The search for the best EV stock has been around since the incredible rise of Tesla (NASDAQ:TSLA).
As electric vehicles (EVs) become increasingly popular, more investors want to add EV stocks to their portfolios. With so many options available, it can be challenging to determine which EV stocks are the best to buy right now.
This article will examine the EV market and share our top three picks for the best EV stocks. We’ll consider factors like the company’s financials, competitive edge, and potential for growth in the coming years. Whether you’re a seasoned investor or just starting, this article will provide valuable insights into the EV market and help you decide which stocks to buy.
Best EV Stock to Buy Now: Nio (NIO)
Established in 2014, Nio (NYSE:NIO), a Chinese electric vehicle firm, has gained popularity among American investors. Despite being less profitable than Tesla in China, it is still a significant player in the Chinese EV market. However, it is not the biggest China-based EV manufacturer, as that title belongs to Nio’s competitor, who we’ll get to shortly.
The price of NIO stock has been attempting to gain upward momentum, trending to reach the higher end of the consolidation phase. To rise again, the cost of NIO shares must attract more buyers. Nio demonstrated its capabilities during its 2020 rally. Analysts predict that NIO stock may repeat this pattern and experience a surge from its current low level, as observed in the daily time frame chart. NIO shares have remained stagnant within a range-bound area and are waiting for a breakout.
Despite having a price-to-sales (P/S) multiple of 2.8, which is much lower than Tesla’s P/S of 8.6, investors should exercise caution before investing in Nio stock. Although Nio is a more affordable option at first glance, it may not necessarily be a wise investment choice due to various risks tied to the Chinese market and other competition in that region.
That said, there are plenty of reasons why analysts predict that the stock price of NIO may experience a significant rally in 2023. As investors look for Tesla-like options outside the U.S., Nio will continue to be a top option to consider in the global market share race.
ChargePoint (CHPT)
One of my preferred electric vehicle companies that do not manufacture vehicles is ChargePoint (NYSE:CHPT). ChargePoint offers EV chargers for residential and commercial purposes in both the United States and Europe.
The consensus among analysts is that ChargePoint’s sales will increase by over 55% this year, making the company’s fundamentals attractive. Additionally, it is worth noting that the company’s finances are currently stable.
ChargePoint did not have a successful year in 2022, as its stock price declined by approximately 40%. However, the situation has improved for CHPT stock in 2023, with its shares rising by 26% since the beginning of the year.
ChargePoint’s stock prices are anticipated to stay relatively steady, averaging $12.64 per share. The projected average price by the end of the year is $11.56, suggesting limited upside from here. That said, this stock has plenty of catalysts to run further if the market determines that the EV sector is the place to be for 2023 and beyond.
One such catalyst is the impressive push by the U.S. federal government to have 500,000 public EV chargers by 2030. Indeed, this presents a significant opportunity for ChargePoint. The company has one of the most extensive EV charging networks worldwide, with 163,000 ports available. With considerable growth on the horizon, I think CHPT stock is one that investors should have on their watch lists, at the very least, right now.
Best EV Stock to Buy Now: BYD (BYDDF)
BYD (OTCMKTS:BYDDF) is the leading EV stock in the world. That’s right. Not Tesla, Nio, or another pure-play EV company, but BYD. At least in total volume sold.
That said, BYD isn’t sitting still. In a recent statement, the company projected its net profit to increase by approximately fivefold in 2023 compared to 2022. Many fundamental-focused, long-term investors are pursuing this kind of rapid earnings expansion.
It’s no surprise, then, that Warren Buffett and Charlie Munger are key investors in this stock.
On Feb. 15, Charlie Munger stated that BYD surpassed Tesla by a significant margin in Chinese sales. He also referred to the Chinese EV manufacturer as his preferred stock of all time.
Charlie Munger was unequivocal when asked which company he would choose as an investment between Tesla and BYD. Munger explained that Tesla lowered its prices twice in China the previous year, whereas BYD increased its prices. He also stated that BYD is far ahead of Tesla in China, so the question seems absurd. Furthermore, Munger pointed out that the two companies are direct rivals.
BYD preannounced a fourth-quarter profit range of 6.7 billion to 7.7 billion yuan. (One dollar is equivalent to 6.75 yuan). This figure is substantially higher than the company’s profit of 602 million yuan generated during the corresponding quarter of the preceding year.
BYD has set its sights on capturing the middle-class market in China by offering electric vehicles that are reasonably priced between 100,000 yuan and 200,000 yuan. This strategy differs significantly from Tesla, which primarily targets the premium EV market, with cars costing over 200,000 yuan each.
On the date of publication, Chris MacDonald 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.
