Investment in electric vehicles: can lithium regain momentum?
Between the mid to late 2010s, lithium producers experienced a resurgence of interest due to the boom in the electric vehicle space. Lithium-ion batteries are commonly used for portable electronics and electric vehicles. For this reason, lithium has started to experience its own gold rush in the last decade.
It soon became clear that the industry was overtaking the EV market itself. Glut quickly arose and ravaged many of the major lithium-related stocks. However, industry experts still expect a return to form as the EV market catches up with build-up in the 2020s.
Lithium Americas (TSX: LAC) (NYSE: LAC) is a Canadian resource company. Its two main projects are the Cauchari-Olaroz lithium brine project in Argentina and the Thacker Pass lithium claystone project in Nevada. Lithium Americas shares have climbed 71% in 2020 so far. It may still take some time for demand to recover from the lithium crash, but the explosion in electric vehicle production is great news for companies like Lithium Americas. Currently, it has high growth potential and a favorable price / earnings ratio of 11.
TSX share enters EV market
NFI Group (TSX: NFI) manufactures and sells buses in North America and around the world. In 2012, in a joint venture with the Government of Manitoba and Mitsubishi, NFI unveiled a fully electric battery-powered bus. Fast forward to August 2019, and NFI announced a new contract with New York’s Capital District Transportation Authority (CDTA) for four battery-powered transit buses.
This makes the NFI Group a player to watch, as municipalities seek to adopt less polluting public transport. Beyond the EV space, NFI is also moving forward with automated transport. NFI Group’s shares last had a book value of one, placing it in favorable value territory. The stock paid a quarterly dividend of $ 0.2125 per share in July. This represents a high yield of 5.1%.
This ETF offers wide exposure to EV stocks
Instead of buying individual stocks, some investors may want to embark on a vehicle with broad exposure to the electric vehicle market. the The ETF Automotive Innovation is evolving seeks to replicate the performance of Indice Solactive Future Cars. The shares of this ETF climbed 51% in 2019 and are up another 20% so far in 2020. Some of its top holdings include NIO, a China-based EV manufacturer, Tesla, and Ballard Power Systems.
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Foolish contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns stocks and recommends Tesla. The Motley Fool recommends NFI Group.