Growth for autonomous vehicles is at a point of inflection. In 2019, the AV market was valued at $54.23 billion. Through 2026, the AV market is expected to grow at a compound annual growth rate of 39.5%. If this projection holds true, lidar stocks are set for robust growth in the coming decade.
Lidar is a technology used in corridor mapping, environment, exploration, urban planning and autonomous vehicles. Lidar sensor companies have scope for growth that’s beyond the automobile market.
By 2027, the automotive lidar market is expected to be worth $3.21 billion. Given this outlook, I am bullish on lidar stocks for the coming years.
With this overview, let’s discuss three lidar stocks that are worth holding in the portfolio for returns that outperform the index.
- Velodyne Lidar (NASDAQ:VLDR)
- Luminar Technologies (NASDAQ:LAZR)
- Collective Growth Corporation (NASDAQ:CGRO)
Lidar Stocks to Buy: Velodyne Lidar (VLDR)
VLDR stock is among the most attractive names among lidar stocks. As I write, the company has signed a strategic partnership with Beijing Trunk Technology. The partnership will “accelerate commercialization of driverless trucks in China’s logistics market.”
In China, the company already has a three-year sales agreement with Baidu (NASDAQ:BIDU). China is likely to remain the biggest electric vehicle market and potentially the biggest autonomous driving market.
And this is not the first partnership for Velodyne Lidar. The company already has 25 signed multi-year agreements as of fourth quarter. In addition, Velodyne has 183 projects in the pipeline. Once these projects are signed and start contributing to the revenue, growth can be robust.
For last year, the company delivered $94 million in revenue with record shipments of 4,100 sensors globally. A market capitalization of $4.25 billion for VLDR stock might still seem expensive.
However, autonomous vehicle growth might be at a point of inflection. Top-line growth can accelerate significant in the next five years. It’s not surprising that analysts have a “buy” rating for the stock with a target price of $30.
Luminar Technologies (LAZR)
After listing at $18, LAZR stock surged to a high of $41.80. Currently, the stock trades at $34.50. I believe that the stock will be attractive for accumulation around $25 levels.
One factor that I like about Luminar Technologies is strong partnerships that provide a clear validation of the company’s technology. Recently, Daimler Trucks and Torc Robotics partnered with Luminar to enable automated trucking. The former has also acquired a minority stake in Luminar.
In the passenger vehicle segment, the company has partnership with seven of the top 10 original equipment manufacturers, including Ford (NYSE:F), General Motors (NYSE:GM), Audi and Toyota (NYSE:TM).
Luminar’s order book has also been swelling and currently stands at $1.3 billion. From an anticipated revenue of $26 million for the current year, the company expects top-line growth to touch $837 million in 2025. Furthermore, by 2030 the company expects to deliver revenue and EBITDA of $5 billion and $2.5 billion, respectively.
The outlook is bright with industry tailwinds. I believe that the stock is worth holding for the next few years. However, gradual accumulation makes sense with broad markets looking stretched in the near term.
Collective Growth Corporation (CGRO)
In the last year, special purpose acquisition companies have provided investors with some attractive investment opportunities. CGRO SPAC has announced a business combination with Innoviz Technologies.
Innoviz is a manufacturer of lidar sensors and perception software. BMW has already chosen the company’s lidar (InnovizOne) for multiple vehicle lines. The company has already launched InnovizTwo, which is 70% cheaper than the first lidar model. The cheaper model will be used for the mass market and can trigger top-line growth.
From a financial perspective, Innoviz expects to deliver revenue of $9 million for the current year. Revenue is likely to increase to $581 million by 2025. This is likely considering the fact that the company’s product is applicable across lidar markets (drones, trucking, heavy machinery, robotaxis, logistics). Further, EBITDA margin is expected at 31% for 2025.
Innoviz is listing through a $1.4 billion SPAC deal. The valuations seem attractive as compared to its peers. Once the company secures more partnerships, the stock can surge higher. With the cheaper version of lidar sensors, I am bullish on the growth outlook for the coming years.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
