Cycling has never been so popular, whether it is middle aged men in lycra (‘Mamils’) taking to the roads and the parks at the weekends, or the ever increasing numbers taking to two wheels for their regular commute, cycling is now not only big business but also a sustainable investment opportunity.
So to accompany this year’s Tour De France, cycling’s greatest bike race, Neil Goddin co-manager of the Global Sustainable Equity strategy casts his eye over a few potential stocks to ride any investment cycle whilst also being good for the environment.
Here are the three stocks he is currently pedalling!
KMC Chain Industrial:
KMC is one of the world’s largest and leading producers of chains for bicycles, including BMX, electric, mountain and road bikes. It is a scale player and is benefiting from rising prices due to its reliability and quality. Two of the key drivers for the business are e-bikes and bike sharing schemes which have proliferated across major cities around the world. This new electric segment within the bike industry is home to a range of manufacturers, from stylish UK-based brand Volt to established mountain bike names such as Californian Specialized. Adding to the momentum, Uber announced in June that it plans to launch is new e-bike rentals service across Europe later this year.
Albemarle is one of the biggest global lithium producers. The commodity is a vital component in the batteries that power not only electric cars but also e-bikes, which are becoming increasingly popular and are an under-appreciated source of incremental demand. For instance, e-bike sales represented more than 9% of the total French bike market in 2017 and showed spectacular growth, c.90% versus the previous year. Although a more nascent segment in the UK, it is still estimated to have grown by 20% from 2016 to 2017.
German engineering firm Aumann is one of the world’s leading manufacturers of wire enamelling and coil winding technology, which are key components of electric motors. Again, this technology is used extensively in e-bikes, which although only a small part of its business, are becoming increasingly popular with the public as an alternative means of transport to cars for getting around cities. It also helps tackle air pollution, reduce congestion and increase access to cleaner transportation solutions.
Opinions and views from the Equities team at Kames Capital are not an investment recommendation, research or advice and should not be considered as such. Content discussing investment strategies and stocks is derived from and solely relates to the investment management activities of Kames Capital.
About the author
Neil Goddin is Head of Equity Quantitative Analysis and also has joint responsibility for managing funds within the Global Equities team. In addition to investment management responsibilities, he leads the team responsible for building and maintaining the Kames equity investment screen, which is used across the equity team, and advising on optimising risk levels in the funds. Neil’s role differs from most typical quant professionals as he sits within the fundamental team, has joint responsibility for managing funds and is an integral part of the equity team; rather than the more traditional model where quant teams sit separately, away from investors. Neil joined us in 2012 from LV Asset Management where he was Head of Investment Risk. Prior to that, he worked for WestLB Mellon Asset Management and Deutsche Asset Management in various risk-management roles. He has 19 years’ industry experience and is a Certified Risk Manager by the Global Association of Risk Professionals*.
*As at 28 February 2018.