Connect with us

Energy & Critical Metals

Step Aside Lucid Motors: The Hottest EV Stock Is One You Don’t Know (Yet)

Editor’s Note: This article is part of Joanna’s Top Trades — a weekly feature dedicated toward making you money within a specific space. Joanna’s…

Share this article:

Published

on

This article was originally published by Investor Place

Editor’s Note: This article is part of Joanna’s Top Tradesa weekly feature dedicated toward making you money within a specific space. Joanna’s pick for this week is Levere Holdings (NASDAQ:LVRA) as the top automotive stock to trade this week.

Source: Shutterstock

Let’s face it: shares of Electric Vehicle (EV) makers Lucid Motors (NASDAQ:LCID) and Tesla (NASDAQ:TSLA) have been stuck in neutral lately. The former (which I’m selling) is dealing with the overhang of lock-up expirations; the latter (which I’m buying), is dealing with a safety probe. For anyone actually working the numbers, here’s an update on my EV pair trade.

Source: Joanna Makris/InvestorPlace

But investors looking for a new and exciting EV stock with near-term catalysts don’t need to sit idly by. In fact, for anyone looking for the next big electric thing, I have an idea for you: Levere Holdings. This  pre-merger SPAC (Special Purpose Acquisition Company) is still under the radar for most retail investors, trading just below its $10 NAV (Net Asset Value). But LVRA could become a household EV name sooner than you think: rumor has it that Levere is eyeing Bugatti-Rimac as a merger target.

If the speculation plays out, Levere would be the first publicly-traded electric hypercar stock.

Hypercars are steamy. They’re also speculative (but then, so was CCIV/LCID).

Still, trading below NAV, LVRA is a fairly low-risk arbitrage opportunity with potential upside as the blank-check company comes closer to identifying a SPAC target. If short-term trading is your thing, here’s a closer look at why you should buy LVRA stock now.

While LCID Stock Grinds Gears, LVRA Looks Ready to Race

Levere, which went public in March of this year, offers scant public details (for now). But at first glance, there’s an obvious similarity between Levere and its EV-focused predecessor, Churchill Capital IV: a merger target “with a presence in EMEA, with high potential for EMEA entrance or would benefit from being deployed in EMEA to then expand to different regions.” 

Adding to the familiarity is Levere’s strong track record in the EV space. The company is led by the cofounders of the Euro-based mobility startup Goggo Network. Also at the helm are CFO and CIO Stefan Krause, who currently serves as the COO of Fisker (NYSE:FSR) and previously founded Canoo (NASDAQ:GOEV), two other notable electric vehicle makers that went public via SPACs (remember Krause; we’ll come back to him a bit later).

Another Category Killer Is Born: Rimac-Bugatti and All-Electric Hypercars

LVRA and LCID share a common focus on EVs and EMEA. But there’s another way they’re alike: both are EV category killers. Where Lucid defined “post luxury,” the theory goes, LVRA could define “all-electric hypercars.” That is, if LVRA makes Bugatti-Rimac its merger target. 

Bugatti-Rimac, for the fast car enthusiasts among us, was born from the July spin off of Bugatti from Volkswagen (OTCMKTS:VWAGY). CEO Mate Rimac says he’s  “f@#%#$ crazy” for propelling the 112-year old Bugatti into an electric future. French carmaker Bugatti, which boasts Cristiano Ronaldo and Jay Leno as customers, makes the world’s most expensive car (80 of them, to be more precise). For $3.6 million, you can take home the 1,480-horsepower Chiron Pur Sport, which, in addition to being expensive, also boasts the worst fuel economy of any car made last year. 

However much credibility you ascribe to a LVRA combination, there’s one thing we can agree on: the new Bugatti-Rimac will be one to watch.

As a public entity, Bugatti-Rimac would be a the first pure-play electric hypercar stock and an investment alternative to Tesla, whose $130,000 Model S Plaid can accelerate from zero to sixty miles per hour  in less than two seconds. (For the record, Rimac was already said to be planning a 2022 IPO). The company plans to deliver two all-new Bugatti models engineered by Rimac by 2030. First up, a 2000-horsepower hybrid hypercar with a naturally aspirated combustion engine; next, Bugatti’s first full EV (for more on fast cars, check out my Fireside Chat with Mark Frohnmayer, CEO of electric carmaker Arcimoto (NASDAQ:FUV)).

LVRA Stock: A Discounted Pre-merger SPAC with Optionality

Admit it: an electric hypercar stock would be amazing. And adding fuel to the LVRA fire is a recent interview between Rimac’s friend and advisor Vitaly M. Golomb and Stefan Krause of Levere. Both also work for investment banking firm Drake Star Partners.

The bottom line on LVRA stock is right now, the deal speculation is purely that: speculative. Still, if you can scoop up LVRA shares on the discount, I’d say it’s worth a gamble. 

Reader Question of the Week: Lidar Skepticism 

From the article “Tesla Cars Are Crashing. But These Lidar Stocks are Ready to Race:”

I have a question, do you drive your car using lasers? Did you watch AI day? Have you spent any time following what Tesla is working on and Elon’s views on Lidar, and it’s shortcomings? I do believe they will solve autonomy first, without Lidar.

Of course not! In the same way that I don’t close my eyes and hit Autopilot. I for one will always use my eyes, until they fail me.

But the people want automation. 

For Elon Musk, lidar has no place at a company whose vision is to create a “synthetic animal.” Musk described Tesla as a company with “deep AI (Artificial Intelligence) activity in hardware on the inference level and on the training level” that can be used down the line for applications beyond self-driving cars. (like say, humanoid robots).

In real life, without the superhuman distance-measuring ability of lidar, we humans figure out the distance to remote objects by being smart. We know roughly how big a person is in relation to a car. We know the smaller a car or person looks to us, the further away it is. We guess distance from how things move relative to one another as we move. 

Deep neural networks can also do that. 

Stay tuned for more AI coverage. 

Your comments and feedback are always welcome. Let’s continue the discussion. Email me at jmakris@investorplace.com.

Disclosure: On the date of publication, Joanna Makris did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Click here to track her top trades, where she sheds light on market psychology and momentum, while leveraging her deep knowledge of fundamental analysis to deliver event-driven trading strategies.

More From InvestorPlace

The post Step Aside Lucid Motors: The Hottest EV Stock Is One You Don’t Know (Yet) appeared first on InvestorPlace.

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…

Share this article:

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.

F6860DA1-29CD-4DA0-9549-3368EA102BCE

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
 

Continue Reading

Energy & Critical Metals

Millennial Lithium Bidding War Bodes Well For Lithium Miners

On September 8, Millennial Lithium Corp. (TSXV: ML) announced that it received an unsolicited takeover bid from a foreign-based lithium..

Share this article:

 

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 Corporation Lithium 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.

Continue Reading

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…

Share this article:

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.

Continue Reading

Trending