We all know that Electric Vehicles are the future, how do we profit from that? Should be invest in Tesla $TSLA ? In BYD? In Nikola Motors? There's a much better way, investing in the suppliers. It is less risky and with greater potential rewards.
Just like with 5G, the best investments are not in Apple $AAPL or AT&T but in semiconductors, Electric vehicles (EV) also gives us the opportunity to invest in semiconductors. Those Electric cars need semiconductors especially if they are autonomous vehicles. For example, Skyworks Solutions supply to Tesla. But unfortunately, since everybody is already betting on 5G, the opportunities in semiconductors are rare.
The best electric vehicle investments are in metals. These Electric cars needs a lot of metals, more than the average car. For example, they need copper wirings and Lithium batteries. It is not just because of EV but also because of renewable energies. Windmills require a lot of copper for wiring and nickel and lithium for the batteries.
Silver is the best electrical conductor but Copper $COPPER for wirings is preferred because it is cheaper. Copper prices are currently low because of the recession. this is an opportunity to take since commodity prices are cyclical and it seems that a supply gap is forming. Another good reason to invest in copper is because of increased electrification in the developing world.
As far as the batteries are concerned, the metal that will win the most is Lithium but there are other metals which are going to be used, for example, Cobalt, Nickel, Manganese, Molybdenum. Wall Street already figured that out and that's why there was a bubble in Lithium a few years ago. That's why it is better to look at the other metals.
Another good reason to invest in metals right now is inflation as the Fed is printing more money. Gold, Silver and other precious metals are more impacted by inflation as they are used as hedges but base metals are mostly dependent on supply and demand.
You need to use the same process when investing in metal miners like you're investing in any other company. Make sure that they have good balance sheets. You don't want just to bet on higher metal prices. You're investing in a business. we cannot know for sure when the price of a particular metal will go higher. If you invest in a company that is losing money when metal prices are low, it won't be sustainable for the long-term.
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