For Big Trend Profits, Follow the Money

Investors often follow big trends. And by investing in those trends when they’re out of favor, they stand to make a fortune. That’s especially true when the big trend involves support from the government, whether in the form of tax credits, direct payments, or loans.

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  • For instance, Tesla Motors (TSLA) grew in part due to tax incentives for buyers of electric vehicles. That benefit still exists today, giving EV buyers a potential $7,500 advantage over buying a traditional gas vehicle.

    Other automakers are getting into the game too. Ford Motors (F) is getting a government loan for billions to help convert its cars to EV models.

    The automaker is already up 21 percent over the past year, and revenues are up by double-digits, in part due to the popularity of an electric version of its F150 pickup truck. But there’s likely more upside ahead, especially as this trend continues even as investors are largely interested in other tech trends now.

    Action to take: Investors may like shares at current prices or on a drop lower. The automaker has a strong brand, and is going for just 9 times forward earnings. Plus, at the moment, shares yield about 4 percent.

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  • For traders, the upside is likely to continue. The September $15 calls, last going for about $0.55, could see high-double-digit returns or better in the coming months.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.