Rachel’s note: Rachel Bodden here, managing editor of Casey Daily Dispatch. Longtime readers know that Casey Research founder Doug Casey often says, “Trends in motion tend to stay in motion until they reach a crisis.”
The pandemic showed us just how many industries need to change following this crisis. As more people work from home, our outdated 4G networks can’t deal with the strain… and we need the quick rollout of advanced 5G to handle the extra traffic.
And while the world shut down, pollution levels dropped worldwide. So investors rushed to find “clean” investments – including electric vehicles… which tech giant Tesla has a stranglehold over.
But there’s one thing Tesla can’t create its signature electric cars without. It’s the investment everyone is missing… except for Strategic Investor editor David Forest.
Fortunately, David just did an interview on why he believes one tiny, $4 company has everything Tesla needs… and may land a huge deal with Tesla any day now. When that happens, this little-known company’s stock will run.
You can’t afford to miss this briefing. Then scroll down to read Casey Research analyst Andrey Dashkov’s latest findings on a new industry set to take off due to the crisis…
By Andrey Dashkov, analyst, Casey Research
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Since the COVID-19 lockdowns began, a strange thing has happened.
Take a look at the photos of New Delhi, India below.
Source: CTV News
The left photo shows pollution in April 2019. The one on the right was taken in April 2020, one month after the government of India ordered a full national lockdown.
The difference is like night and day. Because of the lockdown, pollution dropped, and the air became cleaner.
This phenomenon wasn’t limited to India. Across the world, energy consumption has plummeted amid the lockdowns. The International Energy Agency says that global energy demand will fall 6% this year. That includes a 9% drop in the U.S. and an 11% drop in the European Union.
This will have a tremendous impact on the environment. And millions of people are already taking notice.
It’s accelerating a trend that has been in motion long before the virus began spreading: renewable energy (sometimes called “clean” or “green” energy).
And for some investors, it could mean windfall profits as this movement really takes off, thanks to a boost from the lockdowns.
Now, you may not agree with these developments. But plenty of investors have made fortunes by putting their money into trends that they don’t agree with. Regardless of how you feel about clean energy, it’s happening, and it’s unstoppable.
So we might as well learn how we can profit…
The Era of “Clean Investing”
The megatrend of earth-friendly investing is here.
More and more traders are falling head over heels for companies that follow “environmental, social, and governance” (ESG) guidelines.
These companies develop sustainable technologies and govern themselves by higher environmental and community standards than the average stock.
Take clothes companies Hanesbrands and Nike. Both try to limit water usage, reduce waste, and manage their supply chains in a local, community-friendly way.
But instead of buying into these companies directly, many are turning to so-called “clean funds” to do the work for them. These funds put investors’ money into all sorts of companies, as long as they’re run sustainably.
And they’ve exploded in number and assets.
Between 2016 and 2019, the number of funds that focus on sustainable investing has surged from a few to almost 600. Altogether, they now manage over $1 trillion.
And this industry is growing. Banks are committed to spending hundreds of billions of dollars on ESG-friendly projects. In Canada alone, banks have said they plan to invest up to $440 billion in them.
Investing giants like BlackRock, which manages over $6 trillion of assets, are removing carbon-intensive industries like coal from some of their portfolios. It’s part of a larger strategy to move away from fossil-fuel investments – and towards cleaner energy.
With all this new capital going into “clean” companies and away from the carbon-intensive ones, tech stocks are set to benefit. Plenty of companies are working on new technologies designed to solve environmental problems and improve communities.
In fact, there’s one piece of technology in particular that’s poised to explode in popularity as the green energy wave spreads across the world…
The Rise of EVs
Electric vehicles (EVs) are becoming ever more popular.
A survey done during the lockdown showed that almost one-half of respondents are considering buying an electric vehicle in the future.
Even before the lockdowns, the EV market was on target for exponential growth. By one estimate, the market will grow from about 3 million cars in 2019 to 27 million in 2030.
Right now, EVs make up about 2.6% of global car sales. One estimate predicts that percentage will soar to almost 60% by 2040.
But while mainstream investors are falling over themselves to buy Tesla or other name-brand tech companies, there’s a more lucrative place to put your money. Because all of these companies need certain resources to make their products and ensure they’ll function.
The same is true for EVs.
You see, EVs need certain “battery metals,” to run. And one of these – lithium – is the most crucial ingredient.
A single Tesla Model S needs about 140 pounds of the metal. By 2030, with 27 million cars on the road, that translates to roughly 3.8 billion pounds of lithium needed.
What to Do Next
Last year, the world produced roughly 1 billion pounds of lithium carbonate, the lithium end-product used in EVs.
So there’s about to be a supply shortage as EVs become more popular… Unless new companies come to market and existing mines increase their output where they can. That, too, would be good news for the lithium industry.
With the rise of the clean energy movement, lithium companies are finding it easier to get financing. Banks are more willing to lend them money because they’re ESG-friendly.
The difference is mind-blowing. An executive of one lithium company says that it is up to 10 percentage points cheaper for a company that has an ESG “stamp” to finance its projects.
In other words, a “clean” company could cut its interest cost from 20% to 10%. This means that ESG-friendly businesses can take more debt and manage their interest expenses.
And as the clean trend continues, a surge in demand for EVs will translate into a surge in demand for batteries. And lithium.
Which means that there will be more exploration activity. And with easier financing provided by the “clean” money, the lithium sector is looking at long and sustainable growth itself.
To gain exposure, consider taking a look at the Global X Lithium & Battery Tech ETF (LIT). It holds a basket of companies from across the lithium industry, from mining to battery production. It should see steady returns as this trend kicks into high gear.
Just remember not to bet the farm on a single trade. And only risk money you can afford to lose.
Good investing,
Andrey Dashkov
Analyst, Casey Research
P.S. My colleague, David Forest, just discovered a tiny company that few investors know about – and it’s sitting on a $35 billion prize.
David thinks this company is on the verge of a multibillion-dollar deal with tech giant Tesla that could happen any day now.
Go here to check out his briefing and find out how you could make life-changing gains in the months ahead. There’s no time to lose.