Technology trends are already starting to shape the decade of the 2020s. This decade will be a transformative one in many ways. Fossil fuel companies are already starting to address carbon emissions.
For the automotive sector, the success of Tesla Motors (TSLA) is pushing other carmakers to also offer electric vehicles as well. The market is rewarding that news with much higher share prices.
Case in point? Ford Motors (F). Shares jumped to a multi-year high as the company announced it was planning to spend $30 billion to build out its electric vehicle fleet by 2025.
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The company has also demonstrated its electric F-150 model recently, including with a high profile test-drive by President Biden.
Ford’s prototype EV truck is ahead of that of Tesla’s. Given Ford’s existing sales relative to Tesla, the partial electrification of its fleet could have a big boost for the company’s bottom line—and even take sales from Tesla.
Action to take: It’s time to look at automotive companies as potential electric vehicle plays, and consider how their existing business can take on the high valuation in Tesla Motors. Viewed through that lens, Ford looks like a far better buy here on valuation and its ability to grow an electric fleet.
Besides buying shares, traders could buy the August $15 calls. Going for about $0.80, they offer triple-digit return potential if shares continue to rally from here.
Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.