From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Leadership in this environment is stretching far and wide.
We’re seeing a growing number of industry groups and areas not only making new highs but also outperforming and offering us more and more avenues to express our bullish thesis on stocks and risk assets in general.
Last week, we discussed Commodities and Ags.
The week before that, we dove into Chinese equities.
And for some time now, we’ve been vocal on SMIDs in general.
The point is, with such an overwhelming amount of leadership these days, we can be picky and place our bets on only the best of the best in each group.
In today’s post, we’ll explore a hot new growth industry we haven’t covered in much detail yet – Autonomous Vehicles.
We’ll discuss the broad-based strength we’re seeing from this group of stocks, and outline setups in some names we’re buying as a way to bet on this trend.
So without further adieu, let’s take a look at this week’s Mystery Chart!
The Autonomous & Electric Vehicles Industry $DRIV is still small, but it’s growing… and the recent price behavior from its stocks is demanding investors’ attention.
Just look at this uptrend. The ETF has tripled in price in less than a year’s time.
We’re buyers of DRIV if we’re above 26, with a target of 36.50 over the next 2-4 months.
A lot of this strength has to do with Tesla, the darling of the group, being a top-performer among Mega-Caps for well over a year now. As it closes in on the $1T market-cap milestone, it’s certainly cemented itself a spot among the other US Tech/Growth behemoths like Facebook, Google, Apple, and the rest.
But the truth is when you take a look under the hood, there is a lot more going on in this space than just Tesla. The stock only makes up about 2.5% of the ETF, so there must be some other names in there helping drive these gains…
When we dove into the components that’s exactly what we found. There are actually plenty of other strong stocks that we’ll outline below as vehicles to express our bullish thesis on the space.
The companies on the cusp of this emerging trend go far beyond just Large-Cap US Tech. In fact, only 60% of the ETF’s holdings are US stocks, and over a quarter of the funds’ exposure is in Materials and Industrials… not to mention over a 30% allocation to Small and Mid-Caps.
The winners from this emerging trend range from highly cyclical Copper and Lithium miners with operations all over the world, to Silicon Valley Semiconductor giants, and even an Irish auto-parts manufacturer.
Let’s have a look.