How to profit from the decarbonisation theme
Companies that can profit from the electrification of the planet are grabbing the headlines. And for good reason – in a falling market, their share prices have been heading up. The Montgomery Small Companies Fund holds shares in many of these companies, including Allkem (ASX:AKE), IGO (ASX:IGO), and Pilbara Minerals (ASX:PLS). And I believe there’s more upside ahead.
Back in April, I wrote, “More than 14 countries and 20 cities around the world have proposed banning the sale of fossil fuel-powered passenger vehicles (primarily cars and buses) in the near future”, adding “According to the International Renewable Energy Agency’s Electricity Storage and Renewables, Costs and Markets to 2030 report: Electricity storage will play a crucial role in enabling the next phase of the energy transition. Along with boosting solar and wind power generation, it will allow sharp decarbonisation in key segments of the energy market.”
Since then, investors in many lithium, cobalt, nickel and copper producers – the ingredients powering and building the energy transition – have done extremely well. Allkem (ASX:AKE) is up almost 19 per cent, likewise IGO (ASX:IGO), while Pilbara Minerals (ASX:PLS) is up 77 per cent. Our small cap funds owns all of these names.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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Lindsay Barlow
:
I note that various studies are in place to find a cheaper alternative to lithium batteries for cars. Is this likely to affect the share price of P L S adversely in the near future?
Roger Montgomery
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That will depend not only on the discovery of a commercially viable alternative but also on the pace of uptake by manufacturers and users, with the former also needing to change strategy and retool (and don’t forget the winding back of government plans and strategy globally). Not insurmountable to change to superior technology but there are hurdles.