Electric vehicles (EVs) have become all the rage this year. Obviously it helps that a couple well-known automakers really hit their stride in 2020, despite the novel coronavirus. As a result, a whole host of electric vehicle stocks have been flying higher.
Are all of them worthy of being owned? No, not at all.
Just like when any industry comes to life — like cannabis a few years ago or tech a few decades ago — there will be the winners and there will be the losers. I’m not saying that the industry is bound to suffer catastrophic losses, like the two groups I just mentioned eventually did, but just that not every stock is going to be a winner down the road.
I do find it interesting that these electric vehicle stocks seem to garner such a high valuation. That’s in contrast with traditional automakers garnering such low valuations. It’s as if EV producers are vastly more profitable, when that is not the case.
In any regard, many of these businesses have growth and momentum. With that in mind, let’s look at some electric vehicle stocks to buy.
- Tesla (NASDAQ:TSLA)
- Nio (NASDAQ:NIO)
- Workhorse (NASDAQ:WKHS)
- Boyd (OTCMKTS:BYDDF)
- Ford (NYSE:F)
- Plug Power (NASDAQ:PLUG)
- Fisker (NYSE:FSR)
Electric Vehicle Stocks: Tesla (TSLA)
How in the world can we talk about electric vehicle stocks and not talk about Tesla? It’s the global leader in EVs and it just keeps growing.
The company commands a market capitalization north of $550 billion, making it one of the most valuable companies in the country. It’s made Elon Musk the second-richest person in the world.
What Tesla has done is absolutely staggering. It is an inspiration at every level. Musk continues to hold a major stake in the company, helping to soak up supply out of the open market and allow the share price to push higher.
In any regard, Tesla is the undisputed leader in EV production. While there were times of liquidity issues, the stock’s large run has allowed Tesla to raise additional funds and expand its footprint. With operations in China and the U.S., Tesla is also looking to set up shop in Europe.
Further, having an energy business in its back pocket only helps diversify its operations. I think that’s one reason why Tesla also has more upside potential than many of its peers.
Nio
Despite Tesla’s monster rally over the past year, up 786%, it lags another one of our electric vehicle stocks: Nio.
Nio shares were left for dead. In October 2019, just over a year ago, Nio stock dropped to as low as $1.19. Now, it has a 52-week high of $57.20. Its one-year return of 1,900% has created decades worth of returns in just 13 months.
Nio’s momentum goes beyond its stock price, though.
The company continues to churn out record monthly deliveries, as demand for EVs booms in China. Obviously that is a tailwind for Tesla too, but in a country with 1.4 billion people, there is room for more than a few electric vehicle stocks to thrive.
In its most recent update, Nio said it delivered 5,291 vehicles in November. That figure is up more than 100% from the same month a year ago. This has been the theme for the year too, with year-to-date deliveries of 36,721 vehicles climbing about 111% year over year. That’s despite the disruptions in Q1 from the coronavirus.
Over the past year, Nio has been extremely agile in its business. It shored up operations to drastically improve its margins, while inking new deals (be it via secondary offerings or agreements with Chinese cities) to shore up its financials.
Well, the move is paying off in spades as Nio stock has soared.
Workhorse (WKHS)
Workhorse is one of the newer companies to the EV space. With the momentum we’re seeing in electric vehicle stocks, it’s no surprise to see new SPAC offerings pop up. Not all of these opportunities are good for investors, though.
For instance, Nikola (NASDAQ:NKLA) seems to have far too many headaches for investors’ own good. Its reworked deal with General Motors (NYSE:GM) is a far cry from the original agreement we saw earlier this year, highlighting some of the risk in this group.
I think Workhorse could be different.
Workhorse is starting to get some revenue under its belt. Forecasts for 2020 call for revenue of just $2.17 million, $1.54 million of which is expected to come in the fourth quarter. Essentially, most of its 2020 revenue is just now starting to come in.
