Investors who want to piggyback on the growth of popular companies should look at ancillary businesses that grow in parallel because of their relationship to the popular business. For investors who find Tesla (TSLA) appealing, an ancillary company to consider is Contemporary Amperex Technology Co. (CATL) because it makes Tesla’s battery packs. In this article, we’ll cover how to buy CATL stock, but you may want to just speak directly with your financial advisor if you’re interested in adding it to your portfolio.
Who Is Contemporary Amperex Technology Co. (CATL)?
Contemporary Amperex Technology Co. (CATL) is a global leader in the development and manufacturing of lithium-ion batteries. The company was founded in 2011 by the same team that created ATL, which is the world’s leader in lithium-ion batteries for consumer electronics. Over the last 10 years, CATL developed a strategic partnership with BMW and joint ventures with Geely Auto Group, FAW Group and SAIC Motor.
CATL joined the Shenzhen Stock Exchange in 2018. Its Tibin production base was certified as the world’s first zero-carbon batter factory in 2022. And, as of 2021, it has been ranked No. 1 globally in EV battery consumption volume for five consecutive years.
Why Do Investors Want to Buy CATL Stock?
When evaluating individual stocks, investors often look for consistent growth, competitive advantages and the ability to diversify their holdings. By looking at a company’s suppliers and customers, there are hidden gems that benefit from the growth of one company without facing the same risks.
For example, investors in TSLA and CATL are both up significantly over the past five years – 900% and 766%, respectively. However, TSLA stock has been quite volatile in 2022 and it is down 40% since the beginning of the year. By comparison, CATL stock is down, as of mid-June 2022, some 20% over the same timeframe, about the same as the S&P 500’s decline.
Buying CATL stock is one way to participate in Tesla’s growth without being wholly exposed to the auto industry’s niche. Its battery technology may have applications outside the auto industry, which provides diversification to its revenue possibilities.
How to Buy CATL Stock
Many international company shares are available for purchase on American stock exchanges through American depository receipts (ADRs). However, not all foreign stocks have an ADR equivalent. CATL stock is listed on the Shenzhen stock exchange. Unfortunately, only a limited number of U.S. brokerage companies allow trading in stocks listed on Chinese exchanges.
Here is how to buy CATL stock if you’re an American investor:
- Purchase through Interactive Brokers: Interactive Brokers is one of the few U.S. brokerages that allow American investors to buy Chinese class A shares.
- Buy a battery-themed ETF that owns CATL: There are several ETFs that target the electric battery market and own shares in CATL. A few options include CNXT, KBA, BATT and KARS.
- Invest in a China-focused ETF: Several ETFs focus on companies within specific regions of the world. ETFs focusing on China are a good option to acquire shares in CATL. Examples include MCHI, CQQQ and KGRN.
You can buy ETF shares through your existing brokerage account, by opening a new one or by placing an order with your financial advisor. Remember that ETF holdings can change without notice. Before buying an ETF, visit its sponsor’s website to see a current listing of its holding to verify that it still owns shares of CATL.
Should You Buy CATL Stock?
Before buying individual shares of a company, many advisors recommend taking care of your baseline financial tasks. You can follow these steps to build your financial foundation before investing in individual stocks, but we recommend speaking with your financial advisor to create a plan specific to your unique situation.
- Max out your company retirement plan and IRA.
- Build an emergency fund to cover three to six months of expenses.
- Purchase adequate life and disability insurance coverage.
- Eliminate high-interest debt (like credit cards).
- Create an estate plan for your heirs.
Once you’ve followed these steps, deposit money into a brokerage account where you can buy and sell individual stocks. This is the money that you can invest in higher-risk investments that won’t affect your ability to hit your other money goals.
The Bottom Line
Some investors want to take advantage of the popularity of Tesla’s stock without actually owning it. In every industry, there are companies that benefit from industry growth because they are integral components of that company’s success. Now that you learned how to buy CATL stock, the next step is to talk to a financial advisor to discuss how this investment may fit into your portfolio.
Tips for Investing
- Financial advisors help investors analyze various investment options and create a plan of action to meet their goals. Before investing in an individual stock, mutual fund or ETF, talk with your advisor to understand how it fits within your portfolio. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- When investing your money, it is important to diversify your assets among many different types of stocks and bonds. This helps you gain exposure to multiple sectors of the market and benefit from their growth. Our asset allocation calculator helps you select a profile that’s right for you based on your answers to simple questions.
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