Group 1 - The investment in Solid Power (SLDP) is viewed positively due to management's proactive steps to leverage technological advancements in the industry [1] - The industry is considered promising, reflecting a strong foundation in finance and strategy from a decade of experience in banking, mining, and energy sectors [1] - The investment philosophy emphasizes thorough research and a long-term perspective, which aids in navigating various market cycles successfully [1] Group 2 - The portfolio strategy has evolved to focus on a balanced approach, with an increasing emphasis on value stocks while still maintaining exposure to growth opportunities [1] - The aim is to uncover promising under-the-radar stocks that may not yet be recognized by the broader market [1] - The background in auditing and finance, combined with hands-on investing experience, provides unique insights and actionable ideas for investors [1]

Group 1 - The investment in Solid Power (SLDP) is viewed positively due to management's proactive steps to leverage technological advancements in the industry [1] - The industry is considered promising, indicating a favorable outlook for investments in this sector [1] - The investment philosophy emphasizes thorough research and a long-term perspective, which aids in navigating market cycles effectively [1] Group 2 - The analyst holds a beneficial long position in the shares of QuantumScape (QS), indicating confidence in the company's future performance [2] - The article reflects the author's personal opinions and is not influenced by external compensation, ensuring an unbiased perspective [2]

Group 1: Company Performance - Subaru Corporation (FUJHY) has gained about 22% year-to-date, outperforming the Auto-Tires-Trucks sector, which has returned an average of 3.5% [4] - The Zacks Consensus Estimate for Subaru's full-year earnings has increased by 12.6% over the past 90 days, indicating improved analyst sentiment and a more positive earnings outlook [3] - Subaru is part of the Automotive - Foreign industry, which includes 24 companies and has gained about 0.8% year-to-date, further highlighting Subaru's strong performance within its industry [5] Group 2: Industry Context - The Auto-Tires-Trucks sector includes 99 individual stocks and currently holds a Zacks Sector Rank of 12, reflecting the strength of this sector [2] - QuantumScape Corporation (QS), another stock in the Auto-Tires-Trucks sector, has significantly outperformed with a year-to-date return of 149.5% [4] - The Automotive - Original Equipment industry, to which QuantumScape belongs, is ranked 85 and has seen a decline of 1.5% year-to-date, contrasting with Subaru's performance [6]

Industry Overview - The auto industry is rapidly evolving with electric vehicles (EVs) and autonomous vehicles (AVs) becoming mainstream, reshaping travel and corporate strategies regarding mobility [2] - Tesla's dominance in the EV market is being challenged by strong competition from Chinese automakers and traditional car manufacturers, along with new EV-only startups [2] Technology Advancements - Improvements in battery technology, including longer lifespan, faster charging, and reduced costs, are making EVs more appealing [3] - The expansion of fast-charging networks is addressing one of the major concerns for EV buyers: charging time [3] Market Growth Projections - The U.S. EV market was valued at approximately $131 billion in 2024 and is projected to grow to $439 billion by 2034, reflecting a compound annual growth rate of 13.6% [5] - The International Energy Agency anticipates global EV sales to surpass 20 million units in 2025, accounting for over 25% of all cars sold worldwide [5] - The global AV market is expected to increase from about $106 billion in 2021 to over $2.3 trillion by 2030 [6] Investment Opportunities - Both EVs and AVs present significant long-term investment opportunities, characterized by growth and innovation [7] - Notable companies for investors include QuantumScape Corp. (QS), Alphabet (GOOGL), and Rivian Automotive (RIVN) [7] Company Highlights: QuantumScape - QuantumScape is advancing its solid-state battery technology, achieving a major milestone with the introduction of the Cobra manufacturing process, which is 25 times faster than the previous system [9] - The company has begun customer testing of its new battery cells, with significant interest from leading automakers [10] - QuantumScape recorded $12.8 million in customer billings for the first time in Q3, indicating progress towards commercialization [12] Company Highlights: Alphabet (Waymo) - Waymo, Alphabet's autonomous driving unit, operates the most advanced robotaxi service in the U.S., with fully driverless services in several major cities [14][15] - The company has received substantial funding for research and fleet expansion, enhancing its competitive position [16] - Waymo recently began offering driverless freeway rides, marking a significant milestone in autonomous driving [17] Company Highlights: Rivian - Rivian is focusing on expanding its EV market presence with plans for lower-priced models, including the R2 midsize SUV expected to launch in 2026 [19][20] - The company has a strategic partnership with Volkswagen, which plans to invest up to $5.8 billion, aiding Rivian's next-generation electrical architecture [21] - Rivian aims to reduce material costs by about 20% for its second-generation models and nearly 50% for the R2, positioning itself for growth [22]

