Why you should invest in this market
Wednesday, 15 May 2019
By Bernd Struben
- Russia eager to open oil taps
- ‘The Empire Strikes Back — Barr Targets Democrats’ Probes’
If you’re looking to make money — big money — you have to look at stocks in high growth industries.
Our editors, of course, are well aware of this. Which is why you’ll find them scouring the markets for the best stocks involved in the booming legal cannabis, cyber security, clean (and dirty) energy, and electric vehicle (EV) markets…to name a few.
With the world increasingly focused on cutting carbon emissions, EVs have really moved to centre stage.
China, the world’s biggest car market, is leading the way. At least in sheer numbers.
In 2017 Chinese consumers and businesses bought 777,000 electric vehicles. In 2018 they bought 1.26 million EVs.
That’s still a lot less than the 26 million fossil fuel powered vehicles sold in China last year. But as I mentioned above, if you’re looking to make the really big gains you want to target high growth sectors.
The point here is that EV sales in the world’s largest market for cars grew by 62% last year. And that growth trend looks likely to continue.
Now the Chinese may be leading in sheer numbers, but the Germans are pressing ahead with EV innovations of their own. Namely how to tackle EVs’ glaring Achilles heel.
Yes, their limited range and lengthy charging times.
‘Germany has opened the first stretch of a so-called electric highway that will connect hybrid trucks to overhead wires, allowing them to recharge while traveling on the country’s main transportation arteries.
‘The 10-kilometer (6-mile) stretch south of Frankfurt on Germany’s A5 autobahn was opened last week, the German state of Hesse said in a statement. One truck is using it now, with four more planned by 2020.
‘The system was built by Munich-based engineering firm Siemens AG, while Volkswagen AG’s Scania trucks unit provided the vehicles.’
There’s no doubt this is an innovative move by Siemens. But it’s not unlike what electric streetcars have been using for more than a century. The main difference being the trucks don’t run on rails. And they’re also equipped with diesel motors that kick in once they run low on charge after exiting the electric highway.
To be honest I see this as an interim step. One of those innovations that may capture a niche market for a few years before fading away. As we move further into the 21st century, I just can’t see modern nations eagerly stringing electric cables across all their streets like it was 1901.
But what if all those cables were integrated with the road? Not running beneath it, mind you. But actually part of the bitumen? Charging EVs as they drive from the suburbs to the CBD. Or from Sydney to Melbourne…without ever having to stop.
Now that would be a true 21st century innovation.
And it’s precisely what one small ASX listed company is aiming to do.
Ryan Dinse cottoned on to this company’s sky-high potential. He profiles it in his latest report, ‘The Forever Battery Breakthrough’. Here’s what Ryan had to say after finishing his research on the stock:
‘This eye-popping battery discovery is something completely different and revolutionary. And arguably, vastly more important.
‘Thanks to a stunning breakthrough in chemical engineering, this ASX-listed company has hit on a genius way to “supercharge” the performance of any battery powered vehicle.’
It’s still early days for this small-cap stock. And there are no guarantees its battery breakthrough will be the first or best of what’s to come.
But they’ve got Ryan convinced. And he calculates the share price could rise some 587% from its current level. The kind of potential gain you’ll rarely find outside of major growth industries like the EV market.
Now a look at the markets, which largely closed higher following optimistic tweets from Trump on wrapping up his ‘little squabble’ with China.
Overnight, the Dow Jones Industrial Average closed up 207.86 points, or 0.82%.
The S&P 500 closed up 22.54 points, or 0.80%.
In Europe the Euro Stoxx 50 index finished up 43.60 points, or 1.31%. Meanwhile, the FTSE 100 gained 1.09%, and Germany’s DAX closed up 114.97 points, or 0.97%.
In Asian markets Japan’s Nikkei 225 is up 75.49 points, or 0.36%. China’s CSI 300 is up 1.54%.
In Australia, the S&P/ASX 200 is up 46.69 points, or 0.75%.
