04. February 2021 | 08:00 CET
BYD, Kodiak Copper, BMW: Investing in the future of mobility
The pandemic most recently is showing us that people want to meet, exchange ideas, experience life. Mobility is one of the most important keys to this. As classic combustion engines are politically sidelined in the face of climate change and air pollution in cities, the importance of electromobility is growing. But those who want to invest in this trend are often faced with a dilemma. Shares such as Tesla or BYD are costly, while traditional manufacturers such as Volkswagen and BMW have other problems to contend with. And what about suppliers of the electromobility trend? We present three shares and analyze the opportunities: BYD, Kodiak Copper and BMW.
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ISIN: CA50012K1066 , CNE100000296 , DE0005190003
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
BYD remains full of fantasy
The BYD share is one of the winners of the recent months and even days: The Chinese manufacturer transformed itself within a few years from a battery manufacturer to a carmaker in the exciting field of electromobility. Since China also has a dominant position in critical metals such as rare earths, BYD looks promising. Also, the Company has a vast sales market on its doorstep. Owners of electric cars in China's cities already enjoy significant advantages. Sometimes you have no choice but to buy an e-car if you want a vehicle that can be driven since the number of registrations for classic combustion vehicles is often limited.
BYD recently received an additional tailwind from the rumored interest in Tesla. The South Korean newspaper Chosun reported that the Company of serial founder and visionary Elon Musk wants to take over around 20% of BYD. The transaction is to be settled according to it, half over shares and the other half in cash. There are rumors around BYD about a spin-off in the battery division through an IPO, which would bring new funds into the Company's coffers and make it easier for the battery division to cooperate with other companies. As analysts estimate, this could be an essential step to expand manufacturing capacities and ultimately reduce the cost per battery. There is a lot of fantasy surrounding BYD's stock. However, the share price has already climbed to dizzying heights. Investors who want to follow electric mobility trends should not put all their eggs in one basket.
Kodiak Copper: At second glance, a flawless e-car share
A sound alternative to overhyped stocks could be the paper of Kodiak Copper. The Company is one of the shooting stars of the past year in the Canadian mining scene. The reason for this was positive drill results from the MPD project in the Canadian district of British Columbia. The property is located in the middle of a mining region - copper is mined in the area by, among others, Teck Resources. Mines in the area have produced an average of up to 350 million pounds of copper equivalent annually for years. Based on historical data, Kodiak launched two drilling programs in 2020 and made promising discoveries. In addition to high copper deposits, the results also indicated further exploration potential. To leverage this potential, 30,000 meters are to be drilled in 2021.
This prospect caused the share price to rise from CAD 0.50 to CAD 3.37 in 2020 - it is likely that many professionals now have the stock on their watch list. Since Kodiak also has an experienced management team and anchor shareholders such as Teck Resources, the stock looks solidly positioned. As copper plays a vital role in electric cars and their charging infrastructure, and as our industrialized world would be unthinkable without it, Kodiak Copper appears promising at the current level. The share has found a bottom and is also benefiting indirectly from the megatrend of electromobility.
BMW: Old economy with hope
There is a lot of room for improvement in electromobility, even for traditional manufacturers like BMW - at least when it comes to product quality and market share. Although things have been positive again for BMW since the summer of 2020, the Company remains burdened by the pandemic. The Company expects both car sales and earnings to decline significantly. However, there is a ray of hope in the electric division of all places: here, sales rose by more than 20% in the first nine months of the fiscal year - that gives hope. But does this make the BMW stock sexy?
If the stock stalks the EUR 80 mark, it could continue the positive trend of recent months. But one thing is certain: BMW will not be able to keep up with Tesla or BYD for a long time. However, the stock is certainly a candidate for the watch list.
The situation is similar for Kodiak Copper. The share seems to be stabilizing above the EUR 1 mark and has plenty of room to move upwards. Since the Company is tiny compared to BYD or BMW, the share price can also move quickly in extreme events. Anyone interested in the stock should monitor Kodiak Copper closely.