With Electric Vehicles, Take the “Easter Egg” Investing Approach

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Have you been following the electric vehicle (EV) industry lately? And I’m not just talking about Tesla’s (TSLA) blowout earnings report and wild stock trading.

In just the past week:

  • Panasonic turned its first quarterly profit from its U.S. battery production…
  • And signed a deal to develop batteries for Toyota Motor (TM), in addition to Tesla.
  • General Motors (GM) ran a Super Bowl ad featuring an electric Hummer – to join Ford Motor’s (F) electric Mustang and the Audi e-tron.
  • Outside of flashy car brands, UPS (UPS) just purchased 10,000 EVs for its delivery fleet.

As I’ve been saying for a while, the future of cars is electric. European carmakers are mandated to cut carbon dioxide emissions by one-third in just 10 years. China is also pivoting to EVs to combat its air pollution crisis. And so will Americans, whenever they want to save money on gas.

A lot of investors will see this as their cue to buy Toyota or Volkswagen (VWAGY) – the top two carmakers by revenue – or Tesla – which ranks #2 by market cap.

At Early Stage Investor, we’re taking a different approach. Last night, I revealed at a special event how I’m applying my unique five-factor analytical strategy to our new Microcap Millionaire Project. The nine-stock portfolio I just unveiled includes an innovative Chinese EV company.

It’s a much smaller stock, with a market cap of less than $700 million. Why? Well, the best analogy is actually an Easter egg hunt.

How Investing is Like Easter Morning

Picture this… you’re taking your little niece, daughter, or one of the neighborhood kids to an Easter egg hunt. More than 100 eggs have been hidden with treats inside. You’re told one of them even has a cash prize in it!

Would you rather be searching here:

Or here:

I’m sure you’d rather have just 10 people in competition with you instead of 1,000 picking over the park like a swarm of locusts.

Well, in the financial market, that’s just how different asset classes would look, too!

Millions of people are hunting for investment gains. And where big, institutional investors get involved – with their armies of investment analysts – those assets tend to get really crowded.

The good news is the financial market is a big, diverse place… and there are Easter egg hunts the big guys can’t participate in. That’s where I found nine great buys for our new Microcap Millionaire Portfolio.

A Tale of Liquidity

Liquidity is a factor that professional investors tend to obsess over, because it tells you how easily you can buy or sell.

Take Tesla’s stock. Its market cap is up $135 billion, and its share price got damn close to $1,000 earlier this week.

There’s a large market for Tesla fans to work with. Lately, the average trading volume is almost 15 million shares per day. This week, it’s been more like 50 million!

In my Microcap Millionaire Project, our EV play trades an average of just 190,000 shares a day.

If you’re a high roller on Wall Street managing a $10 billion stock portfolio, you can’t join this Easter egg hunt. Big money managers can’t “play” in other small markets with limited liquidity like many options markets, smaller investment funds (like closed-end funds and ETFs), individual bonds, small-cap foreign stocks, and penny stocks.

So when WE buy into small markets with modest liquidity, we don’t take on the world’s richest, most powerful institutions armed with armies of top-flight analysts and the world’s best computers.

Instead of competing against thousands of other Easter egg hunters, we compete against modest amounts of them.

And The Growth Prospects Are Massive

Our EV microcap stock is an especially hot buy for us because it’s not getting as much attention – shares are undervalued at just 1.5X forward sales – and the company is growing revenue like crazy.

In the most recent quarter, revenue gained 20%. Annually, the prospects are even better.  Estimates are for the top line to grow to $415 million this year and $558 million in 2021 – compared to $223 million in 2018. That in itself was a 96% jump from the prior year!

This company is an innovator of the smart, electric, two-wheeled vehicle category. That’s how it capitalizes on the incredibly rapid urbanization of Asia. I also have high hopes for its U.S. business once the trade issues and coronavirus fears disappear.

And, most importantly, it has something Tesla (as much as I admire its cars) does not: scalability.

Looking ahead to 2021, I expect the stock to trade at more like 25X sales based on its growth trajectory. That’s more in line with other growth stocks. But it’s a big leap from 1.5X sales today!

Tesla might be more popular, but it’s hard for such a big stock to make that kind of leap, especially once the short-sellers get involved.

Meanwhile, our EV stock and my other buys in the Microcap Millionaire Project are more nimble, growing revenue like crazy, and allow us to beat Wall Street to the money.

P.S. More than 10,000 people tuned in last night for the Microcap Millionaire Project. Viewers saw me project how much time is left in the bull market right now.

But more importantly, they learned how buying microcaps can “boost” the gains they’re seeing from blue chip stocks and index funds.

I also revealed the top sectors in which to find microcaps for rare 2,500% potential gains… as well as my nine favorite microcap investment ideas for 2020 and beyond.

Click here to catch the replay of last night’s big event.

Matt McCall’s MoneyLine Podcast

Click here to listen to Matt McCall’s MoneyLine podcast! This week,  Matt discusses Amazon’s (AMZN) ascent to the $1 trillion value milestone. What does its rise tell us about investing and, more importantly, how do we find the next Amazon? Matt also dives into the upside potential of microcap stocks and unveils a new portfolio aimed at the smallest stocks in the market.

You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.

Learn where Matt McCall sees
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