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2 years ago
Telsa, Inc (NASDAQ: TSLA) is not the only choice when it comes to investing in the Electric Vehicle (EV) revolution. Given its sky-high valuation and current price tag at $900+ per share, we are leaning towards investments in its component suppliers and competitors in the industry. EVs have created some great investing opportunities, and one recent winning trade, was to invest in a broad-based Exchange Traded Fund (ETF), such as the Global X Lithium & Battery Tech ETF (NYSE: LIT).
Holdings within the ETF, include: miner, Albemarle Corp (NYSE: ALB), lithium compound producer, Livent Corp (NYSE: LTHM), manufacturers, LG Chemicals (KRX: 051910) and Sociedad Quimica y Minera De Chile S A (NYSE: SA), battery producers, Panasonic Corp (OTC: PCRFF) and Samsung SDI (KRX: 006400); while also having exposure to TSLA with a 9.97% holding. LIT‘s policy is to provide investment results that correspond generally to the price and yield performance of the Solactive Global Lithium Index (SOLLIT). The Fund will invest at least 80% of its total assets in the securities of the underlying index and companies that are economically tied to the lithium industry.
What is notable in the chart (below) is the swift reversal in late 2019; which is somewhat in tune with the recent reversal in TSLA. Although the current surge in LIT has now hit the (.618-.65) resistance at the Fibonacci Golden Pocket; this stall out in the rally, in our opinion, will be a temporary one.
A notable price-level to watch is $41.22; which is the 52-week high price of 2018. If that level can be surpassed, then the chart will have completed a series of higher lows and higher highs. This is a very bullish template to move forward on; with aspirations to claim a new all-time high in 2020, with an upside Fibonacci 1-2-1 extension target of $49.16.
By no means are we advocating the that you invest in any particular ETF, but this is just a example of how you can simplify you investments. ETFs come with the possibility of sacrificing a little gain, for the security of using others’ expertise and time; to make right decisions on your behalf.
One company, in particular, within LIT‘s ETF, that deserves particular attention, is ALB. This company comprises 19.98% of the ETF’s total holdings. The stock is, somewhat of a battleground, with a high short interest of 16.78%. Meanwhile, analysts have placed: 3 sells, 10 holds and 7 buy ratings on ALB. Most recently, analyst, Colin Rusch from Oppenheimer, raised his price target of $86 to $116; as he models “steady unit growth, margin expansion and flattish lithium prices”, while the company continues to implement cost cutting measures. He, like many others, see the long-term growth potential in EVs; as transportation makes a more intensified move towards electrification.
This uptrend could continue for years to come. Companies, industries, investors, banks and most governments are taking a much more proactive stance towards climate change and ethical investing. EV companies, as well as Lithium ETFs, such as LIT; could continue to sky rocket, as we proceed into the 2nd Quarter of 2020, and even further into the future.