By now you know that my mission is to make us a lot of money in NexGen investments. It takes hard work to generate big winners and produce our unusually high success rate (more than 80%), but to boil it down, I scour the market for companies with extremely good fundamentals, strong charts and what I call the intangibles.
Intangibles by nature are harder to define, but they are often what add the next-gen to our NexGen system. Intangibles are frequently mega-trends that are changing our lives and our world, but they can be anything that lights a fire under a stock – a breakthrough drug, an innovative new product, the possibility of an acquisition and more.
It’s pretty rare, but a person can also be one of those intangibles. Think of Steve Jobs at Apple (AAPL), Bill Gates at Microsoft (MSFT), Jeff Bezos at Amazon (AMZN) or Jack Welch at General Electric (GE). All are brilliant visionaries and leaders who changed the game. A true NexGen CEO is one that makes me comfortable betting not on the horse itself but on the jockey controlling the reins.
For my money – both literally and figuratively – the top NexGen CEO today is easily Elon Musk. Not only is he the head of Tesla (TSLA), which is leading the way in the race for both electric and self-driving vehicles, but also of SolarCity and SpaceX. This is a man who not only wants to change the way we drive, but also the way we produce, store and distribute energy – oh, and might as well send a spacecraft to Mars while he’s at it. In his spare time, he’s also developing plans for a high-speed transportation system with pods traveling through tubes (called Hyperloop).
Any person who wants a glimpse into the future needs to pay attention to this man. And any investor who wants to make money off of what’s to come needs to as well. The good news is that you can start making money off of his visions right now, but perhaps not in the way you might expect.
Changing the World
If you’re not familiar with Elon Musk, let me share with you a few news stories that have come out recently:
Story #1: Tesla’s new Model 3 is now in production, as shown by Musk himself on Instagram and Twitter:
The first deliveries of the Model 3 will begin later this month to customers who have already put down $1,000 to reserve one. That’s 373,000 people! Many will not get their vehicles until 2019. The Model 3 is priced at just $35,000 – half of the Model S, which is currently the cheapest model – and is expected to boost Tesla’s electric vehicle sales by 500%.
Story #2: SpaceX had three successful rocket launches in a 12-day period with its latest one taking place on July 5. In mid-June, Musk released a paper detailing his vision for establishing a colony on Mars.
Story #3: Tesla is joining forces with a French wind power company, Neoen, to install the world’s largest lithium battery in Australia. This isn’t some exhibit in a museum but a humongous battery that will store power to be available for a part of Australia that suffers from shortages and blackouts. And if that’s not enough, Musk has pledged to have it done in 100 days or it won’t cost the Australian government a penny. There will be challenges I’m sure, as this battery is three times the size of the current largest lithium battery, but it’s clear that Musk’s vision is once again changing the world – a pure NexGen move.
Making Money the NexGen Way
Tesla’s new models and the SpaceX project are fascinating in their own rights, and as next-generation as a colony on Mars is, I’m not investing my hard-earned money there – at least not yet. But there is a mega-trend at work here that I have no doubt will produce big profits. It’s a common theme to Tesla’s rocketing sales and the big win in Australia: battery storage. Specifically, lithium batteries.
Demand for lithium will continue to grow exponentially, from smartphones to electric cars to electricity storage. Battery storage is the future of renewable energy, and that makes it the single biggest opportunity for investors in NexGen energy.
With Tesla leading the way in both electric cars and storage, that’s the stock to buy, right? Not so fast. I do love the company for the very, very long term, but I’m not buying just yet. Yes, TSLA is up 53% this year, but it has also plummeted 20% in just the last few weeks. More importantly, though, the company is a victim of its own success, and I expect Tesla will continue to have production issues to keep up with surging demand. That would keep a lid on upside potential, at least for a while.
The way to invest now is in the so-called picks-and-shovels plays. There is a lot of money to be made in the companies supplying lithium, the essential natural resource that makes this mega-trend possible. Global lithium ion battery production is forecast to grow by an unbelievable 521% between 2016 and 2020.
There are three big lithium stocks, and I recommended one of them when I launched NexGen Investor in early May. The stock has been on the move lately, up 12% in just the last three weeks, and I see a lot more to come as my long-term outlook on the lithium sector overall and this company in particular is very bullish. It contributes 22% of global lithium production, putting it in prime position to benefit from the increasing need for rechargeable lithium-ion batteries. Estimates for 45% growth in the current fiscal year are far ahead of the overall market as well as most stocks in the sector. It has crept above our buy limit, but I continue to recommend it as a strong buy on pullbacks. (To access my very latest buy advice, you can click here to try NexGen Investor risk-free.)
Lithium is definitely an exciting sub-sector of energy that very few investors are paying attention to. By getting in early, there is big money to be made as lithium demand expands to help power our changing world.