DRIV has both short-term potential and long-term safety
Electric vehicles continue to grow in popularity. As the sector and adjacent markets enter the mainstream, it presents a treasure trove of opportunities for investors. Earlier this week, Schaeffer's Investment Research's Senior Market Strategist Matthew Timpane was a featured presenter at the Benzinga Electric Vehicles Conference. You can view the entirety of his presentation here.
Timpane's slot was so well received, we wanted to further highlight the EV stocks he discussed. We first looked at some individual equities, but now lets dive into some intriguing exchange-traded funds (ETFs).
Matthew: One of my favorite ETFs to get into the space is The Global X Autonomous & Electric Vehicles ETF (DRIV). It already has over 1 billion in total assets at sub 67% year over year and Tesla Inc (NASDAQ:TSLA) as the top holding.
It's a very well diversified ETF for long term exposure to the AV industry, including major auto companies, semiconductors, battery and fuel cell power, plus material and other component providers.
You even have companies in there like Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOGL), that can help keep the ETF state when the EV and more specific companies hit a rough patch. But you're still going to be able to gain exposure to speculative EV stocks like D li or quantum escape. You can see it has moved far away from that 200 day moving average. That's exactly where it kind of bottomed recently. So this consolidation was really warranted over the past year, as it's moved so much from those pandemic lows.
If for some reason we do get a move lower, as we go through this volatile period, I would probably target the 10% year to date area at the $25-$26 range. It's found support there multiple times. I'd put a stone at $24.50 because if for some reason we do kind of break below this area there's a good chance you'd probably go the $20 level and settled at a 161.8% Fibonacci extension level; a 50% retracement level from trough to peak at those lows to the highs. it makes really sense that it'd be an area that you would go to if for some reason we broke down.
Looking at it from a like a relative basis you can see it's been consolidating as the S&P 500 has been outperforming, but it's in a classic lower highs pattern. If it breaks out of this, that's where I think the ETF once again will start outperforming the broader market.