You’ll remember the annoying superannuation advert with the jingle…
‘From little things, big things grow…’
Yeah, like our fees and charges, probably. Paul Kelly, how could you…
But it’s a jingle worth remembering.
The fact is, every big opportunity starts off as a small one.
In 2004, Facebook was a university dorm room experiment. Now, it has over 2.7 billion users.
At what point was the rise of Facebook inevitable?
Or how about this chart from a 2016 banking start up?
Source: Morgan Linton/span>
It shows the growth in users of UK challenger bank Revolut over its first year. Would this have piqued your interest back in 2016?
If it did, you’d be cleaning up right now.
Fast-forward three years to today and Revolut is about to be worth over US$10 billion. That’s more than Barclay’s bank is worth!
It’s yet another sign that something big is going on in the world of banking…
Early investors — usually professional venture capitalists — get in on those first signs of growth.
They know that strong early growth equals future exponential profits.
And in all opportunities, there’s a tipping point which, once hit, becomes an unstoppable force.
Such tipping point moments are even more important to recognise in entire industries, rather than just companies.
But you need to be alert to realise what you’re seeing, when you see it.
Here’s another big example:
The chart on the left shows the decline in camera film sales, which started to fall in earnest between the years 2000 and 2003.
But if you look at the chart on the right, you can see that the trend in digital camera sales (blue line) started rising long before then.
From 1995–2000, the growth of that blue line was telling you something big was happening.
The clue was already there, and the declining film sales ended up being a later confirmation, rather than an early signal.
Right now, a similar clue is presenting itself to you in a much talked about industry…
There’s a lot of ink spilled about electric cars in the media.
Some people love it. Whilst others doubt the hype.
Myself, I prefer to listen to the facts. If it’s real, we’ll see it in the figures over time. If it’s not, we won’t.
But you can’t wait until it’s obvious to all if you want to make big profits.
In that vein, this chart could be your early warning signal…
Source: VFACTS DATA
You see those two small blips on the left.
They may not look like much now, but they show you that the electric vehicle revolution is starting to ramp up, here in Australia.
Remember the jingle!
They show that, while still a small market, sales of electric cars are growing fast. Sales have almost doubled between 2018 and 2019, as have hybrids.
At the same time, sales of petrol and diesel cars are starting to fall.
The trend to EV’s is picking up steam…
And some entrepreneurs think this is just the start.
Brisbane-based company Tritium recently announced grand plans to create a network of electric car charging stations around Australia.
Incidentally, ASX listed small cap stock, Rectifier Technologies Ltd [ASX:RFT] is an equipment supplier to Tritium and its shares are up a whopping 262% over the past year.
[Disclaimer: This has been a live pick in my premium trading service since 9 April 2019 and is still an open trade.]
In the more populous countries of India and China, electric cars are also growing in demand. The governments of these nations are really pushing them.
The Indian government announced last week that they would provide a tax offset to people purchasing electric cars.
The idea is that this will help the growing EV manufacturing industry, too.
‘“The government is trying to create demand, to spur demand, and thus help (original equipment manufacturers),” Puneet Gupta, associate director of automotive forecasting at IHS Markit, told CNBC.’
In China, the trend is the same. In 2018, sales of petrol and diesel cars fell by 6%, while sales of electric cars grew.
The Chinese government has even banned factories that don’t produce electric cars, starting from this year!
You’ve got both the pull (demand) and push (government policy on supply) factors working in tandem here.
My feeling is that the ‘flippenning’ — the transition to electric cars — is actually closer than many people think.
So, if I’m right, how can you benefit?
Investing for the flippenning
There’s a range of ways to plug into the Electric Vehicle boom.
From equipment suppliers like Rectifier, to lithium miners and battery tech companies.
Perhaps graphene has a role to play, or maybe cobalt or nickel?
Can you join the dots on this new tech? That’s the challenge.
Even old favourite Tesla is an option you could buy into.
Funnily enough, the much-maligned Musk owned car manufacturer, Tesla just shocked the market recently with some surprisingly good numbers.
They delivered 92,500 cars last quarter, a company record.
Though the revelation that they’re still burning money faster than a gas guzzling V8 engine, caused the stock to fall sharply in trading last Thursday.
In this area, you need to do your own research and maintain a sceptical eye, too.
The main point is this…
When a tipping points hits in any industry, it’s not unusual for no one to notice it at first.
In fact, it’s the norm.
It’s not until it’s completely obvious that the mainstream jumps aboard.
But by then, the opportunity to make the big gains is usually long gone.
Whether it’s Facebook with social media, Revolut with the rise of challenger banks or clues in the sales of digital cameras.
It’s the rate of growth in early stage companies and industries that matters most.
That’s the kind of clue you need to find stupendous investment opportunities well before the herd…
Editor, Money Morning
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