, TSM expects total revenue between $12.9 billion and $13.2 billion.
That represents 24.3% to 27.2% year-over-year revenue growth—and the forecast is in line with analysts’ current estimates for $13.15 billion.