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President Biden's Transportation Secretary, Pete Buttigeig, is pressing the White House message that a coast-to-coast network of 500,000 electric vehicle (EV) charging stations is needed. To put that in perspective, that 500,000 is nearly three times more than the 168,000 or so old-school gas stations in the country.
Now, a single level 3 EV charger can potentially charge a car battery up to 80% in just 10 minutes. They sure aren't cheap, though; a single charger can cost as much as $260,000.
In fact, Biden's entire EV plan, part of his $2 trillion infrastructure proposal, has a $174 billion price tag.
For investors in the infrastructure and, specifically, the EV space, that $174 billion is a stiff dose of rocket fuel.
And it couldn't come at a better time. The potential for all that stimulus comes right as EV stocks are headed much lower – the perfect conditions for turning a beaten-up company into a double-digit winner.
Here's the play…
EV Stocks Are Getting Crushed… Perfect
Companies like electric automaker Canoo Inc. (NASDAQ: GOEV) had a really strong start in March – GOEV shares rocketed 40% in about a week, and most EV companies were riding high.
Then they fell out of bed. Barron's reported the basket of EV stocks it tracks declined 14%.
There are a couple of reasons why, and it doesn't have much to do with fundamentals or future prospects.
THE "SUPER SQUEEZE" has quickly become the market's hottest trade. The potential can be extreme here. Learn more…
Electric cars are "new," and a lot of investors (foolishly, I'd say) think of them less as long-term investments and more as speculative bets. And, hey, some of them are; I'll trade some EV companies all day if the S.C.A.N. signals are there.
But, when it's all said and done, EVs will dominate roads and streets; they'll be completely mainstream, thanks to economics and environmental concerns, but the fact is EVs aren't "there" just yet. And, at the moment, investors are feeling a little more skittish, a little more "risk-off" these days, with recent market volatility.
So what we have here is a class of beaten-down stocks primed for an eventual return to old highs and ultimately far beyond
Of all the electric vehicles, I like Tesla Inc.'s (NASDAQ: TSLA) the best right now, and TSLA stock is definitely going for a discount. You may remember a few months ago when I listed some key levels to look at, and right now, we're there.
The chart looks really rough and, if you look closely, mighty tempting:
The stock is down nearly 25% from its January all-time highs north of $800 and is trading well below its 50-day simple moving average (MA50), with decent support at $600. But over the past few days it's broken above the short-term 20-day moving average, which says it could be ready to start the trip back up toward $800.
In other words, this is probably a chance to buy an $800 stock for $660 – not a bad deal at all. Tesla call options are looking expensive right now, at least to buy outright, and I can't make a specific trade recommendation, but a credit spread could put some extra cash in your pocket on top of the gains you'll likely get from your TSLA shares.
In this case, you'd buy a TSLA call option one or two strikes below the current price and sell a call option one or two strikes above the current price and pocket a net credit – just make sure they have the same expiration date. You'd maximize your profits if the price shoots past the higher-strike option, which it very well could.
I think in the immediate future, though, the most explosive profit potential could come from what I call "Super Squeeze"-type situations – we saw how insanely powerful those could be not long ago in just a couple of stocks. I've tweaked my proprietary S.C.A.N. algorithm to identify what I think are the two best indicators of an impending squeeze, and when I see a "Go!" signal, I let my subscribers know with an alert. You can go right here to learn how this works; I think it could be the hottest trade on the market right now.
About the Author
Andrew Keene, editor of the 1450 Club, Super Options, and Project 303 at Money Map Press, is a globally known trader and a renowned expert on all things options.