There's No Shortage in Demand for EVs
Editor's note: The transportation industry is undergoing a massive shift...
Just a few years ago, the thought of doing away with internal combustion engines seemed inconceivable. But now, electric vehicles ("EVs") have become commonplace. And as this trend has gained momentum, automakers have been adding EVs to their lineups more and more.
That's why The McCall Report editor Matt McCall has been pounding the table about this "hypergrowth megatrend." He says this shift toward EVs will create a host of buying opportunities, meaning we'll have plenty of chances to multiply our money...
In today's Masters Series, adapted from the July 11 issue of Matt McCall's Daily Insight e-letter, Matt details how EVs have risen to prominence today... explains how one company is leading the charge for this surging trend... and reveals how we can profit as it continues to gain steam...
There's No Shortage in Demand for EVs
Some encouraging numbers were just released that prove that the transportation megatrend is alive and well.
Let's talk about what they mean – plus how one company in particular is squaring up against industry leader Tesla (TSLA).
Then, we'll switch gears slightly to talk about what's happening in the energy sector...
Electric vehicles ("EVs") continue to gain market share in the U.S. with new registrations up 60% through the first three months of 2022. Meanwhile, overall vehicle registrations were down 18%.
Those first-quarter numbers suggest that my long-term outlook for this hypergrowth megatrend is right on track...
According to Bloomberg data, EVs now make up 5% of all new vehicles sales in the U.S.
Tesla remains the dominant leader with a 59% market share after selling 113,882 vehicles in the first quarter. Kia Motors was a distant second with 8,450 vehicles sold. Ford Motor (F) came in third after selling 7,407 vehicles, and Hyundai Motor (HYMTF) rounds out the top four with sales of 6,964 EVs.
Even with all the drama going on surrounding Tesla CEO Elon Musk backing out of his $44 billion offer to buy Twitter (TWTR), Tesla remains one of my favorite ways to play the EV boom during the Roaring 2020s.
But it's far from the only option...
One company that's often overlooked is South Korea-based Hyundai. The company is one of the 10 largest auto manufacturers in the world – and it's making a big push into EVs.
Hyundai is known for its namesake brand along with its Kia, Genesis, and Ioniq models. The $29 billion company caught my eye earlier this year when I started to see more Kia EVs on the road. Plus, its new logo was popping up everywhere.
As you can see above, the Kia EV6 is an extremely sleek SUV. And in my opinion, it's better looking than the comparable Tesla and other competitors' models.
Naturally, it piqued my interest. So I did some research on the company and came to the conclusion that in a few years, Hyundai and its brands would make a strong push to be a leader in global EV sales.
And that's exactly what we're seeing now...
The stock has pulled back with the overall market over the past year but could be nearing a level that makes it attractive for the long term. The price of its vehicles is low enough that it brings in a different customer than Tesla. And what's more, sentiment around South Korean-made vehicles continues to improve around the globe.
As a result, Hyundai may just be the most under-the-radar $29 billion company in Asia...
This company is one I'll be keeping a close eye on as the EV revolution continues to pick up steam. And this isn't the only market I'm monitoring right now...
Energy stocks have entered another bear market.
After rallying as much as 66% through the first half of 2022, the Energy Select Sector SPDR Fund (XLE) is now down around 15% from its June 8 high and is in a new bear market.
According to Bespoke Investment, this was the 14th bear market for the sector since 1998 – with the average pullback lasting 159 days and seeing a 32.5% decline.
A lot of energy investors are still stunned right now. It took the sector only seven days to lose 20% of its value and fall into bear market territory – marking the quickest 20% pullback from all-time highs on record.
The weakness in the price of oil and natural gas has led to the sell-off in energy equities. And the consensus appears to be split on where the sector goes next...
Some believe that lower prices may be on the horizon based on the odds of an "inevitable" recession. In that event, demand would decrease, and energy commodities would fall, too.
The other side is arguing that the economy will hold up and that demand will not fall much – even in the event of a shallow recession or none at all. Prices have come down, and that could actually lead to a pickup in demand. And with the Russia-Ukraine war far from over, supply could remain constrained.
I'm somewhere in the middle of those two camps. I believe that the worst-case scenario is a shallow recession in which demand will not drop too drastically. While I do see supply being an issue in the year ahead, that could limit the downside in energy prices.
With all of that being said, XLE continues to hold its 200-day simple moving average. And as long as it holds above that indicator, I'll continue to lean toward the bullish side of this trade.
Here's to the future,
Matt McCall
Editor's note: Matt has identified a sector with the potential to soar 30X or more in the next few years – no matter how volatile this bear market gets. Our economy and our national security are riding on these companies...
That's why Matt recently released a report revealing the six stocks he believes have the greatest upside potential. He says each could soar at least 1,000% in the future... Click here to learn more.