On the commodities markets, West Texas Intermediate crude oil is US$61.32 per barrel. Brent crude is US$70.90 per barrel. (More on oil below…)
Turning to gold, the yellow metal is trading for US$1,297.84 (AU$1,872.52) per troy ounce. Silver is US$14.81 (AU$21.37) per troy ounce.
One bitcoin is worth US$8,083.14.
The Aussie dollar is worth 69.31 US cents.
Beyond growth industries…
The EV market is a great example of a massive growth industry. One where leading companies could see their revenues grow exponentially for a number of years, right alongside the market they service.
But that’s not to say the only big gains on offer are in rapidly growing sectors.
Take gold, for example.
There’s a finite supply of the yellow metal. And not a whole lot of industrial uses. But that hasn’t stopped some leading gold miners and producers from wracking up big gains during the past week’s market turbulence.
Saracen Mineral Holdings Limited [ASX:SAR], for example, is up 11.0% since market opening last Thursday.
The share price of Evolution Mining Ltd [ASX:EVN] rose 12.0% during that same time. While the ASX 200 is only up 0.3%.
SAR and EVN are clearly doing something right.
But part of the share price surge came as investors sought out havens from the trade war fallout. This saw the gold price increase by 0.9% over the last week.
And when the price of gold goes up, the price of most mining stocks — highly leveraged to the gold price — tend to rise significantly more.
If you believe, as I do, that the world is far from done with the geopolitical turmoil that’s rocked markets in recent months, you may want to up your exposure to gold stocks.
But don’t buy a single stock before checking out Harje Ronngard’s premium investment service, Gold & Commodities Stock Trader.
Russia eager to open oil taps
Getting back to oil, both crude benchmarks are up a few cents per barrel since this time yesterday. But that’s a muted gain, considering Saudi Arabia’s report that armed drones attacked two pump stations servicing its pipelines.
Upward pressure from the attack and rising tensions with Iran was mitigated by fears of slowing global trade and…you guessed it…another ‘unexpected’ surge in US stockpiles.
‘Oil surrendered some of its gains after an industry report was said to show a big jump in U.S. crude and refined products supplies, undermining talk of a tight market.
‘Futures were up about 0.5% in late trading after the American Petroleum Institute was said to find an 8.63 million-barrel increase in oil inventories last week, along with swelling gasoline and distillate stocks.’
That’s today’s picture.
Looking ahead, I still see crude prices falling 10–15% from here in the lead-up to the end of June. That’s when OPEC+ — which includes Russia — will decide if they’ll stick with the current output cuts into the second half of 2019.
The Russians, for one, are signalling that they’re ready to increase output.
As I’ve written to you before, Russia can pump oil profitably at far below today’s prices. They also have the capacity to pump an extra 300,000 barrels per day (bpd)…or more. Even at US$50 per barrel, that’s $15 million per day. A big pile of money to leave on the table for the cash strapped nation.
‘Russia will join OPEC+ talks this weekend having barely fulfilled its pledged production cuts, but keen to secure a share of any potential output increase.
‘In recent months, Russia has indicated it would welcome a return to production growth, said analysts from Fitch Ratings Inc. and IHS Markit Inc. That’s back on the agenda after pledges by Saudi Arabia and its Gulf allies to fill the supply gap created by tighter U.S. sanctions on Iran.’
Connecting the dots, short of a shooting war erupting between the US and Iran — which could send crude prices rocketing — the second half of 2019 should see major producers opening the taps back up.
And prices should take a tumble.
Finally, here’s the latest from The Australian Tribune:
‘The Empire Strikes Back — Barr Targets Democrats’ Probes’
‘US President Donald Trump’s far left opponents have been desperately trying to dig up dirt on the president since he trounced former First Lady Hillary Clinton in the 2016 elections.
‘The witch hunt, as Trump calls it, is now more than two years old. The White House has been surprisingly patient for most of that time. But now Trump is mustering forces to...’
If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.
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You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.