Core Viewpoint - QuantumScape, a solid-state battery developer, has faced challenges in commercialization and revenue generation, leading to a decline in stock price and market cap, but it has potential for future growth in the solid-state battery market [1][2][3]. Company Overview - QuantumScape went public through a SPAC merger nearly five years ago, with an initial stock price of $24.80, which has since dropped to around $16 [1]. - The company currently has a market cap of $9.8 billion, making it a speculative investment with uncertain valuation [3]. Business Model - QuantumScape focuses on developing solid-state batteries that utilize solid electrolytes, offering advantages such as higher charging capacities and shorter charging times compared to traditional lithium-ion batteries [4]. - The QSE-5 battery, designed for electric vehicles (EVs), boasts an energy density of 844 Wh/L and can charge from 10% to 80% in just 12.2 minutes [7][8]. Production and Partnerships - The company has shifted from manufacturing its own batteries to licensing its technology to automakers, starting with Volkswagen's PowerCo, to generate higher-margin royalties [10]. - QuantumScape has expanded its partnership with Volkswagen, securing milestone payments that extend its cash runway through 2029, allowing for increased sample production and customer acquisition [11]. Market Potential - Analysts project QuantumScape to generate $4 million in revenue by 2026 and $59 million by 2027, contingent on successful production ramp-up and licensing agreements [12]. - The solid-state battery market is expected to grow at a compound annual growth rate (CAGR) of 56.6%, from $1.18 billion in 2024 to $15.07 billion in 2030, indicating significant growth opportunities for battery manufacturers [13]. Valuation Concerns - Even with projected revenue growth, QuantumScape's market cap could decline over 60% to $3.86 billion by 2030 if it trades at 30 times sales, suggesting that current valuations may be overly optimistic [14]. - The company is viewed as having potential but may not achieve record stock highs in the next five years unless growth accelerates significantly or valuations decrease [15].

Core Insights - Steady earnings growth is valued by company executives and analysts as a sign of profitability, but earnings acceleration has a stronger impact on stock prices, with leading stocks often experiencing this acceleration before price increases [1][3] - QuantumScape Corporation (QS), Silicon Laboratories Inc. (SLAB), and Affiliated Managers Group, Inc. (AMG) are currently demonstrating strong earnings acceleration [1][8] Earnings Acceleration Definition - Earnings acceleration refers to the incremental growth in a company's earnings per share (EPS), specifically when the quarter-over-quarter earnings growth rate increases over a specified time frame [2] Importance of Earnings Acceleration - Unlike earnings growth, which may already be reflected in stock prices, earnings acceleration helps identify stocks that have not yet attracted investor attention, leading to potential price rallies [3] - An increasing percentage of earnings growth indicates a fundamentally sound company, while a sideways or decelerating growth percentage may signal consolidation or a downturn [4] Screening Parameters - The screening process involves identifying stocks where the last two quarter-over-quarter EPS growth rates exceed previous periods' growth rates, with projected EPS growth rates for the upcoming quarter expected to surpass prior periods [5][6][7] - Additional criteria include a current price of at least $5 and an average 20-day trading volume of 50,000 or more to ensure adequate liquidity [7] Top Stocks Identified - The screening narrowed down approximately 7,735 stocks to nine, highlighting QS, SLAB, and AMG as top candidates showing strong EPS acceleration [8] - QuantumScape focuses on solid-state lithium-metal batteries for electric vehicles, with an expected earnings growth rate of 21.3% for the current year [9] - Silicon Laboratories specializes in analog-intensive mixed-signal solutions, with an expected earnings growth rate of 152.3% for the current year [10] - Affiliated Managers provides investment management services, with an expected earnings growth rate of 17.7% for the current year [11]

