The transition to electric vehicles is proceeding full steam ahead, putting renewed attention on EV stocks.
The U.S. and other countries around the world use regulations and investments to speed their adoption and help them meet their goals to reduce fossil fuel emissions believed to cause climate change.
Fortune Business Insights forecasts that the global electric vehicle market will grow from $287.36 billion in 2021 to $1.318 trillion by 2028, representing a compound annual growth rate (CAGR) of 24.3%. And several electric vehicle makers are leading society’s transition away from the internal combustion engine and towards battery-powered cars, trucks and sport utility vehicles (SUVs).
Here are three of the best EV stocks to buy as we head into February.
Best EV Stocks to Buy: Tesla (TSLA)
The largest electric vehicle maker just reported quarterly results that handily beat on both the top and bottom lines. For the final quarter of 2021, Tesla reported earnings per share of $2.52 versus $2.36 expected by analysts. Revenue came in at $17.72 billion, up 65% from $16.57 billion a year earlier. Net income, at $2.32 billion, was up an astounding 760%, and Tesla said it had a 27.4% gross margin, up from 26.6% in the third quarter.
TSLA stock fell slightly immediately after the print as the automaker warned that supply chain issues could persist this year. But the ongoing supply chain woes cannot take away from the fact that Tesla continues to outpace all other EV makers.
And the good news for investors is that TSLA stock is currently on sale having fallen 22% since the start of this year to now change hands at $830 a share. Investment bank Goldman Sachs (NYSE:GS) became the latest Wall Street firm to urge investors to buy the pullback in Tesla shares, adding the automaker to its buy-rated stock picks down 20% or more from recent highs.
Looking ahead, Tesla has a lot of projects on the go to keep its growth supercharged, including a heavy duty semi-truck and a long gestating compact car that is expected to be priced at $25,000 or less.
Nio (NIO)
Chinese electric vehicle maker Nio has been hard hit this year as well with its stock declining 33% through the first three weeks of trading in January.
Nio’s share price has now fallen 63% over the past 12 months to nearly $21. A big reason for the downturn has been the Chinese government’s crackdown on publicly traded companies as well as souring sentiment on EV stocks. Nio’s production numbers and financial results certainly haven’t warranted such a steep decline in the share price. On Jan. 4, Nio announced that it delivered 10,489 vehicles in December, a 50% year-over-year increase.
The numbers in December led to a record-breaking 25,034 deliveries in the fourth quarter and a record 91,429 delivered for all of 2021, which was a 109% increase from 2020. The big deliveries come as Nio pushes into Europe and gains market share at home in China. The expansion and record delivery numbers led Nio revenues to grow 117% to $1.522 billion in the third quarter, while its vehicle margins hit 18%, up from 14.5% a year earlier.
With its share price down substantially, investors should view Nio stock as a buying opportunity. Among 25 analysts who cover Nio, the median price target on the beaten down stock is currently $58.61.
Best EV Stocks to Buy: Ford (F)
Ford’s share price has come down nearly 6% so far in January following a spectacular run in 2021 that saw the legendary automaker’s stock gain 136%. At just under $20 a share, F stock is looking very attractive right now.
Bill Ford certainly thinks so. In December, the Ford chairman and family patriarch purchased 412,500 shares in the company that was founded by his great-grandfather in 1903, bringing his total stake in the automaker to 2.3 million shares of common stock. Clearly, Bill Ford likes the turnaround that has occurred in the Detroit-based company and its new focus on electric vehicles.
After years of struggling, Ford has successfully transitioned to focus on EVs, as well as on pickup trucks and sport utility vehicles, and F stock has responded. Last September, the Ford Motor Co. announced that it is investing $11 billion to build its biggest ever manufacturing plant in Tennessee, which will churn out electric vehicles only, as well as build two battery plants in Kentucky. The investment will help to create 11,000 jobs in the two states and is part of Ford’s stated goal to have half the cars it sells by 2030 be fully electric and produce zero emissions.
Among legacy automakers, Ford’s switch to electric vehicles has been most dramatic and, to date, most successful.
On the date of publication, Joel Baglole 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.
