What a long way Australia has come in just 2 years.
In 2019, the Coalition was returned to government on the back of a scare campaign that electric cars would “end the weekends” of Australians.
As a response to Labor’s policies incentivising the adoption of electric vehicles, the Coalition insisted that such cars were not fit to meet the needs of the typical Aussie family.
But now, as the nation heads into another federal election likely in May, such an argument would be laughed at.
As with the rest of the world, Australian investors now know electric is the inevitable next phase of the motoring industry.
As such, it’s not a crazy idea to invest in the companies leading “the charge” in this theme.
But there are a lot of stocks out there purporting to represent the new green future. Lucky for us, ETF Securities this week picked out the 5 best ones to consider buying:
The electric journey starts in Australia
Let’s start with the Australian stock.
Electric cars need batteries, and lithium is a major ingredient for the advanced units that are strong enough for motoring.
This is where Pilbara Minerals Ltd (ASX: PLS) comes in.
“Thanks for surging demand for batteries and electric cars, Pilbara’s revenue doubled from 2019 to 2020, and then it doubled again from 2020 to 2021,” stated ETF Securities.
“Surging revenue, and its inclusion in the S&P/ASX 200 Index (ASX: XJO) in March, have helped its share price shoot up 213% year-to-date.”
The “global success story” regularly tops the rankings of the most traded shares on the ASX.
Pilbara releases its latest results on Thursday 27 January.
Companies that actually build the electric cars
Two car manufacturers make the top 5, one each from the two largest economies in the world.
The name of US company Tesla Inc (NASDAQ: TSLA) is almost synonymous with electric cars these days.
And despite rising 10-fold over the past couple of years, ETF Securities still reckons Tesla shares are a strong bet.
“Tesla is more than just a car maker. It is also a battery company; a self-driving software business; an Uber challenger; clean energy company; a robotics company; and space company,” said the ETF Securities team.
“With its revenue growing at 50% a year, its order book full, and its competitors unable to sell electric cars profitably, the company can justify a high valuation.”
But over in China, Tesla faces stiff competition from BYD Co Ltd (SHE: 002594).
“BYD makes electric cars and makes them cheap. It holds a near monopoly position in electric car taxis within China,” stated ETF Securities.
“It also makes other kinds of electric powered vehicles, including forklifts and bikes. Increasingly, it has been branching out into other parts of clean energy too — such as solar panels.”
ETF Securities analysts reminded investors that Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) owns 25% of the Chinese company.
Electric planes and self-driving
Over in Europe, the ETF Securities analysts love the look of ultra-luxury car and aviation engine maker Rolls-Royce Holding PLC (LON: RR).
“Rolls-Royce have announced they will go fully electric by 2030 — bringing much of the ultra-premium end of the car market with it,” said the team’s notes.
“Perhaps more interestingly, Rolls-Royce also recently built the world’s fastest all-electric plane.”
Rolls-Royce shares have risen almost 20% over the past 12 months.
Note that although ETF Securities refers to both cars and plane engines, the listed entity makes the latter only. Rolls-Royce cars are made by a separate company owned by BMW, also known as Bayerische Motoren Werke.
All these cars and planes will need many seriously advanced computer chips and batteries, and the last pick, Samsung Electronics Co Ltd (KRX: 005930), provides exactly those.
“Samsung is one of the largest semiconductor and battery companies in the world,” stated ETF Securities.
“Its chips are being used by car makers to help power self-driving software, which requires a lot of computer power — while its batteries are also being added to electric vehicles.”
Samsung shares are down 12.3% over the past 12 months.