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Ford Continues to Electrify the EV Market

With the big push towards electric vehicles, traditional car makers have also pursued an aggressive portfolio transformation. Amidst intense competition…

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This article was originally published by TipRanks

With the big push towards electric vehicles, traditional car makers have also pursued an aggressive portfolio transformation. Amidst intense competition in the electric vehicle industry, there are bound to be winners and losers.

Ford (F) seems like one company that’s positioned to survive and grow, with big investments in the electric vehicle segment. A revival in the company’s business is already indicated by the stock price trend. F stock is higher by 83% in the last 12 months. (See F stock charts on TipRanks)

Still, it seems that the best past of the upside is still to come. I am bullish on Ford, with the stock looking attractive at a current price-to-earnings-ratio of 14.9.

Talking about the electric vehicle industry, the International Energy Agency estimates that three million electric cars were registered in 2020. The agency believes that by 2030, there will be 145 million electric vehicles on road.

The key point here is that electric car penetration is still low. Given the growth outlook for the next decade, multiple players can survive and grow at a healthy pace.

Strong Financial Flexibility

Ford is gearing up for big investments in the electric vehicle segment in the coming years. The company expects to invest more than $30 billion in the segment through 2025. Further, Ford believes that electric vehicles will comprise almost half of its sales by 2030.

Since big investments are involved, the first point to note is the company’s financial flexibility. As of Q2 2021, Ford reported more than $25 billion in cash. Considering the undrawn credit facilities, the company has a total liquidity buffer of $41.0 billion.

Additionally, Ford reported adjusted free cash flow of $1.5 billion for 2020. In the current year, the company has guided for FCF of $4.0 to $5.0 billion. As cash flows accelerate, the add to the company's financial flexibility to make big investments.

Gradual Inroads in the Electric Vehicle Market

Ford has already been delivering strong electric vehicles sales. For June 2021, the company reported 117% growth in EV sales in the U.S. on a year-on-year basis. Furthermore, the company sold 56,570 electric cars in the first half of 2021.

The electric version of Mustang Mach-E has already captured second position in the U.S. among electric SUVs. Further, F-150 Lightning has garnered reservations of 120,000. Even in Europe, the company sold 151,000 passenger vehicles in Q2 2021. Of this, 46% were electric vehicles. Clearly, the initial sales response has been encouraging.

China is also a big market for Ford. The company has already opened 10 direct-to-customer electric vehicle storefronts in Q2 2021. During the quarter, the company also revealed the locally built electric Mustang Mach-E.

Commercial electric vehicle segment is likely to be another game changer for Ford. It’s worth noting that the company has leadership position in the commercial vehicle segment in Europe. By 2024, the company expects to have all-electric or plug-in hybrid commercial vehicles.

Overall, with a deep pipeline of electric vehicles for the next few years, Ford is positioned to gain market share.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, F stock comes in as a Moderate Buy, with six Buys and three Holds assigned in the past three months.

The average Ford price target is $16.26 per share, implying 28.23% upside potential from current levels.

Concluding Views

Ford seems to be in a key transformation phase and initial results have been encouraging. The company has a global presence and a big addressable market.

With electrification of existing models and the launch of new cars, the company seems positioned for healthy vehicle deliveries.

Ford is well positioned from a financial perspective to aggressively invest in the business transformation. These factors make F stock attractive and the uptrend is likely to sustain.

Disclosure: At the time of publication, Faisal Humayun did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Ford Continues to Electrify the EV Market appeared first on TipRanks Financial Blog.

Energy & Critical Metals

Millennial Lithium Bidding War Reads Well For Peers

On September 8, Millennial Lithium Corp. (TSXV: ML) announced that it received an unsolicited takeover bid from a foreign-based lithium
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On September 8, Millennial Lithium Corp. (TSXV: ML) announced that it received an unsolicited takeover bid from a foreign-based lithium battery production company. The bid is reportedly $0.25 per share superior to the $3.85 all-cash takeover bid it received and accepted in July from China-based Ganfeng Lithium Co., one of the largest lithium producers in the world. 

Bloomberg reported on September 14 that the mystery bidder was likely Contemporary Amperex Technology Co., Ltd. (CATL), another China battery giant. Millennial has given Ganfeng until September 27 to amend its bid to counter the mystery bidder’s proposal.

The Ganfeng bid for Millennial equates to $377 million in cash. Factoring in Millenium’s net cash position of about $52 million as of February 28, 2021, Millennial’s takeover enterprise value per the Ganfeng bid is about $325 million. Millennium’s principal asset is its flagship Pastos Grandes lithium brine project in Argentina. Lithium, the lightest of all metals, is used extensively in the batteries of electric vehicles.

Millennial’s Pastos facility should begin production in 2024. Its projected battery and technical grade lithium carbonate output is 24,000 tonnes per year (tpy). Ganfeng’s willingness to pay $325 million – and another party at least $25 million more than that — for a project which is not scheduled to commence production for three years is noteworthy.

The bidding war between two very well-capitalized lithium battery producers is clearly a positive for Millennial shareholders. In addition, there are two key read-throughs for other stocks.

