There’s perhaps no hotter serious investing topic than electric vehicle stocks. EV stocks resonate across political and social discussions, as well.
However, investors appear largely split on this trade. EV bulls are quick to point out the long-term growth expected in this segment of the auto industry, soon to be most of that industry. Electric vehicles are set to revolutionize how we all get around on a daily basis. Additionally, these cars are going to play a key role in reducing carbon emissions and greenhouse gasses long-term.
On the political landscape, there’s also a ton of political support for the electric vehicle segment today. President Biden’s American Jobs Plan highlights significant investment in charging infrastructure and incentives to get more EVs on the road. Biden’s goal of having half-a-million EV chargers installed over the next few years could provide a big boost for the industry. A lack of infrastructure has been the source of blame for lower adoption rates than what otherwise has been seen in other countries.
For makers of electric-powered vehicles and all things related, that’s a great thing.
Still, these stocks have had a rough go of late. Investors appear to be dissuaded by relatively high valuations across the sector. Additionally, there’s a chip shortage at play right now, squeezing auto manufacturers across the board.
For those who believe these concerns are transitory, and the growth story is real, here are seven top picks to consider right now on the electric vehicle stocks landscape.
- Tesla (NASDAQ:TSLA)
- Fisker (NYSE:FSR)
- Nio (NYSE:NIO)
- XPeng (NYSE:XPEV)
- Churchill Capital (NYSE:CCIV)
- Chargepoint Holdings (NYSE:CHPT)
- Blink Charging (NASDAQ:BLNK)
Electric Vehicle Stocks: Tesla (TSLA)
Nearly any EV discussion starts with a mention of Tesla.
A now-iconic American electric vehicle maker, Tesla has been at the forefront of the EV revolution. Indeed, this company has paved the way for the growth its EV peers now enjoy today. Say what you will about the company’s CEO, but Elon Musk has shown the path forward for electric vehicles. Investors may easily forget how seemingly impossible this transition once appeared. (Need proof? See Better Place.)
Tesla’s share price has taken investors on a wild ride this year. TSLA stock started the year around the $900 per share range. Today, shares can be bought for a little more than $700 a pop, at the time of writing.
For some context, five years ago, shares were trading around $45 (adjusted for splits). Any stock with a five-year return of around 1,600% is worth checking out.
Indeed, as the bellwether of the entire sector, investors often look to TSLA stock as a gauge of how to value other companies. Given the outsized valuation Tesla has garnered of late, the sector-wide drop we’ve seen is understandable.
That said, Tesla’s growth trajectory has been impressive. The company’s been growing its revenues at around 28% a year, despite otherwise negative growth for the entire sector. Indeed, investors are enticed by the company’s brand, it’s positioning in the market and its current market share; having a charismatic CEO doesn’t hurt.
As the market share leader in the U.S., Tesla stands to benefit from rising EV adoption and infrastructure growth on the horizon.
One of the more recent EV options to come to market via SPAC merger last year, Fisker is an intriguing speculative play right now.
The company’s flagship Ocean electric SUV option is as intriguing as it is attractively priced. This SUV option is available to customers for only $37,500. Factoring in the EV tax credit, and investors will be able to drive home in one of the nicest-looking brand new SUVs for around $30,000.
Additionally, Fisker provides a leasing model to its potential buyers as well. With $3,000 down, Fisker buyers can lease its Ocean model for only $379 a month. That’s pretty attractive, when compared to the existing marketplace.
Indeed, Fisker’s product lineup sounds great.
However, this is still a story stock. Fisker won’t be delivering cars until late-2022. Accordingly, both customers and investors will have to be patient with FSR stock.
For those patent investors, the numbers Fisker has put out paint a nice picture. The company’s already received 14,000 preorders for its Ocean SUV. Indeed, it appears demand is materializing in the form of deposits, a situation which is very bullish for this EV start-up.
Again, Fisker is more of a speculative pick in the group. It’s a company with a troubled past. However, for those bullish on the company’s prospects, it’s attractively priced right now, trading at a price-to-book ratio of 3.64 compared to 4.02 for the Morningstar US Market TR index.
Just as any EV discussion begins with Tesla, no “top EV automaker” list is complete without a spot for Chinese EV maker Nio. Mostly, that’s because the Chinese market for electric vehicles is the world’s largest and fastest-growing.
Yes, competitors like Tesla and Xpeng (which I’ll get to later) are making inroads in this market. However, Nio is largely viewed as the poster child for the Chinese EV sector in the same way as Tesla was in the U.S. a few years ago. Partly that’s because Beijing is reportedly looking to transition entirely to EV/hybrid cars by 2035. That requires some pretty rapid growth.