Core Viewpoint - The Zacks Automotive - Original Equipment industry is expected to benefit from a combination of new tax incentives for car buyers, rising demand for advanced electronic systems, and strategic partnerships among key players in the sector [1][3][4]. Industry Overview - The Zacks Automotive - Original Equipment Industry includes companies that design and produce passive safety systems, driveline technologies, and metal forming technologies for various types of vehicles, including electric and hybrid models [2]. - The industry also provides equipment financing and leasing solutions, primarily through third-party funding arrangements [2]. Factors Influencing Outlook - The Trump administration's tax incentive allows qualifying car buyers to deduct up to $10,000 on interest paid for new U.S.-assembled vehicles, potentially increasing vehicle demand and the need for related equipment [3]. - Demand for advanced electrical and electronic systems, such as ADAS and infotainment features, is increasing, allowing OEMs to supply more high-value components and improve profitability [4]. - Protectionist tariffs, including a 25% tariff on imported engines and transmissions starting May 2025, are raising costs for auto equipment manufacturers [5]. Industry Performance - The Zacks Automotive - Original Equipment Industry holds a Zacks Industry Rank of 89, placing it in the top 37% of over 250 Zacks industries, indicating positive near-term prospects [6][7]. - Despite this ranking, the industry has underperformed the S&P 500 and its sector over the past year, returning 2.9% compared to the S&P 500's 19.1% and the broader sector's 24.5% [9]. Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 17.33X, which is lower than the S&P 500's 18.59X and the sector's 23.51X [13]. - Over the past five years, the industry's EV/EBITDA ratio has ranged from a high of 22.17X to a low of 8.07X, with a median of 13.51X [14]. Notable Companies - **Magna International Inc. (MGA)**: A global automotive supplier focusing on innovation and technology development, with a Zacks Rank of 2 (Buy) and an average earnings surprise of 7.67% [16][17]. - **QuantumScape Corporation (QS)**: A battery developer for electric vehicles, known for its solid-state battery technology, with a Zacks Rank of 2 and a projected EPS growth of 21.3% for 2025 [21][22]. - **Luminar Technologies, Inc. (LAZR)**: A company specializing in autonomous vehicle sensors, with partnerships with major automakers and a Zacks Rank of 2, projecting a 52.2% EPS growth for 2025 [25][26].

Core Insights - QuantumScape Corp. (NYSE:QS) experienced a significant drop in share prices, falling by 7.98% to close at $14.64, as investors awaited catalysts to stimulate buying interest [1][2] - The company announced a narrowing of its net loss in Q3, reducing it by 11.5% to $105.8 million from $119.6 million year-on-year [3][4] - Following the earnings report, TD Cowen raised QuantumScape's price target to $16 from a previous $5, indicating a 9% upside potential based on the latest closing price [4] Trading Performance - QuantumScape's stock performance aligned with the broader market, which showed a lackluster performance as investors remained cautious ahead of potential government shutdown developments [2] - The company's chief legal officer sold over 178,000 shares last week, which may have contributed to the selling pressure [2] Financial Performance - The loss from operations decreased by 11.6% to $114.99 million compared to $130.16 million in the same quarter last year [4]

