The markets tried to recharge the clean-energy bubble of February 2021 last week. Of course, Reddit’s r/WallStreetBets is probably (at least partly) responsible for the sector’s short-lived rally. What do I mean? Well, the Redditors likely tried to predict the next Gamestop (NYSE:GME) by speculating on the clean energy sector. This strategy would make sense because names like Clean Energy Fuels (NASDAQ:CLNE) popped in February before steadily falling.
Now, though, investors who want to bet on a more financially sustainable sector should look at electric vehicle stocks. If Tesla continues to trade at its high price-to-earnings (P/E) multiples despite consistent profits, for example, then the market will pay a premium for electric vehicle (EV) stocks.
For this list, I’ve compiled seven electric vehicle stocks to charge your clean-energy portfolio. These companies sell either EVs or their major components, such as batteries. It’s important to note, too, that I’ve weeded out names with broken business models; for instance, Nikola (NASDAQ:NKLA) and Workhorse (NASDAQ:WKHS) will not join the list.
Chart courtesy of Stock Rover
In the chart above, ALB and TSLA stock stand out the most when it comes to scores. Albemarle scores well on growth and quality. Meanwhile, Tesla has the highest overall score. Plus, the stock’s quality score will rise as operating margins and profits increase.
- Albemarle (NYSE:ALB)
- Ayro (NASDAQ:AYRO)
- Fisker (NYSE:FSR)
- Li Auto (NASDAQ:LI)
- Nio (NYSE:NIO)
- Tesla (NASDAQ:TSLA)
- Xpeng (NYSE:XPEV)
Electric Vehicle Stocks to Buy: Albermarle (ALB)
For its first quarter of 2021, lithium miner Albermarle posted sales growth of 12%. The company earned $95.7 million, or 84 cents a share. Those positive earnings set ALB stock apart from EV makers, which are still in their growth phases. For conservative investors who don’t want to hold names without positive earnings, Albemarle could be the way to go. After all, its full-year 2021 outlook is reassuring.
Albermarle forecast net sales of $3.2 billion to $3.3 billion. Additionally, it expects to earn $3.25 to $3.65 per share in 2021. In the company’s investor presentation, ALB also highlighted the lithium business specifically. This segment accounts for 37% of its total revenue, with the industry growing at around 20% (Page 5). Management is running a tight ship as it pursues profitable growth alongside strong customer demand. As such, Albemarle should benefit for years to come as EV shipments grow exponentially.
So, instead of buying electric vehicle stocks like Xpeng, Nio or Tesla and watching their monthly delivery reports, investors may want to invest in lithium supply growth instead. Albemarle is investing in mines to increase its resource base. As the next wave of its potential projects starts, the company’s revenue should expand nicely.
Ayro does not have any meaningful revenue and posted an EPS loss in Q1 2o21. However, that could change.
For the quarter, Ayro — which engineers and manufacturers light-duty EVs — posted revenue of nearly $789,000. This was up by 437% year-over-year (YOY). That said, the company also lost $5.6 million, or a loss of $3.8 million on an adjusted EBITDA basis. But Ayro’s $314,000 backlog may cushion the near-term underperformance. In its press release, CEO Rod Keller also highlighted the following:
“Our management team draws on its collective know-how to establish […] partnerships, which we understand will be critically important in supporting rapid revenue growth once we launch our next-generation vehicles, namely the 411x light-duty truck and the 311x targeted at the restaurant delivery market.”
Ayro needs to carve a niche in the truck delivery space. There, it may specialize in selling a fleet of EVs to customers. Furthermore, it plans to form crucial partnerships to leverage multiple channels and supply chains. This will minimize costs while increasing the company’s scale.
True, Ayro is not yet in its volume production phase, but Keller expects the next generation 311x to start in the first half of next year. The company also has a multi-year revenue ramp forecast. So, while it’s still a nascent name among electric vehicle stocks, AYRO stock could be an interesting play.
Electric Vehicle Stocks to Buy: Fisker (FSR)
For starters, Fisker’s $30,000 or so price point immediately sets its electric vehicle apart from the competition. Plus, with an additional U.S. tax credit, the company should be able to attract the mainstream consumer.
CEO Henrik Fisker has said that customers buying a $70,000 car will not need a big tax break. However, at the $30,000 to $40,000 range, the company has a good chance of winning the mass market. And Fisker won’t rely on just the U.S. markets, either. For example, its Ocean model EV will have a starting price of under 32,000 euros.
On top of this, FSR has a specific advantage over Tesla, too. By selling less expensive models, it will not run out of tax credits as fast. And, with the life cycle of most vehicles from original equipment manufacturer (OEMs) being about seven years, Fisker may plan its production and sales around that timeframe.
