With the growing concerns about climate change and government initiatives across the globe to replace the traditional energy with sustainable clean energy, investors are betting big on the cleantech industry. This industry includes companies involved in solar energy, wind energy, hydropower, and lithium-generated energy. As Electric Vehicles (EVs) are expected to rule the automobile industry by 2030, companies involved in lithium-related businesses should see significant growth in demand. Moreover, under President-elect Joe Biden, the growth of the cleantech industry is expected to accelerate.
While most of cleantech stocks have already attracted significant investor attention and are trading at high valuations, there are several stocks which don’t make headlines, but possess huge growth opportunities. So, it could be a good idea to consider these under-the-radar stocks.
Since it might be risky to bet on a particular stock amid this market uncertainty, under-the-radar ETFs exposed to cleantech stocks can be a smart investment option now. Investing in these ETFs will allow diversification at a nominal cost. Global X Lithium & Battery Tech ETF (LIT), First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID), and Amplify Advanced Battery Metals and Materials ETF (BATT) are three such ETFs that are well positioned to gain in the future.
Global X Lithium & Battery Tech ETF (LIT)
LIT follows the Solactive Global Lithium Index. This ETF primarily invests in lithium companies. With the growth in the demand for Electric Vehicles (EVs), the lithium industry is expected to surge in the future as it is used in making the batteries for EVs. With assets under management (AUM) of $1.3 billion, its top holding Albemarle Corporation (ALB) makes up 12.11% of the fund, followed by BYD Company Limited at 5.87% and Ganfeng Lithium Co., Ltd. at 5.52%.
LIT’s expense ratio of 0.75% compares to the category average of 0.52%. It has returned 97.3% over the past six months, and 93.9% year-to-date. It pays an annual dividend of $0.44, which yields 0.84% on the prevailing price. LIT’s four-year average dividend yield is 2.6%.
LIT has gained 192.4% since hitting its 52-week low of $17.83 in March. The ETF is currently trading 2.7% below its 52-week high of $54.49, which it hit on November 24th.
How does LIT stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating
It is also ranked #2 out of 110 ETFs in the Commodity ETFs group.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID)
GRID is focused on companies that are engaged in the 'smart grid' movement, which seeks to upgrade America's electricity grid with 21st century technologies. It follows the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index. The fund has AUM of $104 million. Its top holdings include Aptiv PLC (APTV) making up 9.32% of the fund, Eaton Corporation, PLC (ETN) at 7.97% and Johnson Controls International plc (JCI) with 7.56%.
GRID has an expense ratio of 0.70% compared to the category average of 0.63%. It has returned 50.5% in the last six months, and 38.3% year-to-date. GRID pays $0.49 annually as dividends to its investors, which yields 0.64%. Its average four-year dividend yield stands at 1.2%.
GRID has gained more than 89% since hitting its 52-week low of $35.96 in mid-March. The ETF is currently trading just 0.3% below its 52-week high of $76.19 which it hit on November 24th.
GRID’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” for Industry Rank. Among the 67-ETF Diversified Portfolio ETFs group, it’s ranked #17.
Amplify Advanced Battery Metals and Materials ETF (BATT)
BATT includes a portfolio of companies that generate significant revenue from the development, production, and use of lithium battery technology. With AUM of $16.6 million, BATT follows the EQM Lithium & Battery Technology Index. BHP Group Limited (BHP) makes up 6.30% of the fund as the top holding, followed by Contemporary Amperex Technology Co., Ltd. at 6.25%, and Tesla, Inc. (TSLA) with 5.78%.
BATT’s expense ratio of 0.72% compares to the category average of 0.47%. It has returned 73.6% over the past six months, and 27.3% year-to-date. It pays an annual dividend of $0.35, which yields 2.5% on the prevailing price. Its average four-year dividend yield stands at 1.7%.
BATT has gained nearly 127.7% since hitting its 52-week low of $5.91 in March. The ETF is currently trading just 2.4% below its 52-week high of $14.31.
It’s no surprise that BATT is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. In the Commodity ETFs group, it is ranked #34.
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LIT shares were trading at $53.36 per share on Friday morning, up $0.34 (+0.64%). Year-to-date, LIT has gained 96.18%, versus a 14.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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