The UK speeds up on its way to EVs… and two SELL Alerts
16th June 2022 |
In our 20 January 2022 update, we delivered some hard numbers which show how demand for electric vehicles (EVs) in the UK is rising.
However, the latest figures show that the transition – from internal combustion engine (ICE) vehicles to EVs is accelerating.
For example, according to heycar.co.uk and the Guardian:
- March 2022 saw the highest volume of battery electric vehicle (BEV) registrations ever recorded in a single month, with 39,315 EVs leaving dealerships. This is an increase of 78.7% on the figure for March 2021.
- Battery-powered and hybrid EVs now make up more than half of all new cars sold.
- By the end of 2022, it’s expected that EVs will outsell diesel-engine vehicles.
Here at Frontier Tech Investor, the transition to EVs is something we’ve been excited about for a long time.
Against a backdrop of soaring fuel prices, and government plans to ban the sale of petrol and diesel-engine vehicles by 2030, we believe demand for EVs will continue to grow.
With this, comes a growing need for the EV charging infrastructure to power them.
However, for much of the EV transition, the UK’s charging infrastructure has failed to keep pace with the uptake of EVs.
For example, according to the Daily Mail, there are currently just 0.28 charge points per EV in the UK. In 2018, there were around nine chargers per EV.
Another estimate is that the shortfall of EV chargers could reach 250,000 by 2032.
Whilst these figures are pretty worrying, there are signs that the rollout of EV infrastructure is drastically improving.
Between 1 January 2022 and 1 April 2022, the number of public EV charge points increased by 7%.
Since 1 April 2021, the number of public EV charge points has increased by 33%, whilst the number of rapid EV charge points has increased by 29%.
In total, there are now roughly 42,000 EV charging stations across the UK, in over 15,500 locations. There are now more public places to charge EVs than petrol stations.
What’s more, the UK government is taking action to further expand the UK’s EV charging network.
On 14 June 2022, the UK government ended the £300 million plug-in car grant scheme to new EV orders, with the government re-directing funds towards bolstering the national EV charging network.
Originally, the grant made a contribution of £1,500 towards new EV purchases, on cars costing less than £32,000.
To be clear, we don’t think this government action will impact the UK’s transition to EVs.
In fact, we believe it will help to balance the scales in terms of EV numbers and charge points, creating a more sustainable EV network for the future.
Overall, we believe that the current news flow is a positive for the UK-based, EV-centric stocks in the Frontier Tech Investor buy list.
As a reminder, they are:
- AMTE Power (LSE: AMTE). AMTE is a developer of battery technology to the automotive, oil and gas, and energy storage industries.
- Aston Martin Lagonda Holdings (LSE: AML). The company is a manufacturer of luxury performance cars. Aston is adjusting to the EV trend, and claims that every one of its models will be “electrified” by 2026.
- Ilika (LSE: IKA). Ilika is a producer of solid-state battery technology, targeting the industrial internet of things (IoT), medical and EV industries.
- Pod Point Group (LSE: PODP). Pod Point is a provider of EV charging infrastructure. We believe that its versatile range of EV charging solutions could go a long way in helping to reduce the UK’s EV charging network deficit.
We reiterate our BUY recommendations for each of these stocks. Please remember to stick to our buy limits.
You can find the original recommendations for each of these stocks in the Frontier Tech Investor buy list.
Buy list update
Aura Energy (LSE: AURA)
Aura Energy is an Australian-based mining company that focuses on the exploration and production of uranium and vanadium.
We are excited by the part Aura has to play in driving the world’s nuclear energy transition. That transition has gained new momentum following the geopolitical conflict between Russia and Ukraine, and brought a greater need for energy autonomy.
Of course, uranium is an essential ingredient in the production of nuclear energy.
Aura is an early-stage mining company. Its ability to make the transition from explorer to potential producer will be key for its long-term growth and profitability.
Aura’s latest developments suggest it is successfully making this change.
On 30 May 2022, Aura commenced a 10,000-metre infill drilling programme at its Tiris uranium project in Mauritania – the largest ever for that site.
