Our theme of EV Supplier stocks has been a mixed performer this year, rising by about 4% year-to-date, compared to the S&P 500 which has gained over 17% over the same time frame. This follows a difficult 2022, which saw the theme decline by 21%. Now the macro-environment has actually been somewhat favorable for technology and futuristic stocks, with inflation cooling, and the Federal Reserve scaling back on its pace of interest rate hikes. Things have also been strong on the EV adoption front. For example, in the U.S. battery electric vehicle sales rose 57% year-over-year in Q2 2023, per Counterpoint, with sales accounting for about 7% of overall auto shipments in the country. That said, there have been challenges as well. Earlier this month, the United Auto Workers went on strike, marking the first time workers at all three big Detroit auto companies – Ford, General Motors
GM
TSLA
Interestingly, Albemarle has had a Sharpe Ratio of 0.4 since early 2017, lower than the 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
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