The most recognizable six syllables in English literature, "To be or not to be," is probably the one line from Hamlet that you remember from high school. But it's the advice from the king's advisor, Polonius, that is my favorite: "To thine own self be true" -- wisdom that's applicable in a variety of aspects of life, especially investing.
If your personal circumstances are such that you'd be better off with conservative investments, you should lean toward stocks that will help you sleep better at night. However, if you're looking for high-growth opportunities, you should feel no compunction about seeking stocks capable of blockbuster returns like Blink Charging (NASDAQ:BLNK), Livent Corporation (NYSE:LTHM), and Virgin Galactic Holdings (NYSE:SPCE) -- but only if you've been honest with yourself and you're confident that you can afford to take on the increased level of risk.
When history is written about investing during the summer of 2020, one chapter will surely be dedicated to electric vehicle (EV) manufacturers. Enthusiasm for Tesla (NASDAQ:TSLA), has sent the stock soaring recently, while fervor for fellow EV builders Nikola (NASDAQ:NKLA) and NIO (NYSE:NIO) has also electrified investors' excitement. But there's another investing avenue EV-interested investors can drive down: Blink Charging. Over the past decade, Blink has emerged as a leader in EV charging solutions, and it provides investors with an opportunity to potentially profit from the momentum building toward EVs while mitigating the risk of investing in an EV manufacturer that ultimately fails to deliver. Blink's market opportunity is considerable. According to Bloomberg New Energy Finance, almost 1 million public charging stations are currently available worldwide; however, the growing EV market will require nearly 290 million charging points worldwide over the next two decades.
Unlike competitors like EVgo, which owns and operates charging stations, Charge Point, which manufactures hardware, and EV Connect, which operates an EV charging network, Blink differentiates itself by dealing in all three areas, providing investors with a multi-faceted approach to EV charging in the U.S.
Whereas the EV market has picked up speed over the past few years, Blink's vacillating revenue suggests that there's plenty of risk surrounding an investment in the company. While its top line grew from $2.8 million in 2014 to $4 million in 2015, revenue subsequently declined over the next two years to $2.5 million in 2017, ticking up moderately to $2.8 million in 2019. Profits have also lagged. Over the past five years, for example, Blink has reported annual average EBITDA of negative $19.1 million according to Morningstar.
Investing in charging stations like Blink isn't the only way to gain EV exposure without hitching a ride with an automaker. EV aficionados can take an alternate route with Livent. Whereas the company has been in the lithium business since the 1940s, it has only been an option for investors since its spinoff from FMC Corporation in 2018.
A pure-play on lithium, Livent is a fully integrated company that deals in the production of lithium for a variety of applications; however, it's heavily vested in the growth of the EV market as lithium is a critical component of the batteries used in EVs. In fact, its sensitivity to the EV market is acutely stated in its 2019 10K, where the company lists its risk factors, stating, "Our growth depends upon the continued growth in demand for electric vehicles with high-performance lithium compounds."
Like the global growth in the EV market representing a potential boon for Livent, the worldwide growth in the energy storage market -- which heavily relies on lithium -- presents the company with another lucrative opportunity. According to Wood Mackenzie, the global energy storage market is expected to grow nearly 300% over the next four years from 4 gigawatts of new installations in 2019 to 15 gigawatts in 2024.
Although Livent has the potential to prosper from the increasing interest in energy storage, it's important for investors to recognize the risk associated with the company's financial health. Livent, for example, relies heavily on leverage to help it keep the lights on. At the end of Q1 2020, for example, Livent had a net debt-to-EBITDA ratio of nearly 3 -- a figure which makes the company seem even more precarious considering it reported negative free cash flow of $126 million in 2019 and negative $162 million over the past 12 months, according to Morningstar.
Shifting focus from the road to the sky, investors will find that Virgin Galactic Holdings provides another high-risk, high-reward opportunity -- one that is literally out of this world. A company focused on space tourism, Virgin Galactic characterizes itself as the "world's first publicly traded human spaceflight venture," aspiring to provide individuals with a chance to look back on their home planet from the setting of space.
As one can imagine, experiences like these come with a hefty price tag, so the company's potential customer base is limited. In fact, during the company's Q1 2020 earnings report, Virgin Galactic identified a total addressable market of about 2 million high net worth individuals.
Beyond these initial spaceflight experiences, moreover, Virgin Galactic may be offering individuals the opportunity to fly even higher. In late June, the company announced that it had inked a deal with NASA "to encourage commercial participation in orbital human spaceflight to the International Space Station ("ISS") while enabling the development of a robust economy in Low Earth Orbit." And the company's partnership with the American space agency goes even deeper. In May, Virgin Galactic announced that it had signed a deal with NASA regarding hypersonic travel -- a collaboration meant to "advance the United States' efforts to produce technically feasible, high Mach vehicles for potential civil applications."
Since the company is still in the testing phase of its spacecraft and hasn't commenced commercial operations, it hasn't generated significant revenue yet; nonetheless, for investors who are willing to accept a considerable amount of risk, Virgin Galactic is a potential high-flyer that is well worth having on a watchlist.
Final words for those who are not faint of heart
There is a wide variety of investing options from which those interested in growth stocks can choose. But for those who aren't risk averse and who are on the prowl for potentially explosive returns, Blink and Livent are two EV-related stocks worth keeping tabs on. On the other hand, if you're more interested in the nascent space tourism industry, Virgin Galactic is an ideal choice for a watchlist.