Thanksgiving is coming and if you’re reading this, you probably have a lot to be thankful for. And if you bought any electric vehicle stocks in the past few months, you’d better thank your lucky stars because the returns have been stunning and, frankly, abnormal.
On September 2, Crush the Street published my recommendation on SOLO stock, which was trading at $2.65 at the time. On November 20, those same shares were worth $10.81. I also recommended Blink Charging Co. (BLNK), which was trading at $7.28. That stock reached $22.67 on November 20.
The point here isn’t to brag, but to offer a lesson in knowing “when to say when.” Profit taking is an art and a science, just like knowing when to enter a position is. After all, a profit can quickly turn into a loss if you’re not paying attention or if you get greedy.
You can still be long-term bullish on electric vehicles and chargers, while also taking some shares off the table if your stocks ran up hundreds of percentage points. As the old saying goes, you won’t lose money by taking profits.
Going back to SOLO stock for a moment, the chart is a textbook example of what I’m referring to when I say that a stock has “gone vertical”:
Courtesy: Yahoo Finance
When a line chart of a stock starts to represent a hockey stick, it might be a good time to book profits and wait for other opportunities. Sure, it’s exciting when stocks move like this, but no stock just goes up in a straight line forever and there’s a real possibility of some retracement.
Now, I know what some of you might be thinking. A Biden administration would be supportive of electric vehicles, right? Therefore, we should all load up on electric vehicle stocks irrespective of the share price or valuation.
I believe that a small position for the long term might be fine, but anything beyond that would be hasty at this point in time. Biden or no Biden, investors must remember that price does matter. Patience will reward the traders who seize the right opportunity, when the fundamentals and the price chart align perfectly.
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With this in mind, I’d like to suggest something that’s related to the electric vehicle market, but it’s not an electric car or charger company. Instead, it’s an industrial metal that’s already used around the world, but will be in high demand in the coming years as the electric vehicle revolution gains momentum:
As shown in the chart above, the need for silver will increase exponentially through 2040 for the three main types of vehicles: internal combustion engines (ICE), electric vehicles (EV), as well as hybrid electric vehicles (HEV).
Overall, the demand for silver from the automotive industry is expected to triple by 2040. That represents 15% of the predicted supply of silver, so a supply shortage is a real possibility. Just this factor alone could significantly bolster the price of silver bullion and mining stocks.
There are other metals to consider, but silver looks like the safest bet. For example, automakers may try to replace cobalt in electric vehicle batteries with nickel. Silver, on the other hand, is irreplaceable in electric vehicles.
Besides, silver is already used in car electrical systems, including cars that run on traditional internal combustion engines. Electric vehicles will use even more silver, and by investing in silver and the companies that mine it, you won’t need to bet on any particular electric vehicle company.
Again, it’s perfectly fine to own shares of electric vehicle stocks. Just know that there’s another investment that can also offer strong returns as the automotive sector goes electric. Silver investors didn’t need for this to happen to make money, but it certainly won’t hurt.
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