Safe growth stocks are those that encourage and support a growing industry. So even though much is still uncertain in the UK, we are fortunate as investors to be living in a time when we can predict, with some reliability, the future of renewable energy.
COP26 has bolstered what some are calling a revolution, emphasising the need for cutting down on traditional power sources in favour of electrification and wind power. Many billions have been invested into developing renewables, and because many countries are keen to lead it, investment from governments is significant. BP and other oil companies have shown their intention to invest serious money, and I believe 2022 will see much more money from them.
How will I take advantage of this energy revolution?
The new technology needs resources, in great quantities, in order to grow. In short, it needs lithium, copper, and rare earths. China has in many ways beaten the west to the line in securing much of the supply around the world. So finding a good investment opportunity isn’t as easy as you think.
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In regards to rare earth, there are alternatives not yet scooped up by the east. One particularly good play is Rainbow Rare Earths, which has the Phalaborwa Project in South Africa and the high-grade Gakara Project in Burundi, East Africa. Rainbow’s strategy is to become a globally significant producer of rare earth metals. It also has advanced processing technology enabling extraction with relative ease. It also has the USA as significant investors. At just 16p, the shares are cheap as chips.
For lithium, my choice is Zinnwald Lithium, which now has a 100% ownership of a 30-year lithium project in Germany, close to the European car manufacturers who will be using its high-grade product to in their electric batteries. At a current share price of just 16p, this also has a big scope for growth.
My copper choice is Rambler Metals and Mining, which has a 100%-owned copper-gold mine in Canada. It is fully funded and producing at a significant capacity. They have some debt to pay off but the production far outweighs the overhang. The gold is a bonus. At the current price of just 32p this is also far below what it should be.
These are growth companies that are in my opinion undervalued. However, they are small caps and have all the usual risks which come with that. But of course, what the last two years have show us is that we cannot predict what’s around the corner: 2022 might be no better than 2021 delaying the energy revolution further. But I believe it is inevitable, if not now then soon.
