The hidden stocks in pole position for
electric vehicle revolution
By Thomas Sørensen and Henning Padberg,
Portfolio Managers of Nordea’s Global Climate and Environment Strategy
Climate change represents an attractive investment opportunity, which is accelerated by many drivers. There is a push from society and consumers who ask companies to be more “responsible”, as well as a push from politicians, who feel the urge to develop better environmental policies. However, in our opinion, the biggest push is the economic incentive achieved by adopting these technologies.
We focus on three main investment areas in the climate and environment space: innovators within the alternative energy sector, companies aiming at resource efficiency, as well as adapters focusing on environment protection. The majority of our strategy is allocated to resource efficiency – companies improving efficiency with products and services.
Resource efficiency is the most economically sensible area to achieve lower emissions and reduce energy consumption. This may not be one of the most visible areas in the universe, but it is one of the most diverse and interesting. It includes capabilities such as energy-efficient building material applications, smart farming via advanced navigation systems and energy efficient cooking and lighting.
One high-profile area of resource efficiency is the rise of electric vehicles. While we sold out of Tesla in 2017, due to concerns over its valuation, there remain other avenues to capitalise on the EV revolution away from car manufacturers – where the long-term winners and losers are not yet clear. For example, we see attractive under-the-radar resource efficiency opportunities within eco-mobility and smart grid spaces.
Below are four attractively-valued stocks playing a vital role in the electric auto revolution:
Infineon is a world leader in semiconductor solutions which are widely used in the automotive, alternative energy and other general industries. Its power-efficient electronics enable the electrification of transportation, renewable energy production and energy consumption, which improves resource efficiency across many applications.
ASML is the largest global supplier of photolithography systems used by chipmakers for processes that enable innovative technology solutions for our society. ASML’s advanced equipment makes computing cheaper and reduces energy consumption across multiple applications from automation technology to cloud servers and zero-emission vehicles.
National Grid plays a vital role in connecting millions of people safely, reliably and efficiently to the energy they use. We continue to believe investments in renewables – onshore and offshore wind and solar – are viable technologies in both the UK and US energy mix today and will result in a need to build out the electricity grids. Furthermore, a smarter grid is needed to integrate renewable energy and to enable the side of electric vehicles.