For investors looking to capture some of this upside, there’s no better option than Nio. The company’s set some pretty aggressive targets of late, and has exceeded analyst expectations. While chip shortages may cause some problems with hitting these targets in the near-term, all indications are that Nio’s got the market share and Chinese domestic brand strength to pull off some pretty impressive long-term growth numbers.
Additionally, Nio’s looking to expand globally. The company recently announced its intentions of entering Europe. Speculators have also suggested U.S. expansion, which the company has talked about previously, is on the horizon.
Accordingly, Nio is increasingly being viewed as a global play on the EV market, with a robust Chinese base. That’s a strong growth thesis, in an already-fast-growing sector.
Another key Chinese EV player in the sights of investors is XPeng.
Currently, XPeng sits in third place in terms of market share in the world’s second-biggest economy after BYD and Nio. That said, this EV maker has continued to beat analyst expectations, and is one of the largest “start-ups” in the EV sector globally.
Last month, the company produced more than 5,100 vehicles. This number handily beat expectations, and long-term investors seem to think XPeng has a shot at growing its market share in China.
Yes, the company has some steep competition. And the aforementioned chip shortage issues plagues the entire sector right now. However, China’s a big enough market to have room for multiple players. China’s making some heavy investments in EV, and the targets the country has set are among the most aggressive in the world.
To be sure, XPeng’s stock price has certainly factored in a lot of bearishness of late. On a year-to-date basis, XPEV stock is down more than 27% at the time of writing.
Now, there are two ways to look at this. Momentum investors may shy away from such a company. However, long-term growth investors may see this 25% discount as a buying opportunity.
When one factors in how far this stock has fallen from its peak of $74.49 last year, we’re really talking about a 55% discount.
Churchill Capital (CCIV)
Lucid Motors is the company which is set to be brought public by Churchill Capital via a reverse SPAC merger later this year.
Following its listing at $10 per share (as per all SPACs), CCIV stock climbed to as high as $64.86 on the news that Lucid was the merger target. Since then, shares of CCIV have fallen off a cliff.
Today, investors can pick up shares of this SPAC at less than $20 per share. Now, that’s still a premium of about 100% to its initial offer price. However, considering how far this stock has fallen, it’s certainly a speculative play worth looking at.
One interesting element of this stock is the company’s proposed move into energy storage. The proposed business model re-uses old car batteries to create storage systems. With the focus on electrification at all-time highs, and concerns about the environmental impact of battery disposal picking up, this move has enticed some investors of late.
However, it appears the absence of a production timeline, as well as an exact timeline on when the merger will close (latest word is “sometime” in Q2), investors are getting antsy.
For those looking for a pre-revenue option in the EV space, Churchill/Lucid represents an intriguing speculative pick today.
As an EV charging company, Chargepoint remains a top choice for investors considering how to play the EV space.
Auto manufacturing in general is tough sledding. Over time, competition erodes margins, capital costs are high, and recalls, economic downturns, and a myriad of other issues can lead to near-term volatility some investors would prefer to avoid.
While the EV charging space isn’t one without risk, it’s also increasingly being viewed as the safer way to play this segment. Indeed, after President Biden announced his American Jobs Plan, which detailed investments targeted at dramatically increasing the number of U.S. charging stations available for use, CHPT stock ripped higher in recent weeks.
CHPT stock has settled down since then. However, investors looking to get into the EV charging space will want to look at Chargepoint. It’s the largest publicly traded option for investors right now. And the company’s got some pretty impressive growth plans over the near-, medium- and long-term.
For EV investors looking to spread their bets, EV charging plays are an intriguing option today. Of course, the rate of growth in the EV sector will determine a lot of the profitability for such companies over the long-term. Additionally, competition is likely to remain fierce.
However, Chargepoint’s current market share and growth trajectory paints a nice picture for long-term investors right now.
Blink Charging (BLNK)
The primary competitor to Chargepoint, Blink Charging is a company I’d suggest investors keep on their radar.
All the catalysts fueling Chargepoint hold true here. Blink is a smaller player in this space, though I don’t know that a company with a $1.53 billion market cap is all that small.
Investors can now get Blink shares on the cheap, as on a YTD basis, BLNK stock is down 14.8%, compared to CHPT stock’s 44.4% decline. With all the aforementioned catalysts seemingly in place to take stocks in the EV charging space on a nice ride, that’s a pretty attractive proposition for investors.
On an entirely speculative level, there are also indications Blink could be the target of Reddit’s r/WallStreetBets group, given its relatively high short interest of late. I’m not going to advocate buying any stock on such speculation, but it’s certainly a near-term catalyst to consider today. We’ve all seen the power retail investors wield over such stocks, and with Blink in the fray, anything’s possible.
However, over the longer term, EV charging stocks are ones I think will remain in the limelight. Investors focused on the overall growth in the EV sector will gravitate toward company-agnostic plays. Accordingly, this is a stock to keep on your radar today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.