How To Play The Coming Boom In Electric Vehicles

by: Simit Patel

As I noted in my recent article on gas prices, the sharp increase in prices is only going to continue. It's time to adjust to the new paradigm of perpetual currency devaluation (which also has the effect of centralizing wealth) and peak oil. I believe this will create an opportunity for new forms of transportation systems built around electric vehicles. Here's an overlook of the value network and some of the opportunities it presents, as I see it:

1. Smart Money. As is generally the case these days, China is the smart money likely to be lifting the electric value network up. It's welcoming car manufacturers, and its centrally planned cities are conducive towards having the rigid demand needs of electric vehicle charging stations met on a large scale.

2. Vanadium. With EV production on the rise, a big opportunity will center around the battery. Battery quality is a major obstacle, and in this regard, I think vanadium is a mineral of interest, due to its advantages in storing electricity and its role in conjunction with lithium. One vanadium producer I have on my watchlist is Denison Mines (NYSEMKT:DNN), who also produces uranium -- another mineral I believe benefits from the emerging electric vehicle value network.

3. Uranium. Electric cars will of course require electricity -- which means they'll add to the demand for nuclear power, and so, uranium. This is a huge opportunity and constitutes a primary focus of mine, as my recent articles on SeekingAlpha can attest. Nuclear power is the macro-trend that ultimately will enable a world mobilized primarily by electric vehicles. My two favorite picks in the uranium sector are Cameco (NYSE:CCJ) and Uranium Energy Corp (NYSEMKT:UEC).

4. Superconductors. The shift from gasoline to electric vehicles is part of the larger shift away from fossil fuels and towards the nuclear -- or electric -- age. If there's going to be more electricity overall, there's going to need to be more usage of metals that conduct, or transport, this electricity. The most conductive metals are silver, copper, gold, and aluminum -- in that order, although the wide disparity in silver and copper price make silver favorable in that regard while gold is too expensive to be used at all. My favorite way to play silver at the moment is the royalty company Silver Wheaton (SLW), although I also like Silvercorp (NYSEMKT:SVM) very much. As for copper, Nevsun Resources (NYSEMKT:NSU) is a miner operating in Eriteria that begins copper production next year that I think has an excellent resource on its hands.

5. Internet Stocks. The Internet companies have a chance to get tablets and location-based social networking installed in cars as part of the shift to electric vehicles. The opportunities here are immense; apps for finding re-charging stations and for car sharing of electric vehicles are absolutely necessary to make electric vehicles safe and economically viable. This also introduces multiple ways in which the cost of electric vehicles can be reduced, as the Internet will enable greater EV car sharing as well as the possibility for the car to profit from the data it gathers in its travels. Google's (NASDAQ:GOOG) forays regarding its self-driving cars, and Amazon's (NASDAQ:AMZN) quiet accumulation of real estate, are trends to be watched. Location-based social networks like Foursquare as well as car-sharing services like Getaround and Zipcar are uniquely positioned to profit from and shape the electric vehicle value network.

The opportunity in re-wiring the world with electric vehicles is one of the biggest opportunities I see.

Disclosure: I am long NSU, CCJ, UEC, SVM, SLW.