How to profit from the decarbonisation theme

Companies that can profit from the electrification of the planet are grabbing the headlines. And for good reason – in a falling market, their share prices have been heading up. The Montgomery Small Companies Fund holds shares in many of these companies, including Allkem (ASX:AKE), IGO (ASX:IGO), and Pilbara Minerals (ASX:PLS).  And I believe there’s more upside ahead.

Back in April, I wrote, “More than 14 countries and 20 cities around the world have proposed banning the sale of fossil fuel-powered passenger vehicles (primarily cars and buses) in the near future”, adding “According to the International Renewable Energy Agency’s Electricity Storage and Renewables, Costs and Markets to 2030 report: Electricity storage will play a crucial role in enabling the next phase of the energy transition. Along with boosting solar and wind power generation, it will allow sharp decarbonisation in key segments of the energy market.

Since then, investors in many lithium, cobalt, nickel and copper producers – the ingredients powering and building the energy transition – have done extremely well. Allkem (ASX:AKE) is up almost 19 per cent, likewise IGO (ASX:IGO), while Pilbara Minerals (ASX:PLS) is up 77 per cent. Our small cap funds owns all of these names.

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