However, the forecasts for 2021 jump significantly, up to $138.2 million. In 2022, which is admittedly a long ways off, revenue expectations climb to $302 million. If a company can go from having ~$2 million in sales at year-end 2020 to more than $300 million at year-end 2022, investors have to know about it.
Obviously there will be bumps along the way (like the recent delay with the U.S. Post Office) and likely capital raises and other events, but this type of growth must be pointed out.
BYD Company (BYDDY)
It’s not often investors want to go to the over-the-counter exchanges to pick up their stocks. But in the case of BYD, this stock may be an exception.
This company is actually very established and not a name many know off the top of their head. BYD Company is based in Shenzhen, China and is a producer of various transportation vehicles. BYD makes everything from electric bikes, to buses, cars, batteries, electronics and railroad solutions. This company has its hands in everything and it’s not a newcomer, either.
Founded in 1995, BYD Company has been coming up with realistic solutions for real-world problems for 25 years. From the company:
BYD’s NEVs [new energy vehicles] have ranked No.1 in global sales for three consecutive years (since 2015). Developing electric vehicles that are intelligent and connected, BYD is inaugurating a new age of automotive innovation.
Plus BYD Company counts Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) as a major shareholder, giving the company a big boost in credibility.
Ford (F)
Ford is the most traditional automaker on this list, but its push toward electrification is noteworthy.
The company has been pouring billions of dollars into the tech side of its business — including electrifying its current lineup.
Ford’s Mustang Mach-E doesn’t look like a Mustang, but it performs better than one. Its specs call for an acceleration from 0-60 mph to just 3.5 seconds. The company estimates 300 miles of driving range to go with it. The vehicle is slated for release in 2021 and already has many fans clamoring for it.
There are others on the way too, with the Mustang and the F-Series pickup being investors’ two largest focal points.
The F-Series pickup is the country’s best-selling vehicle. Its move to a hybrid offering is a natural bridge to an eventual electric offering, something Ford is working on. That goes for a number of other vehicles that are in production already.
In short, look for Ford to transition its fleet to electric offerings — and let’s see if Ford stock gets a premium for doing so.
Plug Power (PLUG)
Some would be hesitant to include Plug Power in their list of electric vehicle stocks. Given that its business primarily revolves around hydrogen and fuel cells, that’s a fair argument.
I would argue that because of its clean-energy solutions, Plug Power shouldn’t be discarded simply because it is not a sole producer of electric vehicles. The company says that it has “sustainable fuel cell solutions for an electrified world.” It adds:
Plug Power is enabling the paradigm shift to an electrified world by innovating clean, cutting-edge hydrogen fuel cell solutions across a broad spectrum of transportation, aerial, and stationary applications.
With that, we turn to its growth. Analysts expect roughly 37% growth this year and 36% growth in 2021. Should those numbers come to fruition, Plug Power will churn out $440 million in revenue next year. Looking two years ahead, analysts expect more than $560 million in sales.
While the company does have long-term debt of $225 million and current debt of $74.8 million, (about $300 million combined), its assets are strong. With cash and equivalents of almost $450 million and current assets of $778 million, we don’t have to worry about Plug Power’s liquidity.
Fisker (FSR)
Many would say Fisker is the most speculative name on this list of electric vehicle stocks. I find it hard to disagree with them, with Fisker only coming public on Oct. 30. Like many others, Fisker came to the public markets via a SPAC offering, thus the charts do go back a bit further than Oct. 30.
This company is still very much in the early days, although it is now gearing up for a much larger launch. As such, it is only taking reservations, but not actually producing its vehicles yet.
However, the all-electric Ocean SUV does look pretty sweet.
Citi analysts recently assigned a buy rating and $26 price target. However, the company plans to begin production in the fourth quarter of 2022, so investors have plenty of time. If we can get this name on a deep discount sometime next year, it may pay off with a handsome reward.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