Aura has also upgraded the resource estimate from 34% to 50%. In other words, it’s expecting to extract more uranium from the deposits at its Tiris site.
In fact, non-executive chairman Phil Mitchell noted that the resource upgrade will support the expansion of Tiris to between £3 million and £5 million of uranium oxide per annum within five years of initial production.
Assuming 5 million lbs of annual production, and a current market value of $52/lb, Aura’s annual production of uranium oxide would be worth $260 million.
According to Aura, the production cost of the Tiris project is $25.43 per lb of uranium oxide extracted, giving Aura the potential to earn $132.9 million in profit per annum from the project.
And with a current share price of just 9.95GBp, and a capitalisation of £55.016 million, this makes the upside potential for Aura looks huge.
Of course, Aura still has a fair way to go before it reaches full-scale, commercial production.
However, in our view, expanding its mining capacity is a step in the right direction and reinforces our positive long-term view on the stock.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
Sell Alerts: City Pub Group (LSE: CPC) and WANdisco (LSE: WAND)
Current market conditions have made us re-think some of our positions in the Frontier Tech Investor buy list.
What’s more, over the past year, the buy list has swelled to a total of 31 stocks, which is a lot to keep track of in your portfolio.
With this in mind, we are further trimming the size of the buy list, selling off some stocks which we believe are showing limited future potential.
- City Pub Group (LSE: CPC)
City Pub Group is an operator of pubs in the UK. We added it to the buy list in November 2020, anticipating a rebound in the hospitality sector following the gradual easing of lockdown.
In truth, it hasn’t really gone on to deliver value to shareholders in the way that we had hoped.
And with current macro conditions squeezing the pockets of the people of the UK, we believe hospitality spending may stagnate.
With this in mind, we are taking a 13.39% gain from City Pub Group off the table.
Action to take: sell City Pub Group (LSE: CPC)
Price recommended at: 83.00GBp
Price sold at: 94.12GBp
Gain/ loss: + 13.39%
- WANdisco (LSE: WAND)
WANdisco is a provider of secure data migration services.
The company enjoyed a successful lockdown period. With many businesses transitioning from office to home-working environments, its data migration services became highly sought after by tech companies.
Of course, hindsight is a wonderful thing. With a current share price of 277.60GBp, taking some profits off the table this time two years ago would’ve left us with a healthy gain.
However, with WANdisco’s share price on a strong downward trajectory, we believe now is a good time to staunch the metaphorical bleeding and bear a 35.29% loss.
Action to take: sell WANdisco (LSE: WAND)
Price recommended at: 429.00GBp
Price sold at: 277.60GBp
Gain/loss: – 35.29%
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.
Volex (LSE: VLX) – Volex is a global manufacturer of power and connectivity products. This includes power cables, fibre optics and charging plugs. It might sound a little basic, but these are critical mechanisms which are powering some of the key technologies of the modern day. These technologies include electric vehicles (EVs), artificial intelligence (AI) and big data networks. Volex has huge credibility behind it, particularly as it does business with some of most widely recognised companies in the world, including Tesla. You can find the original recommendation here.
Team17 (LSE: TM17) – Team17 is a video game publisher. It has a large collection of games which contains some of the most popular games of the gaming world. One of which is Worms, the enthralling last-man-standing survival game born out of the nineties gaming boom. Team17 is keeping up with the times and offers its games across a number of contemporary technology platforms. It has even flirted with the idea of non-fungible tokens (NFTs), a megatrend which could revolutionise the gaming industry. At a time where sceptics think online gaming will come off the boil following the ease of lockdown restrictions, Team17 keeps gamers coming back for more. You can find the original recommendation here.
AB Dynamics (LSE: ABDP)- AB Dynamics is a provider of automotive testing services. The automotive industry is undergoing rapid transformational change, heading for an electric and autonomous future. This brings an ever-changing regulatory landscape, with automotive manufacturers needing to ensure they adhere to the latest safety standards. AB Dynamics testing services are helping to make arduous, chaotic testing periods more seamless than ever before, ensuring that the vehicles of tomorrow are fit for our roads. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Analyst, Frontier Tech Investor