Core Insights - Electric vehicle (EV) adoption is slower than anticipated, but the future of transportation is electric, with Tesla being the most recognized name in the sector. However, Tesla's dominance is being challenged by increasing competition, particularly from Chinese automakers [1][10] - QuantumScape is innovating in the battery sector, developing solid-state lithium batteries that could significantly impact EV performance and cost. The company is making progress despite being pre-revenue [2][18] Tesla's Performance - Tesla experienced its first annual delivery decline in 2024, with sales dropping 13% year-over-year in Q1 and another 13.4% in Q2. Although Q3 saw record deliveries, this was largely due to buyers taking advantage of the expiring $7,500 federal EV tax credit, leading to expectations of weaker Q4 volumes [4][10] - Sales in Europe have sharply declined, with October sales down 89% in Sweden, 86% in Denmark, and 50% in Norway compared to the previous year. The only exception was France, which saw a slight increase in sales [5] - In China, Tesla's sales fell to 26,006 vehicles in October, marking the lowest monthly total in three years due to softening demand in a competitive market [5] - Despite introducing more affordable versions of its Model 3 and Model Y, Tesla has not launched new models to compete with Chinese rivals offering feature-rich EVs under $30,000. Additionally, regulatory credit sales, a key profit driver, are declining due to changes in U.S. policy [6][10] QuantumScape's Advancements - QuantumScape has made significant strides in solid-state battery technology, including the introduction of the Cobra manufacturing process, which is 25 times faster than its previous system. This advancement is crucial for cost-effective mass production [11][12] - The company has begun shipping its new B1 battery samples and has received positive evaluations from several automakers, indicating growing industry confidence [11][14] - QuantumScape recorded $12.8 million in customer billings for the first time in Q3, marking a significant milestone in its commercial activities [14] Market Outlook - The Zacks Consensus for QuantumScape's bottom line indicates a year-over-year improvement of 21.3% and 12.6% for 2025 and 2026, respectively, with a narrowing consensus mark for losses over the past 60 days [15] - In contrast, the Zacks Consensus for Tesla's 2025 EPS suggests a year-over-year decline of 32%, although it anticipates around 50% growth from projected levels in 2026 [16] Conclusion - Tesla's market position is under pressure due to slowing sales, tightening margins, and increased competition, while QuantumScape's technological advancements and growing partnerships position it as a promising long-term investment opportunity [17][19]

Core Insights - QuantumScape Corp. has made significant progress in the battery space, with its stock surging approximately 220% year-to-date, including an 83% increase in the last three months, outperforming the industry [1][5] - The company has achieved operational and technological milestones that could enhance its long-term value [1] Technological Advancements - QuantumScape's breakthrough is the Cobra separator process, a next-generation manufacturing method that enhances the commercial viability of solid-state batteries [3] - The Cobra process is 25 times faster than the previous Raptor system, allowing the company to transition from Raptor-based B0 samples to the latest B1 samples [4][5] - In Q3 2025, QuantumScape began shipping B1 samples to automotive partners, marking a significant milestone as several automakers are now evaluating these cells [7] Industry Validation and Partnerships - QuantumScape demonstrated its technology at the IAA Mobility show in Munich, showcasing a Ducati MotoE race bike powered by its QSE-5 solid-state cells, achieving an energy density of 844 Wh/L [8] - The partnership with Volkswagen's PowerCo has deepened, with PowerCo pledging up to $131 million to accelerate the QSE-5 pilot line development [11] - The company has also signed a joint development agreement with another major automaker and partnered with Murata Manufacturing and Corning to scale production of ceramic separators [12] Financial Position and Business Model - QuantumScape ended Q3 with approximately $1 billion in liquidity, extending its cash runway through 2029, aided by a $263.5 million capital raise [13][14] - The company reported its first customer billings of $12.8 million in Q3, primarily from Volkswagen's PowerCo, indicating early signs of monetization [15] - QuantumScape is focused on a capital-light licensing model, prioritizing technology development and collaboration over costly gigafactory builds [14] Future Outlook - The advancements in the Cobra process, the initiation of B1 sample shipments, and successful real-world demonstrations indicate that QuantumScape's technology is moving towards practical applications [16][17] - Despite the long journey ahead for solid-state battery commercialization, QuantumScape possesses both technological validation and financial stability to support its progress [18]