Millennial’s Pastos Grandes Projected Timeline

More specifically, the purchase price highlights the value of another South American-based lithium producer, Sigma Lithium Corporation (TSXV: SGMA). In June 2021, Sigma broke ground on its Grota do Cirilo hard rock lithium project in Brazil. It is scheduled to begin lithium carbonate production in 4Q 2022.

Its projected Phase 1 output, 33,000 tonnes of lithium carbonate equivalent, is 40% larger than Millennial’s target capacity. Phase 2 production could begin in 2023. Sigma’s enterprise value is nearly $650 million, or about twice Millennial’s likely takeout value. Given Sigma’s two-year time advantage to market, that differential may be too small.

Projected Timeline of Sigma’s Grota do Cirilo Phase 1 Project

Secondly, Ganfeng owns 51% and Lithium Americas Corp. (TSX: LAC) 49% of the Cauchari-Olaroz lithium brine project in Argentina. Cauchari-Olaloz, which has projected stage one output of 40,000 tpy of battery- quality lithium carbonate, is expected to commence production in mid-2022. If the facility operates well, it is certainly possible that Ganfeng (stock market capitalization of around US$38 billion) at some point could decide to buy Lithium Americas’ stake or Lithium Americas itself.

Sigma and Lithium Americas Have Solid Balance Sheets

Both Sigma and Lithium Americas are well capitalized. As of June 30, 2021, the companies have net cash positions of $40 million and $446 million, respectively. Sigma’s enterprise value is $849 million, and Lithium Americas’ is $3.18 billion.

(in thousands of Canadian $, except for shares outstanding)Sigma Lithium CorporationLithium Americas Corp.
Cash – as of 6/30/21$40,577$641,250
Debt – as of 6/30/21$531$195,112
Net Cash$40,046$446,138
Market Capitalization$889,410$3,630,000
Enterprise Value$849, 364$3,183,862

Lithium is a key element in most electric vehicle batteries. If electric vehicle demand were to reverse the trends of the past few years and start to slow, all lithium miners would likely be negatively affected. Also, if engineers at some point can develop a cheaper, more effective option than lithium, lithium producers would likewise be impacted.

A bidding war for Millennial at a rich price for a junior miner which is unlikely to produce lithium carbonate for three years, is a positive for more advanced lithium development companies like Sigma Lithium and Lithium Americas. Equally important, Sigma and Lithium Americas seem to be attractively valued relative to the ultimate takeover price for Millennial Lithium.

Millennial Lithium Corp. last traded at $4.09 on the TSX Venture.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Millennial Lithium Bidding War Reads Well For Peers appeared first on the deep dive.

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Energy & Critical Metals

Benchmark: lithium’s price rally accelerates

Lithium price rises accelerated in the first half of September as surging demand and raw material supply concerns combined to push Chinese domestic prices…

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Lithium price rises accelerated in the first half of September as surging demand and raw material supply concerns combined to push Chinese domestic prices up to their highest levels since mid-2018 according to data from Benchmark’s Lithium Price Assessment.


Lithium hydroxide and carbonate price rises accelerated to new levels in the first half of September. Source: Benchmark


Technical and battery-grade lithium carbonate prices increased by more than 20% in the first two weeks of September and are now up 188.9% and 215% respectively in the Chinese domestic market this year.

Carbonate price increases are once again outpacing lithium hydroxide, last seen in Q1 2021, and could soon race ahead, Benchmark said. China EXW lithium hydroxide prices rose 14.2% in the first half of September, up 162.7% year-to-date.

Throughout August and early September, the price rally for lithium chemicals and feedstock has been re-ignited on incredibly strong downstream demand, especially within the Chinese domestic market, which acts as a bellwether for the rest of the world’s lithium market.

—Benchmark analyst George Miller
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Energy & Critical Metals

This Will Help the Market Right Itself

Despite recent weakness, expect buybacks to help support the market … look for a break to new highs later this fall … a preview of the amazing technologies…

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Despite recent weakness, expect buybacks to help support the market … look for a break to new highs later this fall … a preview of the amazing technologies headed our way this decade

Coming into September, it seemed just about everyone was expecting a market pullback.

And whether it was a self-fulfilling prophecy, market dynamics, or just seasonal weakness, this month has, in fact, seen losses.

As I write Friday at lunch, the S&P and Nasdaq are down 1.7% and 1.3%, respectively, on the month. The Dow leads the losses, off 2.1% so far in September.

If your portfolio is in worse shape, that’s because pockets of the market have been underperforming the broader indexes for weeks now.

From CNBC:

About 15% of S&P 500 stocks are more than 20% below 52-week highs, but much larger swaths of the midcap and small-cap universe are down 20% or more. The latter groups are less tech-focused and more susceptible to an economic slowdown:

Slow motion deterioration
(percentage of stocks that are 20% or more below their 52-week highs)

  • S&P 500 15%
  • S&P Midcap 30%
  • S&P Small Cap 48%

Below are a handful of widely-owned stocks, as well as the percentage by which they’re now trading below their 52-week high.

