Friday, January 13, 2023
If auto manufacturer Porsche has its way, we'll soon be cruising around in cars powered by (drumroll, please)...
OK, technically, that's not quite accurate. But it's close.
You see, Porsche recently tested a new synthetic fuel it says can compete with electric vehicles ("EVs"). To pull it off, the company developed its net-zero "eFuel" by combining carbon captured from the atmosphere with hydrogen sourced from water. The result is methane that can power cars.
As a former auto writer from Detroit, I'll admit I'm impressed with the new breakthrough. It has the potential to disrupt the nearly $3 trillion dollar global car market.
The thing is, at the moment, there's no direct way to invest in this breakthrough.
Not to worry, though, because I've uncovered a savvy supply company that focuses on exactly these types of innovations...
It's a company on pace to double its earnings within the next three years...
Porsche's project, aptly named Highly Innovative Fuels, is based in a plant located in southern Chile. And notable partners include Siemens Energy, ExxonMobil (XOM), and Chile's national energy company.
The location of this project is critical. That's because the plant uses wind turbines to split water molecules into their component atoms: hydrogen and water.
Southern Chile happens to be the ideal place for a plant like this. The region gets high winds about 270 days a year, meaning a wind turbine can generate four times as much power compared to one in Europe.
Once split, hydrogen is combined with carbon taken from the air or from industrial sources, and the result is hydrocarbons like methane. These can then be strung together into longer chains, creating drop-in replacements for the hydrocarbons that make up regular gasoline.
Because all the components – water, air, and wind power – are clean, the resulting fuel is clean, too. Even the carbon released from burning the fuel isn't "new" carbon being added to the air. It's carbon that was taken from the air at the plant, making it "net zero" (in other words, no net carbon is being added to the atmosphere).
To start, the plant will make 34,000 gallons of fuel per year. But plans are in place to quickly scale annual production to 14.5 million gallons.
Porsche has called "dibs" on the first batch of fuel, using it to run its Supercup racing series, as well as the vehicles at centers where potential buyers can test drive a Porsche.
It makes sense, then, that the first bit of gas the facility ever produced was used to fill up a Porsche 911, one of the company's most iconic sports cars.
This is all exciting stuff. And it could be a game changer once more plants are built. But 14.5 million gallons of fuel a year pales in comparison to global gasoline consumption. In 2021, the U.S. alone consumed 369 million gallons of gas every day.
That's why, for the next few years, at least, EVs will rule the "net zero world."
But as I mentioned earlier, one company focuses on innovation – whether by dealing with alternative fuels or the fast-growing EV market. In fact, this company counts Porsche's parent business, Volkwagen AG, as a client...
I'm referring to Jabil (NYSE: JBL), a key manufacturing partner for all kinds of tech companies. This firm works with a variety of businesses to design parts for whatever it is they make...
It then uses its more than 50 years of experience to help those clients set up production and factories to make those parts.
Jabil's clients include those in the defense and aerospace industries. But it also partners with multiple car makers, including Ford (F), BMW, Nissan, Tesla (TSLA), Rivian (RIVN), and others.
Jabil also boasts key experience in helping design and produce EV charging equipment. With billions flowing into EV charging right now (and with nearly every EV maker struggling to keep up with demand), the company's timing couldn't be better.
As mentioned, though, Jabil's work isn't exclusive to autos. In the health care sector, this company is the world's largest manufacturing solutions provider.
In other words, it works with the biggest medical brands and medical device makers to design, test, and mass-produce advanced medical implants, surgical tools, diagnostic equipment, inhalers, and much more.
Furthermore, half of Jabil's revenues come from high-tech electronics manufacturing. The company helps firms like Cisco Systems (CSCO) and Amazon's (AMZN) cloud unit to develop 5G chips, solar panels, networking equipment, and smart phones...
And it even helps companies overcome today's strained supply chains. Jabil uses in-depth knowledge to help clients source the parts and materials they need, transport them, and fulfill all accompanied regulations.
Admittedly, Jabil's earnings growth slowed in the most recent quarter. But the company has certainly done well over the long term. Over the past three years, it's averaged a per-share profit growth of 47%.
To be conservative in the current economy, let's cut that figure in half. Even at that reduced rate, we'd still see earnings double in three years.
This is a great way to play the exciting changes in the global auto revolution. And in our "Trade of the Day" opportunity, I'll reveal how to maximize your profit potential. Don't miss out!
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Cheers and Good Investing,
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Trend Trader Daily