Electric vehicle (EV) stocks are all the rage in 2020. But don’t forget out-of-the way electric vehicle plays, like Westwater Resources (NASDAQ:WWR) and WWR stock.
As I mentioned in my article in November, Westwater recently announced it is selling its uranium business to enCore Energy (OTCMKTS:ENCUF).
That sale allows Westwater to focus its attention on its Coosa Graphite Project in Alabama. This project gives Westwater control of more than 40,000 acres of mineral leases. And importantly, there’s a graphite deposit that has more than 27 years of life.
Graphite is becoming increasingly important as the EV industry grows. Investors looking for creative ways to invest in the industry – something other than buying the stock of one of several EV manufacturers – would be wise to consider WWR stock.
The Graphite Opportunity
Graphite is the anode – the electrode that currents use to enter a polarized electric device – in lithium-ion batteries that are used to power electric vehicles. Without graphite, your EV isn’t going anywhere.
But according to an annual report published by the U.S. Geological Survey, there are no active graphite mines in the United States.
The report also notes that a U.S. automaker is building a large plant to manufacture batteries for electric vehicles. It also notes that the automaker will need 35,200 tons of graphite per year for its batteries.
While the automaker isn’t mentioned by name, it’s an obvious reference to Tesla (NASDAQ:TLSA), which is building its gigafactory in Nevada.
GlobalData projects that by 2035, electric vehicles will account for 16% of the light passenger market. So, the need for graphite is only going to grow.
Westwater is expecting to have a plant online sometime in late 2022 but won’t begin mining operations in Alabama until 2028. Building a new revenue stream will take time, but the long-term benefits are obvious.
An Executive Order
President Donald Trump won’t be in office for much longer, but a recent executive order will likely outlive his presidency. The order, enacted on Sept. 30, is designed to reduce U.S. vulnerability in the supply of critical minerals.
China produces 60% of the world’s graphite, with large graphite deposits being developed in Madagascar, Mozambique, Namibia and Tanzania.
Trump’s order requires government agencies to help in identifying projects that are eligible for government support, such as loans or grants. That will only help WWR stock, as the company will be able to explore new opportunities to develop its graphite deposits in Alabama, says CEO Chris Jones.
Our management team possesses a unique combination of battery materials knowledge and extensive project-execution experience alongside manufacturing and processing expertise. … we have what we need to build a powerful presence in the new energy marketplace. In the third quarter of 2020 we reached a number of significant milestones, and I believe these milestones position our company for growth throughout 2021. We continue to execute our business plan without pause.
WWR Stock at a Glance
In mid-September, WWR stock was trading just over $1 per share. But then a series of events gave the company new life.
- Tesla CEO Elon Musk, at the company’s Battery Day conference on Sept. 22, projected a shortage of battery materials in the next five years as EV growth increases.
- The next month, Tesla signed a five-year deal with Piedmont Lithium (NASDAQ:PLL).
- Finally, Trump issued his executive order.
Westwater Resources lost $1.23 per share in the third quarter. But the company also raised $50 million in stock sales in the third quarter and increased its cash on hand from $5.5 million on Sept. 30 to $53.3 million on Oct. 31.
The stock price has come down 25% since hitting those highs but is still up nearly 200% on a year-to-date basis.
The Bottom Line
At its core, Westwater is a natural resources mining company. But it’s also an interesting way to invest in the electric vehicle wave that looks to be transforming the automotive industry in the next 15 to 20 years.
WWR stock has a “B” grade and a buy recommendation in my Portfolio Grader right now.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in TSLA. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
