The hidden stocks in pole position for
electric vehicle revolution

By Thomas Sørensen and Henning Padberg,
Portfolio Managers of Nordea’s Global Climate and Environment Strategy

Climate change represents an attractive investment opportunity, which is accelerated by many drivers. There is a push from society and consumers who ask companies to be more “responsible”, as well as a push from politicians, who feel the urge to develop better environmental policies. However, in our opinion, the biggest push is the economic incentive achieved by adopting these technologies.

We focus on three main investment areas in the climate and environment space: innovators within the alternative energy sector, companies aiming at resource efficiency, as well as adapters focusing on environment protection. The majority of our strategy is allocated to resource efficiency – companies improving efficiency with products and services.

Resource efficiency is the most economically sensible area to achieve lower emissions and reduce energy consumption. This may not be one of the most visible areas in the universe, but it is one of the most diverse and interesting. It includes capabilities such as energy-efficient building material applications, smart farming via advanced navigation systems and energy efficient cooking and lighting.

One high-profile area of resource efficiency is the rise of electric vehicles. While we sold out of Tesla in 2017, due to concerns over its valuation, there remain other avenues to capitalise on the EV revolution away from car manufacturers – where the long-term winners and losers are not yet clear. For example, we see attractive under-the-radar resource efficiency opportunities within eco-mobility and smart grid spaces.

Below are four attractively-valued stocks playing a vital role in the electric auto revolution:

Infineon Technologies
Infineon is a world leader in semiconductor solutions which are widely used in the automotive, alternative energy and other general industries. Its power-efficient electronics enable the electrification of transportation, renewable energy production and energy consumption, which improves resource efficiency across many applications.

ASML Holding
ASML is the largest global supplier of photolithography systems used by chipmakers for processes that enable innovative technology solutions for our society. ASML’s advanced equipment makes computing cheaper and reduces energy consumption across multiple applications from automation technology to cloud servers and zero-emission vehicles.

National Grid
National Grid plays a vital role in connecting millions of people safely, reliably and efficiently to the energy they use. We continue to believe investments in renewables – onshore and offshore wind and solar – are viable technologies in both the UK and US energy mix today and will result in a need to build out the electricity grids. Furthermore, a smarter grid is needed to integrate renewable energy and to enable the side of electric vehicles.

Eversource Energy
Eversource is a grid utility company, focused on transmission activities in electricity and gas that allows connecting people safely, reliably and efficiently to the energy they use. Eversource is committed to integrate renewable energy and to facilitate the upcoming growth of electric vehicles.

 

 

About Nordea Asset Management
Nordea Asset Management (NAM, AuM 216.8bn EUR*), is part of the Nordea Group, the largest financial services group in Northern Europe (AuM 311.5bn EUR*). NAM offers European and global investors’ exposure to a broad set of investment funds. We serve a wide range of clients and distributors which include banks, asset managers, independent financial advisors and insurance companies.

Nordea Asset Management has a presence in Cologne, Copenhagen, Frankfurt, Helsinki, London, Luxembourg, Madrid, Milan, New York, Oslo, Paris, Santiago de Chile, Singapore, Stockholm, Vienna and Zurich. Nordea’s local presence goes hand in hand with the objective of being accessible and offering the best service to clients.

Nordea’s success is based on a sustainable and unique multi-boutique approach that combines the expertise of specialised internal boutiques with exclusive external competences allowing us to deliver alpha in a stable way for the benefit of our clients. NAM solutions cover all asset classes from fixed income and equity to multi asset solutions, and manage local and European as well as US, global and emerging market products.

*Source: Nordea Investment Funds, S.A., 30.09.2018

Nordea Asset Management is the functional name of the asset management business conducted by the legal entities Nordea Investment Funds S.A. and Nordea Investment Management AB (“the Legal Entities”) and their branches, subsidiaries and representative offices. This document is intended to provide the reader with information on Nordea’s specific capabilities. This document (or any views or opinions expressed in this document) does not amount to an investment advice nor does it constitute a recommendation to invest in any financial product, investment structure or instrument, to enter into or unwind any transaction or to participate in any particular trading strategy. This document is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instruments or to participate to any such trading strategy. Any such offering may be made only by an Offering Memorandum, or any similar contractual arrangement. Consequently, the information contained herein will be superseded in its entirety by such Offering Memorandum or contractual arrangement in its final form. Any investment decision should therefore only be based on the final legal documentation, without limitation and if applicable, Offering Memorandum, contractual arrangement, any relevant prospectus and the latest key investor information document (where applicable) relating to the investment. The appropriateness of an investment or strategy will depend on an investor’s full circumstances and objectives. Nordea Investment Management recommends that investors independently evaluate particular investments and strategies as well as encourages investors to seek the advice of independent financial advisors when deemed relevant by the investor. Any products, securities, instruments or strategies discussed in this document may not be suitable for all investors. This document contains information which has been taken from a number of sources. While the information herein is considered to be correct, no representation or warranty can be given on the ultimate accuracy or completeness of such information and investors may use further sources to form a well-informed investment decision. Prospective investors or counterparties should discuss with their professional tax, legal, accounting and other adviser(s) with regards to the potential effect of any investment that they may enter into, including the possible risks and benefits of such investment. Prospective investors or counterparties should also fully understand the potential investment and ascertain that they have made an independent assessment of the appropriateness of such potential investment, based solely on their own intentions and ambitions. Investments in derivative and foreign exchange related transactions may be subject to significant fluctuations which may affect the value of an investment. Investments in Emerging Markets involve a higher element of risk. The value of the investment can greatly fluctuate and cannot be ensured. Investments in equity and debt instruments issued by banks could bear the risk of being subject to the bail-in mechanism (meaning that equity and debt instruments could be written down in order to ensure that most unsecured creditors of an institution bear appropriate losses) as foreseen in EU Directive 2014/59/EU. Nordea Asset Management has decided to bear the cost for research, i.e. such cost is covered by existing fee arrangements (Management-/Administration-Fee). Published and created by the Legal Entities adherent to Nordea Asset Management. The Legal Entities are licensed and supervised by the Financial Supervisory Authority in Sweden, Finland and Luxembourg respectively. The Legal Entities’ branches, subsidiaries and representative offices are licensed as well as regulated by their local financial supervisory authority in their respective country of domiciliation. Source (unless otherwise stated): Nordea Investment Funds, S.A. Unless otherwise stated, all views expressed are those of the Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches, subsidiaries and representative offices. This document may not be reproduced or circulated without prior permission. Reference to companies or other investments mentioned within this document should not be construed as a recommendation to the investor to buy or sell the same, but is included for the purpose of illustration. The level of tax benefits and liabilities will depend on individual circumstances and may be subject to change in the future. © The Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches, subsidiaries and/or representative offices.

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