Could we finally be on the cusp of a new bull market for UK and US shares? The successful rollout of Covid-19 vaccines (especially in Britain) is giving investor confidence a bump in start-of-week trading. This is boosting hopes that the global economy will experience a robust rebound in the second half of 2021.
Global share markets are also rising on signs that central banks and governments the world over will keep printing money to aid the recovery. There are clearly reasons, then, for stock investors to be optimistic on this slightly-less-chilly Monday morning. But it’s too early to say that the new bull market has begun in earnest, in my opinion.
The UK share price rally that kicked off in early 2021 evaporated as quickly as it began. And the factors that forced the last rally to fizzle out — namely the emergence of Covid-19 variants and Brexit-related concerns — remain very much in play in mid-February.
Electric dreams
Aptiv (NYSE: APTV) is a US share I think can deliver big profits in 2021 whatever happens to the broader global economy. In fact, I’d buy this US share with the aim of holding it for at least a decade.
Not even a colossal economic downturn could derail rising demand for electric vehicles (EVs) last year. In Britain alone, a whopping 108,000 EVs rolled out of showrooms in 2020, according to the Society of Motor Manufacturers and Traders (SMMT). This was up more than 180% from 2019 levels. And this bodes well for companies that make these new-age vehicles, the components to get them rolling, and the infrastructure to power them up like Aptiv.
This particular US share provides the architecture that makes cars safer, greener, and better connected. There’s another reason why I like this auto specialist too. It’s an expert in the field of autonomous cars, another hot growth market for this new decade.
A top US growth share?
EV sales could take a hit if governments pull financial incentives for the purchase of low-carbon vehicles, or make them less generous. The Covid-19 crisis is putting huge strain on government spending all over the globe. And this could hit green schemes like this, too, which could in turn reduce demand for Aptiv’s products. Rising investment in hydrogen poses a long-term risk to EVs as well.
Things are looking good for the moment, however. Indeed, global car manufacturers are boosting spending on EVs as they leave fossil fuel-powered vehicles behind. Today Jaguar Land Rover announced that luxury brand Jaguar will become an all-electric manufacturer from 2025.
City analysts reckon Aptiv’s earnings will soar 113% in 2021. They believe, too, that annual earnings will rise an extra 32% next year. These projections leave the company trading on a forward price-to-earnings (P/E) ratio of 40 times. This reading is toppy on paper and is certainly not guaranteed. But I think it’s a reading that’s a fair reflection of the US share’s bright long-term earnings outlook.
