Stuck in peak hour this week?
15th April 2021 |
This weekend I’m putting together a race car bed for my son. It is his first real bed. It is the bed I always wanted as a kid, but never got. To complete this home project, I needed to get a mattress for him. So I headed to Bensons for Beds this week to get him one.
Now the shops are open and some normality appears to be returning, it felt like quite a big deal just to be “out”. That was, until I hit the road at 5.30pm.
At this point in the tale, the story shifts from race car beds to real cars.
In lockdown I had got used to the lack of traffic on the roads. As soon as that release valve was opened on Monday, things quickly reverted to what I remembered as normal.
And once again at 5.30pm on a weekday, “peak hour” traffic is already back.
I’ve noticed it in central London too. The sounds of revving car engines have returned, and the eerie atmosphere that lockdown had brought is fast disappearing.
All this is a reminder that, as we move to a post-Covid world, demand for new cars in the UK is likely to pick up.
Almost 284,000 vehicles were sold in March 2021, compared with 255,000 in March 2020. This reflects an 11.5% increase. In particular, demand was driven by the availability of the new ‘21 number plate.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), expects April to be a record-breaking month. This is amplified by the lack of demand in April of last year as the pandemic began to set in.
Another sign of the return to the roads is demand for driving lessons and driving tests – which is set to skyrocket in the coming months. The pandemic, which has halted lessons and tests, has built pent-up demand for the services. In the AA driving school alone, more than 26,000 people have inquired about lessons since December 2020.
Of course, the more people that take their tests, the greater are the chances of more people passing and going on to buy a car.
We are excited about the implications of this rising vehicle demand for a number of our stocks.
While we don’t expect new drivers to be stepping into high performance sportscars and supercars, we still believe this pent up demand is good news for Aston Martin Lagonda (LSE:AML), as well as Surface Transforms (LSE:SCE).
We also see there being substantial benefits for our latest recommendation, AMTE Power (LSE:AMTE), as the demand for electric vehicles (EVs) rises.
EVs are showing the strongest sales growth in the whole car market, with sales of EVs and plug-in hybrid vehicles taking a combined market share of 13.9%, up from 7.3% this time last year.
As mentioned in past updates, the automotive sector has been investing heavily in electric technology, as the clock ticks down to a government ban on the sale of new petrol and diesel models in 2030.
AMTE’s specialised EV battery products cater for this structural change in the automotive industry. They are having a growing influence in this space.
On 8 April, AMTE announced it had teamed up with three companies in its funded AcouBAT project, designed to improve and accelerate battery production.
The partnership is with HSSMI, a sustainable manufacturing innovation consultancy, University College London, and JW Froehlich MaschinenFabrik GmbH, a systems manufacturer for the automotive industry.
The aim of the AcouBAT project is to monitor the state of charge and state of health of batteries in a non-invasive way. This will ensure high battery quality, and will boost commercial battery production in the UK. Tests will be carried out at AMTE’s cell manufacturing line.
AMTE’s involvement in the testing and delivery of high-quality battery products will further establish the company in the EV battery space. It also provides them with excellent publicity and will raise industry awareness of them.
In addition, CEO Kevin Brundish stated in a S&P Global Platts report that EV battery demand is currently outpacing supply in the UK. As a result, his company is focusing on expanding in the UK market, where they are free from any tariffs imposed by Brexit.
All things considered, we believe AMTE’s share price will continue to rise. We are already seeing signs of this in our portfolio.
After only joining our portfolio on 8 April, AMTE has already incurred a modest 8% gain. We are anticipating further appreciation in the stock in the coming weeks. Therefore, our recommendation to buy up to 285p remains.
Buy list update
Gfinity
Now that lockdown is coming to an end, many of us may be looking towards other forms of entertainment aside from our games consoles. It seems inevitable that less time will be spent on them due to the newfound freedom that an easing of lockdown brings. Restaurants, bars and gyms may be the preferred places to spend our free time.
However, rest assured, we remain as bullish as ever on our esports stock, Gfinity (LSE:GFIN). The ePremier League that we alluded to in our update on 31 March was a huge success, and it will continue to be so for the foreseeable future.
In addition, the company announced an extension of its partnership with global advertising technology platform, Venatus. Under the new agreement, Venatus will monetise Gfinity’s web platforms.
These platforms include RacingGames.gg, which has grown from 1,000 to 120,000 users since November 2020, and MTGRocks.co, which has attracted over 200,000 monthly fans since its launch in February 2021.
The deal is the latest strategic partnership in Gfinity’s publishing platform, Gfinity Digital Media. It is on track to deliver £2 million in revenue in 2021.
Gfinity remains a hold whilst it’s over its buy-up-to price. This partnership highlights the company’s commitment to accelerating growth across the GDM Group and the wider Gfinity business.
Rolls-Royce Holdings (LSE:RR)
Rolls-Royce Holdings announced on 7 April that it will be supplying 12 maximum transition unit (mtu) Kinetic PowerPacks to a top Saudi Arabian University. In the deal, the PowerPacks will be delivered to the supercomputing facility at the King Abdullah University for Science and Technology (KAUST) this summer.
In simple terms, an mtu is a measurement in bytes of the largest data packets that an internet-connected device can accept.
The systems will be used to provide the university supercomputing facility with clean, conditioned and uninterruptible power supplies. They are able to operate in temperatures of up to 50 degrees Celsius, meaning that they are perfectly adapted to the hot temperatures in Saudi Arabia.
The value of the order is worth tens of millions of pounds: an official figure has not been disclosed.
The company’s commitment to delivering sustainable power in the growing green economy is very positive and Rolls-Royce also remains a buy.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Kanabo Group (LSE:KNB) – one of the world’s most controversial investment ideas revolves around the legalisation of medicinal and recreational cannabis. It’s sweeping across Canada and now the US. Both countries are leaders on the way to legalisation. In Australia a similar path is being followed. And now, the UK is on the same track. Kanabo is one of the newest and best plays into this huge investment opportunity. You can find our recommendation here.
IQE (LSE:IQE) – our most recent recommendation, IQE, is a key part of the supply chain that gets semiconductors into the world. You can find our latest discussion, and a link to the original recommendation here. With a gigantic increase in the demand for semiconductors, the world is facing a “chipageddon”. This is a situation where there simply aren’t enough semiconductors to supply the world’s biggest, most demanding companies. IQE is one of the few UK listed stocks that is a play on this theme.
Velocys (LSE:VLS) – there’s no doubt that governments are going to continue to push their “green agenda”. This means that they will do what they can to support industry in ways that will help enable carbon neutral economies. Velocys is a big part of this. The company is developing sustainable fuels for transport and logistics (in particular aviation) with pioneering technology. Some discussion, and a link to our report on Velocys can be found here. If you’re looking for a great “green energy” play, Velocys is a very good place to start.
Until next time,
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
