Infant industries are a moment for big opportunity… and big risk. An outstanding way to mitigate that risk is to invest in the nuts and bolts that any company in a new industry will need.
In a recent Real Money column, contributor Timothy Collins writes, "The electric vehicle market has experienced its share of ups and downs, even in its infancy. But, while I don't think every name in the group will be a winner, there is plenty of upside to be had along with some great trading."
Read more on Real Money about the companies Collins says are key to investing in an emerging industry like electric vehicles.
Collins says the car makers in the group are likely to pose the biggest challenge of picking winners vs. losers, "so I've been looking more at the picks and shovels in the group. ChargePoint CHPT is a name I like." The company, which provides charging networks and charging solutions in the U.S., "is the type of infrastructure play that can win no matter what EV auto maker comes out on top," Collins wrote.
Infrastructure is your key when it comes to investing in an emerging industry.
Just about every major car company is jockeying for position in the emerging market for electric vehicles. From all indications, EVs are set to boom in the coming years but there’s no good way to tell which makes and models will succeed. Buying into a specific stock on the hope for that future might end well, but it’s a gamble.
But here’s what you can know: Every electric vehicle is going to need batteries. They’re going to need charging stations, the heavy-duty cords and wires that go with those stations, and all the other pieces of infrastructure that make this technology work. For investors who would like to get into the EV market before it takes off, that very well may be the smarter play.
This market is set to boom in the coming years, but there'll be winners and losers. How can you invest in an industry that is still forming without taking a risk on unproven products? By investing in what's under the hood.