Have I ever told you how much I hate puns?
Not when I hear them, obviously, but when I make them myself – as I always wind up feeling about as cheesy as a Fremont Street lounge singer’s act during Elvis appreciation week.
However, every once in a while – it just fits…
And this week I simply HAD to make one – as the automobile market is entering something of a late winter.
Auto manufacturers are having to take a break from production…
But not because business is bad – but because there’s something their missing that is GREATLY needed in today’s automobiles – and there’s a huge shortage of it.
Have guessed what it is?
If not – keep reading to understand my pun.
Now, as I said, things haven’t been bad for the auto industry…
But now they find themselves in the unenviable position of having to put a freeze on production – due to the shortage of a very important part to the automobiles of the 21st Century.
It’s not catalytic converters…
It’s not batteries…
And it’s definitely not foam for seats (though there WAS a bit of a shortage on that too, due to the pandemic restrictions and China holding what seems to be a monopoly on)…
No, the part that is holding up companies like Ford (F), Tesla (TSLA) and Honda (HMC) – is something you probably never dreamed of being a problem…
Semiconductors.
While we really haven’t talked about it, the truth is, there’s been a bit of a semiconductor shortage for a while now – and in today’s age where EVERYTHING is a run by a computer (including our refrigerators and dishwashers) – that’s a huge problem…
A problem compounded by the inconveniences of the pandemic lockdowns – as well as a shortage in the right kind of sand needed to make the kinds of computer chips that run our 21st Century digital world.
Needless to say, the shortage is impacting almost ALL industries across the board…
However, not many industries have been hit as hard as automakers.
How hard?
Well, recently Ford Motor announced that it will wind production down at its Dearborn, Michigan plant (which is the one that makes their most popular and profitable vehicle, the F-150 pickup truck) due to the chip shortage…
So, for Ford to make that kind of a costly decision – you know that this shortage is more than just a minor inconvenience.
But Ford isn’t the only company hurting…
Chinese electric car maker Nio (NIO) said that it’s stopping production for five days at its Hefei plant forcing the company to LOWER its first-quarter delivery expectations by 1,000 vehicles.
Which will DEFINITELY cut into the profits this year.
But again, this is something that the ENTIRE industry is dealing with…
One of General Motors’ (GM) Mexico plants has been down for almost two months and one of its Missouri plants is in the middle of a two-week shutdown due to the shortage.
Honda put a freeze on production at plants in the U.S. and Canada…
While Tesla wrote in its February 10-K filing that production may hit a speedbump or wall due to a “shortfall of microchip supply” – but we probably won’t know what the REAL impact is for a while.
And this is JUST the auto industry.
Do you think the computer industry is faring any better?
Or…
What about the home electronics? Your TVs, electronic thermostats and even your vacuum cleaners all run digitally these days…
If you don’t think they’re feeling the semiconductor squeeze – you’re making a grave mistake.
So, how do we, as investors, take advantage of this misfortune?
Well, instead of investing in the companies that make the semiconductors themselves – why not look at the stocks of the companies that actually give semiconductor companies the materials and tools they need to CREATE these computer chips?
One company you could look at – is U.S. Silica Holdings (SLCA) – the market’s BIGGEST play on the sand and silica the two things that absolutely necessary to make these little suckers…
However, if that’s not your style, you could also take a gander at Applied Materials (AMAT) – the company that makes the machines that MAKE the computer chips!
There’s a bunch of contrarian plays out there if one were to be so inclined to look.
Do yourself a favor – and take a look – there could be a huge opportunity there for some fast cash!
Oh…
Before we go, if you liked this information and are looking for actual recommendations in the same vein – consider becoming a member of GorillaTrades today!
Once you do – you’ll understand why we’ve become one of the most trusted stock recommendation sites on the entire web!
Hopefully, you take me up on my offer…
Would be great to have you aboard!
“I think it’s my adventure, my trip, my journey, and I guess my attitude is, let the chips fall where they may.” – Leonard Nimoy