Although FSR stock is currently cycling in a trading range, its next break out may lead to a long-term uptrend. As such, investors who are willing to buy into electric vehicle stocks with promising business models should consider Fisker. The company is offering an attractive SUV at a great price point. This should help it post exceptionally strong initial sales.
Li Auto (LI)
After peaking in November 2020, Li Auto bottomed out last month as the markets picked up some of the biggest EV names. That said, this company did post very strong May delivery figures recently, fueled by interest in its Li ONE EV model.
Yanan Shen, the company’s co-founder and president, has said that customers have offered strong recognition and positive feedback for Li Auto so far. Investors can also quantify this through Li’s strong orders. For the month, Li Auto delivered 4,323 Li ONEs, up over 101% YOY but down 22% sequentially from April’s 5,539 units.
For Q1 2o21, Li Auto posted a non-GAAP EPS loss of 3 cents. However, revenue was $545.7 million, more than triple from last year. The vehicle margin was also 16.9%, or double the 8.4% from Q1 2020 and down just slightly from 17.1% in Q4 2020. Looking ahead, the company forecast revenue of between $609 million and $652 million for Q2 2o21.
Near-term sales will not pick up until Li Auto has more than one product. Still, the company’s one EV model has many compelling features. For example, with its “rich sensors and redundant capable hardware […] the 2021 Li ONE can recognize traffic signals, traffic cones, road curbs, and other more complicated objects.” So, if you’re looking to invest in electric vehicle stocks, consider giving LI stock a closer look.
Electric Vehicle Stocks to Buy: Nio (NIO)
For most of 2021, Nio has trended at or below the $40 range. However, sentiment has improved after the company posted great May delivery figures; Nio saw an increase of 95.3% YOY in vehicles for the month, or 6,711 units.
Currently, the company’s ES6 is its flagship model with 3,017 deliveries. However, the ES8s and EC6s give customers more choices. This helps Nio differentiate itself from competitors. Currently, though, supply constraints are the EV maker’s headwinds. As such, standing out against Tesla is critical to this company’s domestic and global growth.
Nio will need to raise billions in capital in the next year to fund those ambitious global growth plans, which include expansion into Europe. Its expenditures in manufacturing, research and development (R&D) and marketing will weigh on operating profits. In the long run, however, Nio has a good chance of growing its market share.
Investors with a shorter timeframe can also speculate on the easing of current supply constraints here. That news would send NIO stock higher. Conversely, potentially lower output may pressure Nio to cut operating costs and focus on profitability, which would also benefit shareholders. So, when it comes to electric vehicle stocks, NIO seems like it could be a winner.
For a while, Tesla introduced no product innovations. That changed when the company launched the Model S Plaid. At its flashy event, the company revealed a model without a steering wheel.
This $130,000-or-so model should win accolades from critics and the press. The EV has 1,020 horsepower, a touchscreen and a dual motor configuration that gives the vehicle a potential 412-mile range. Most importantly, though, owners can get 187 miles of range after only 15 minutes of charging.
During the reveal, Tesla did not give much attention to the model’s new battery pack. However, it’s important to note that investors speculating on lithium-battery suppliers are probably better off holding TSLA stock for its battery developments.
In the last year, the markets have worried about TSLA stock because of competitors like Lucid and other luxury EV makers. After the product refresh, though, a higher valuation may be assigned to this pick of the electric vehicle stocks.
Tesla and Elon Musk have been in the news lately for their foray in and out of Bitcoin (CCC:BTC-USD), but that’s just a distraction. In my opinion, Musk will eventually favor the cryptocurrency again and accept it as a form of payment.
Electric Vehicle Stocks to Buy: Xpeng (XPEV)
Last up on this list of electric vehicle stocks is XPEV stock. On Jun. 1, Xpeng posted solid delivery results for May. As such, investors may want to look past the supply constraints that are currently hurting Xpeng and other EV makers, at least for now.
For the month of May, this company posted a 483% YOY increase in vehicle deliveries, to 5,686. XPEV also posted a “record high” in monthly deliveries for its P7 model, which saw 3,797 units delivered. Clearly the P7 smart sedan has resonated with customers. Likewise, Xpeng’s smart and compact SUV, the G3, also fared well with 1,889 deliveries.
On top of these results, Xpeng also reported the successful launch of its XPILOT 3.0 and its Navigation Guided Pilot (NGP) highway solution in January. Now, customer utilization is strong and the company may grow revenue through a modest monetization of the software. Additional updates and additions should lead to strong, sustained subscriptions.
Finally, when Xpeng starts selling its P5, unit sales should increase. True, Nio is still ahead of Xpeng on volume. But as this company takes market share by offering better technology, it should nicely reward long-term investors.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.