American Airlines 26%… FedEx 20%… Nordstrom 41%… Pulte 26%… Eli Lilly 14%… Dupont 20%.

***What are we to make of this? Are we slowly slipping into a stealth correction?

Let’s go straight to our technical experts, John Jagerson and Wade Hansen of Strategic Trader:

After breaking to new all-time highs and briefly riding above up-trending resistance a few weeks ago, the S&P 500 started pulling back last week on some post-Labor Day profit-taking.

While this pullback has gotten the permabears out there all hot and bothered, this pullback is just that… a pullback.

It’s not the beginning of the end.

There’s just too much demand for U.S. equities to allow the S&P 500 to break below the up-trending support level that has been interacting with the index since May.

Daily Chart of the S&P 500 (SPX)

***One factor that will keep the bull market going

In John and Wade’s Wednesday update, they pointed toward a reason why stocks have support, despite the current volatility – share buybacks.

For any readers less familiar, when a company has extra cash, it can use it to buy back its own shares, in effect “retiring” or canceling those shares.

Assuming the company is still generating the same amount of profit, fewer shares will boost a company’s earnings per share (EPS). This is a benefit to shareholders.

Here’s John and Wade illustrating how this works:

For example, if a company earns $100 and there are 100 shares outstanding, the EPS is $1 ($100 / 100 shares = $1 per share).

Similarly, if a company earns $100 and buys back 50 shares so there are now only 50 shares outstanding, the EPS is $2 ($100 / 50 shares = $2 per share). The company didn’t increase its earnings at all, but by buying back its shares, it doubled its EPS.

Today, we’re seeing companies resume their share buyback programs following a COVID-19-related slowdown.

John and Wade provided the chart below, illustrating the ramp-up in buybacks here in 2021.

Chart showing how corporate stock buybacks are ramping back up post 2020Source: Standard & Poor's

Quarterly S&P 500 Buybacks (source Yardeni Research)

Back to the Strategic Trader update:

This increase in share buybacks among S&P 500 companies is good news. Buybacks had slipped during the pandemic, but they are making a strong comeback in 2021.

We expect more companies to announce increased buyback programs as we head into Q4. This should keep demand for S&P 500 stocks strong in the near-term.

So, returning to our question at the top of today’s Digest, what are we to make of the recent pullback in the market?

Here’s John and Wade’s bottom-line:

We’ve been here before.

The S&P 500 climbs to new all-time highs and traders take profits. This pushes the index lower, which attracts more buyers.

We expect this pattern to continue for the foreseeable future.

***Let’s end today with a fun look at the amazing technologies that will be in your portfolio tomorrow

Bank of America Global Research just released a 152-page research report that highlights 14 “radical technologies that could change our lives and accelerate the impact of global megatrends.”

According to the report, these technologies have a market size of $330 billion today. But by next decade, they could explode to $6.4 trillion.

As we’ve noted here in the Digest, the 2020s will be the most transformative decade in human history. That’s because technology is leading to exponential progress, not traditional linear progress.

The BofA report echoes this point:

The pace at which themes are transforming businesses is blistering, but the adoption of many technologies – like smartphones or renewable energy – have surpassed experts’ forecasts by decades, because we often think linearly but progress occurs exponentially.

Here are the 14 “radical technologies.” We’ll dig into a handful below.

  • 6G
  • Brain Computer Interface
  • Emotional Artificial Intelligence
  • Synthetic Biology
  • Immortality
  • Bionic humans
  • eVTOL
  • Wireless Electricity
  • Holograms
  • Metaverse
  • Nextgen Batteries
  • Ocean Tech
  • Green Mining
  • Carbon Capture & Storage
Graphic showing 14 amazing technologies coming this decadeSource: B of A Global Research

Here’s more detail on a handful of these moonshot technologies.

From the BofA report:

Brain Computer Interfaces: “As we reach a point where humans are unable to keep up with computers and AI, brain computer interfaces could help ‘level up’ humans with computers. Shorter term, brain computer interfaces hold solutions for paralyzed individuals and promise a new wave of innovation in gaming.”

Immortality: “Traditionally, aging has not been viewed as a disease that can be treated but this is changing. Actors in this space are increasingly looking to tackle the hallmark of aging via pathways such as ‘genomic instability, telomere attrition, mitochondrial dysfunction, and cellular senescence’ among others.”

eVTOL: “Electrical vertical take-off and landing vehicles that could provide an alternative mobility transportation solution to outdated infrastructure and overly stressed roads in urban settings.”

Holograms: “A technology capable of creating a simulated environment through light imagery projections that will allow everyone to come together in one virtual room, without having to leave their physical location.”

Metaverse: A “future iteration of the Internet, made up of persistent, shared, 3D-shared spaces linked into a virtual universe. It could comprise countless persistent virtual worlds that interoperate with one another, as well as the physical world and transforming markets such as gaming, retail, entertainment etc.”

It’s hard to look at this list and not be excited about what’s coming this decade – from both a societal and portfolio perspective.

We’ll keep you up to speed with the development of these trends here in the Digest.

Have a good evening,

Jeff Remsburg

The post This Will Help the Market Right Itself appeared first on InvestorPlace.

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