TE Connectivity, Albemarle, Amphenol: Electric Vehicle Suppliers To Watch

by Trefis Team
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Demand for electric cars and trucks is expected to grow meaningfully, driven by declining costs, increasing environmental consciousness, and favorable regulation. However, picking stocks of electric vehicle companies looks tricky at the moment. While pure-play EV stocks such as Tesla (NASDAQ:TSLA) have rallied significantly this year and look highly overvalued, the disruption caused by Covid-19 could make the transition to EVs more difficult for mainstream automakers. Considering this, it’s possible that component makers and materials suppliers could be a good way to play the growing electric vehicle market, without having to bet on individual brands. See our indicative theme of Electric Vehicle Component Suppliers which includes names such as Amphenol Corporation (APH) , TE Connectivity (TEL), BorgWarner (BWA), and others. Below, we provide an overview of the companies in the theme and how they have fared this year.

Albemarle (ALB) is the world’s largest producer of lithium for EV batteries. Most electric vehicles are powered by lithium-based batteries and it’s likely that demand for the material will rise as EV adoption grows. The stock is up by about 36% year-to-date.

TE Connectivity (TEL) provides a range of products including connector systems, sensors, and relays for a range of industries such as automotive, aerospace, defense, and oil and gas. The company has increasingly been focusing on products for hybrid and electric vehicles. The stock is up by about 7% year-to-date.

Amphenol Corporation (APH) produces electrical and fiber optic connectors, sensors, and interconnect systems such as coaxial cables. The stock is up by about 1% year-to-date.

APH

 

BorgWarner (BWA) is an auto components and parts supplier best known for its manual and automatic transmissions. The company is doubling down on the EV space, producing electric motors, power transmission, and power electronics for electric vehicles. The stock is down about 2% this year.

Aptiv (APTV) provides a range of solutions for the auto industry, including autonomous driving technologies, safety technologies, and vehicle components. The stock is down by about 9% this year.

What if you’re looking for a more balanced portfolio instead? Here’s a top-quality portfolio to outperform the market, with over 100% return since 2016, versus 55% for the S&P 500, Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk. It has outperformed the broader market year after year, consistently.

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