Don’t worry if you’ve never heard of ELYSIS – most investors haven’t.
And yet it is set to have a massive impact on the global drive toward a net zero carbon economy.
Not just that, either. ELYSIS can also help lower the cost of producing aluminum, a critical component widely used in construction, aircraft, and even fuel-efficient high-speed trains.
ELYSIS is the acronym for disruptive technology that eliminates all direct greenhouse gas (GHG) emissions from the aluminum smelting process.
It’s also the first technology ever that emits oxygen as its by-product.
This breakthrough is the brainchild of a Montreal firm that has attracted backing from Apple Inc. (AAPL).
And while the brainchild behind ELYSIS is privately held, I have identified a great way to invest in this technology with a firm unveiling the “refinery of the future.”
This stock is up 66.8% over the past year compared to -3.56% for the S&P 500.
It’s a storied leader in metal production that’s absolutely crushing the market with plenty of upside still ahead…
You Already Use This Aluminum Provider More Often than You Think
Due to its strength, low weight, and resistance to corrosion, aluminum is the metal of choice in the tech industry.
It is a key part of Apple’s smartphones, tablets, laptops, and much more – which explains why the firm is so interested in cheaper and cleaner aluminum. This year, Apple bought the first batch of commercial aluminum from ELYSIS for use in the iPhone SE model of smartphones.
And the company recently invested $13 million into ELYSIS as part of a joint venture with two other firms. The Canadian and Quebec governments also put money in the venture.
That might sound relatively small, but it’s just the latest investment. Apple has been involved with ELYSIS since 2019 and has devoted a whopping $4.7 billion to projects aiming to reduce industrial greenhouse and waste emissions.
What’s important here is that ELYSIS works.
But this breakthrough in aluminum production isn’t just about smartphones. For the same reasons that Apple likes it, aluminum is also a critical resource in many other industries.
Take aircraft, for example. Aluminum is both lighter and stronger than steel, making it a natural choice for the aviation industry as far back as the Wright Brothers.
They used aluminum for the engine block of the Kitty Hawk, the world’s first powered aircraft. Similarly, Boeing Co. (BA) has been using mostly aluminum since the 1930s for its planes, and today’s popular Boeing 737 aircrafts are 80% aluminum.
Closer to Earth, regular and high-speed rail also uses aluminum to increase strength while cutting weight and thus fuel costs. Today, practically everything in passenger rail cars is made of the metal, which allows for a 35% weight reduction compared to a stainless-steel construction.
Even the auto industry is switching from stainless steel to aluminum, with Ford Motor Co.‘s (F) best-selling F-150 pickup truck now sporting an aluminum body.
All this goes to show how aluminum technology like ELYSIS’ impacts everything in our lives – far beyond just phones and laptops.
Making metal productions more efficient is fundamental to our way of life. And that’s where the parent company of ELYSIS, Alcoa Corp. (AA), comes in.
An acronym for Aluminum Company of America, Alcoa was founded in Pittsburgh in 1888 by Charles Martin Hall, who had discovered how to smelt aluminum not long before.
Today, Alcoa is the world’s eighth-largest producer of aluminum, with operations in the U.S., Caribbean, Africa, Australia, and more. Business has only grown over the years, as aluminum has been replacing stainless steel in many industrial applications.
More recently, Alcoa has shifted its focus to better margins, and is benefitting from the fact that rising energy prices in China and Europe have decreased production.
The cost of power accounts for about half of the cost of smelting aluminum, so higher power costs have meant less aluminum coming from China and Europe.
Of course, ELYSIS isn’t the only thing Alcoa has going on.
In Australia, Alcoa just got the green light for a new technology that heats up the last stage of aluminum processing with electricity instead of by burning natural gas. This will cut carbon emissions and reduce water use. No wonder they call it the “refinery of the future.”
To be sure, Alcoa’s per-share profit growth has been weak in the last few years. But the firm is now clicking on all cylinders.
In the most recent quarter, sales grew a very robust 40%, and earnings per share were off the chart – rising some 685%.
The stock price dropped after the company’s April 20 quarterly report as Wall Street got spooked by higher-than-expected inventory and lower sales.
Alcoa, however, expects this to be a temporary blip caused by Russia’s invasion of Ukraine, and sees aluminum demand growing by 2% in 2022.
Even so, Alcoa is crushing the market this year. It’s up over 5% year-to-date compared with a 15.91% decline for the S&P 500, as of this writing.
That makes it the ultimate backend play on the tech-centric net zero carbon economy with a stock you can count on for the long haul.
Cheers and good investing,
— Michael A. Robinson
Source: Strategic Tech Investor