Who wins from the fuel “crisis”?
30th September 2021 |
You would’ve no doubt seen the chaos ensuing at UK petrol stations over the past week and perhaps even have been caught up in it yourself.
Panic has set in, causing long queues, mindless fuel hoarding and extortionate prices.
It’s the sort of desperation we haven’t seen since the start of pandemic, with the panic buying of… toilet rolls.
What this “crisis” has done is to drive the price of petrol to an eight-year high in the UK on 26 September 2021.
We’ve even had people tell us of diesel price up to over £1.80 per litre in the West Midlands.
Crude oil’s price is also on a charge, having reached a three-year high of $80 per barrel on 28 September 2021.
In the main, strains on oil supply in the United States following hurricanes Ida and Nicholas, combined with a rise in demand for energy following the emergence from lockdowns, have created an energy crunch, which is now being reflected in prices.
With things probably only going to get worse before they get better, a $100/barrel oil price before the year is out could well be on the cards.
In fact, a $200/barrel price is not out of the question as the northern hemisphere heads into winter and air travellers take to the skies once more.
We strongly suspect that owners of electric vehicles (EVs) currently have very smug looks on their faces.
In fact, I (Sam) grabbed a coffee in the midst of the panic from a local BP (which had no fuel) and took this photo, which I found hilarious… the ultimate troll I reckon!
Source: editor’s own photo
That’s a Tesla Model X by the way – I’ll let you figure out why I found it hilarious.
In an abnormal situation like this, we believe there’s always opportunity in the market.
If anything, the burden of higher oil prices may only speed up the rollout of EVs not only in the UK, but around the world.
Maybe the fuel “crisis” is even part of a bigger conspiracy to push people to EVs faster, just so the government can achieve their net zero targets…
We’d love to hear your views on the “Fuel Crisis” too. Is it a massive beat-up, is it a “greenspiracy” or is it a thing we need to take far more seriously? Let us know by sending us an email with your thoughts to editorial@southbankresearch.com.
When it comes to what kinds of companies could benefit from these abnormalities in the market, our view is a company like AMTE Power (LSE: AMTE), a provider of batteries for the EV market, is exactly the kind.
There’s no doubt that the problem to future energy crises is appropriate energy storage. That’s why we’re of the view that its specialist battery technology could face higher demand. The reasons for this are people making the sudden switch to EVs, both domestic and commercial, in reaction to the soaring fuel costs (and/or the UK government’s pledge to ban the sale of petrol and diesel vehicles by 2030).
Looking further afield, we also believe Saietta (LSE: SED) will be a beneficiary of higher fuel costs and potential future energy panics.
Saietta is a provider of e-mobility propulsion technology.
With the majority of its customers being vehicle manufacturers targeting (relatively) low-income citizens from India and China, the transition towards lightweight EVs in this large, untapped market may be boosted by skyrocketing oil prices.
At this rate, it may be cheaper for the person/business who is the end buyer to bear the higher upfront cost of an EV, rather than be exposed to extortionate running fuel costs facing internal combustion engine vehicles. This particularly becomes relevant for “just in time” logistics networks that rely on small, nimble, but always on-the-go transportation.
With both these companies focused on the electrification of transport, it’s our view that long term they both have huge potential.
For that reason, we’ve decided to raise the buy limit on Saietta.
The stock has consistently traded above our buy limit since our recommendation. While we expected it to track back, which it did a little bit last week, it hasn’t really come back close to our 178 GBp buy limit.
Considering the long-term potential, and the size of Saietta being still around £204 million, we’ve decided to life the buy limit to 265 GBp.
While this does potentially eat into the longer-term profit that we’re looking for, we think it’s also the kind of stock that fits into a very topical and important area of investment – namely smarter, greener and more efficient transportation technologies.
Saietta is now a BUY with a buy limit of 265 GBp.
AMTE also remains an active BUY recommendation while it trades below its buy limit.
Buy list update
Saietta (LSE: SED)
In any case, the latest news from Saietta has been good.
On 27 September 2021, the company announced a collaboration with Electric Assisted Vehicles (EAV), who is a UK-based provider of lightweight, e-mobility vehicles.
In the deal, Saietta will supply its flagship axial flux technology to EAV.
The technology will provide efficiency and maneuverability to EAVs vehicles, allowing them to safely transport people and goods in congested inner-city areas.
The vehicles that Saietta’s technology will be bound to are autonomous.
Saietta’s technology is aiding the transition towards EVs, and also driving the transition towards autonomous vehicles.
Saietta’s involvement in each of these areas in the automotive industry is hugely exciting and potentially lucrative.
Wicher Kist, CEO of Saietta, noted:
“The growing collaboration with EAV on the development of its LINCS platform will help showcase how effective Saietta in-wheel motors can be for lightweight commercial vehicles and we hope could become a significant revenue opportunity in its own right.”
As noted above, Saietta moves to a BUY with a new buy limit of 265 GBp.
Mode Global Holdings (LSE: MODE)
Mode is a financial ecosystem that enables crypto and fiat currency to be managed and transacted.
The company’s latest figures reinforce our long-term optimism on the stock.
For the six months ended 30 June 2021 (H1 2021), the company announced revenues of £0.8 million. This is an increase from £0.03 million in the same period in the corresponding year (H1 2020).
In all, that’s a whopping 2567% increase in revenue over the period. The company also noted a 3,200% rise in trading volumes and payment volumes.
We can attribute this to Mode’s growing user base, which rose 575% from H1 2020 to H1 2021.
In addition, it is beginning to strike commercial deals with big corporates who are looking to get safely onboard into the new crypto money system.
Of note, Mode secured a partnership with e-commerce giant THG earlier this year.
Ryan Moore, CEO of Mode, noted:
“Our half-year results mark a significant milestone for Mode. 2021 has been a transformational year and, after a successful period of investing in our people and products, we are now moving at pace. We have successfully built a strong platform of regulated and innovative products to drive growth.”
We think that this is only just the start for Mode.
We reiterate our BUY recommendation. You can find the original recommendation here.
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.
Surface Transforms (LSE: SCE) – this is car braking technology like you have never seen before. The carbon ceramic brake discs from Surface Transforms are notable for their efficiency, providing up to 70% in weight savings. Surface Transforms is the UK’s only manufacturer of carbon ceramic brake discs for automotive use, meaning it has something of a niche market all to itself. The durability and smoothness of the brakes enhances the driving experience for all. It currently has a buy limit of 68GBp. Make sure you stick to the latest advice and check the current price before investing. You can find the original recommendation here.
Velocys (LSE: VLS) – there’s no doubt that governments will 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 – developing sustainable fuels for transport and logistics (in particular aviation) with pioneering technology. If you’re looking for a great “green energy” play, Velocys is a very good place to start. You can find the original recommendation here.
Argo Blockchain (LSE: ARB) – Argo is a history-making crypto mining company. It is the first pure-play crypto mining company to list on the London Stock Exchange. Its listing on the exchange shows how quickly the transition to the new money system is taking ahold. Through its powerful mining rigs, the company has the capability to mine thousands of bitcoin each year, earning potentially lucrative returns in line with the price of bitcoin. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
