Business & Investment

Forget Tesla: How to Regenerate EV Stock Momentum and Raise a 5.8% Yield

Soaring Tesla (NASDAQ: TSLA) Over the past year, there has been a growing wave of investor interest in EV stocks.

The EV sector is full of newcomers who want to achieve the same success that Tesla has achieved. Some will grow into very successful companies. Others fail and disappoint investors.

Betting on startups can be very profitable if you get the timing right and choose the final winner. Unfortunately, no one knows which stock will be the next Tesla.In fact, Tesla CEO Elon Musk said in December last year that his company About 1 month After filing for bankruptcy during the tough times of 2017-2019. Currently, Tesla has a market capitalization of approximately US $ 775 billion.

How can investors unleash the momentum of EVs without taking too much risk?

One option is to find stocks in companies that invest in the EV business, but those positions represent a small part of the overall capital allocation.

In an ideal scenario, you can prevent your bets from getting worse while your investment is successful and you are arranged to earn rewards when you reach the next Tesla in the EV sector.

Let’s see Power Corporation (TSX: POW) Check how it fits the description.

Why PowerCorp shares are a good way to bet on the EV sector

Power Corp is best known as a holding company with an interest in insurance and wealth management businesses. Assets generate strong cash flow and profits. PowerCorp shareholders are generous dividend It is safe and currently offers a yield of 5.8%.

Power Corp is also investing in new technologies and promising start-ups. In terms of financial services, Power Corp and its subsidiaries own a controlling stake in Wealthsimple. The implicit valuation of fintech companies is Latest round Of financing.

Another PowerCorp investment is targeted at the EV market. Power Sustainable Capital holds a significant position in the Lion Electric Company, a manufacturer of electric school buses and commercial vehicles in Canada.

In November, Lion Electric Company Northern Genesis Acquisition Corporation.. Northern Genesis is a listed special purpose acquisition company (SPAC).

Upon completion of the transaction, Lion Electric will be listed on the NYSE: LEV. The implied market capitalization of Lion Electric under the contract is US $ 1.9 billion. Power Sustainable held a 44.2% stake in Lion Electric for the deal. Once the smoke settles in the deal, Power Sustainable owns 31.4% of Lion Electric.

As a result, PowerCorp’s net asset value increased by $ 737 million. According to the press release, this is about $ 1.09 per share, or 2.7%.

Conclusion

Investors who like the idea of ​​betting on fintech and EV startups but don’t want to take too much risk should own a stake in Power Corp and get enough payment while waiting for the new company to turn into a home run. I can.

If Lion Electric grows to become the dominant player in electric school buses in the United States and Canada, valuations can skyrocket and enormous paydays can occur. Otherwise, investors have limited downside risk.


David Gardner I own a stake in Tesla. Tom Gardner I own a stake in Tesla. Motley Fool owns and recommends a stake in Tesla. Stupid contributor Andrew Walker owns a stake in Power Corporation.

Forget Tesla: How to Regenerate EV Stock Momentum and Raise a 5.8% Yield

https://www.fool.ca/2021/02/17/forget-tesla-how-to-play-ev-stock-momentum-and-collect-a-5-8-yield/ Forget Tesla: How to Regenerate EV Stock Momentum and Raise a 5.8% Yield

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