Three out-of-the-box ways to trade the rise of electric vehicles in 2022
As valuations for headline electric vehicle stocks like Tesla reach elevated levels, traders are advising investors to consider under-the-radar plays in the broader ecosystem. Laffer Tengler Investments’ Nancy Tengler and Joule Financial’s Quint Tatro offered alternative strategies on CNBC’s “Trading Nation.”
Tengler recommends focusing on critical suppliers and raw materials. She highlighted auto-parts manufacturer BorgWarner, which is poised to supply approximately 30% of EV powertrains by 2023. The stock trades at a relatively cheap forward price-to-earnings ratio of 11 and has lagged the market in 2021, presenting a potential value opportunity.
Her second suggestion is to invest in copper miners such as Freeport-McMoRan, which provide essential raw materials for EV production. “We’re trying to play around the edges,” Tengler said, suggesting these are ways to gain exposure to the EV boom without paying a premium for the most popular automaker stocks.
Quint Tatro pointed to a potential rebound in charging infrastructure stocks, which have been battered this year. He cited Blink Charging (down 33% year-to-date) and ChargePoint (down 52%) as names that could benefit significantly from the roughly $7.5 billion allocated to EV charging in President Biden’s infrastructure plan.
“These are stocks that we think are going through some tax-loss selling into the new year and I think these are going to be interesting trade opportunities as we enter January,” Tatro said.
The consensus is that while direct EV manufacturers may be richly priced, significant value and growth potential remain in the essential components, materials, and infrastructure that enable the broader industry’s expansion.
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