Prior to the onset of the novel coronavirus, electric car stocks were the talk of the town on Wall Street. There was even discussion among some commentators that this niche automotive market would be the hottest play of the year.
The pandemic threw a wrench in the works, but a turnaround seems to be in progress for electric car stocks. Besides, this market has been on a strong growth trajectory for years. The International Energy Agency predicts that by 2030, the global electric vehicle fleet will increase to around 130 million.
That’s quite a jump from just over 5.1 million electric vehicles in 2018. So, which companies are poised to benefit from this ongoing trend? Here are four prime candidates:
There’s plenty of gas in the tank for these four electric car stocks, so let’s analyze them one by one.
Electric Car Stocks: Tesla (TSLA)
Tesla stock is the most obvious choice for electric vehicle market investors. After breaking through the $900 resistance level, the share price appears to have some conviction. TSLA stock buyers tried before a couple of times and failed, but this could be their chance to achieve $1,000 and beyond.
As InvestorPlace’s Ian Cooper observes, Tesla’s Model 3 was the best-selling electric vehicle in all of 2019. The company delivered in excess of 300,000 electric vehicles that year. This year, Tesla made a pledge to deliver 35% more vehicles.
Moreover, Tesla is quickly becoming a global presence. In its first year of being fully operational, Tesla’s Gigafactory 3, located in Shanghai, appears to be on track to deliver 100,000 of the company’s Model 3 vehicles. Clearly, the pandemic can’t slow Tesla’s production ramp-up for very long.
Some folks might call Nio the “Chinese Tesla,” but this electric vehicle upstart deserves to be respected in its own right. Granted, Nio’s automobile sales and cash holdings aren’t at the level of Tesla. On the other hand, Nio stock shares are much more affordable.
It’s been said that China’s economic recovery from the pandemic happened before America’s recovery. And Nio is a good example of this. The company’s month-over-month vehicle sales doubled in March and then again in April. That’s an incredible feat and a great sign for Nio investors.
Analysts at Goldman Sachs recently gave Nio stock an upgrade from “neutral” to “buy.” They also increased their price target on the shares to $6.40. That’s a perfectly reasonable objective from the current share price, which has recovered in line with Nio’s vehicle sales. The opportunity just seems ripe for the picking, especially for traders who don’t want to pay the high price of entry for TSLA stock.
Ford is easily the oldest automaker on this list, and to be honest, F stock isn’t a pure play in the electric vehicle market. Still, the company did make a pledge to roll out 16 fully electric vehicles through 2022. Plus, plans to build a Mustang-influenced electric vehicle crossover are in the works.
That, along with the planned rollout of Ford’s F-150 electric truck, could provide some serious competition to Tesla. And like Nio stock, F stock is much more affordable. Besides, a trailing 12-month price-earnings ratio of 16.3 suggests a compelling bargain at the current F share price.
In addition, Ford has a joint venture in China with Changan Automobile in which it’s planning to introduce a hybrid car with batteries built by BYD Company (OTCMKTS:BYDDF), a Chinese battery maker. The parties involved need government approval before they can develop a hybrid plug-in automobile using BYD’s batteries. Still, if the Chinese government does grant final approval, F stock could take a big leap higher.
Kandi Technologies Group (KNDI)
There’s a distinct possibility that you’re not very familiar with Kandi Technologies Group. However, you might consider KNDI as a relatively under-the-radar entry point into the electric vehicle market. Kandi supplies electric vehicle parts such as battery packs, drive motors, controllers and air conditioners. It works both within its home country of China and internationally, and it also provides parts for electric scooters and off-road vehicles.
Prior to the spread of the novel coronavirus, this company was making strides in the electric vehicle space. As Kandi’s investor relations manager Kewa Luo explains, “Kandi had a strong year in 2019 with solid performance. Full year 2019 revenue was $135.7 million, up 20.7%, and the gross margin expanded to 18.7%.”
The pandemic slowed production down temporarily, but that could be said about all of the companies featured on this list. The KNDI stock price has demonstrated multiple times that it’s capable of reaching $7 or more. Walter Hill of Carty & Company expects that “Kandi’s balance sheet could soar to a net book value of around $285 million or about $5.38 a share,” so higher prices for KNDI shares could be in store very soon.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.