After a significant correction in 2022, certain EV stocks have rebounded strongly in 2023.
I anticipate clear winners and losers emerging in the EV sector in the next 12 to 24 months. This article highlights the top-performing EV stocks in July that show potential for future growth. With the electric vehicle market expected to expand significantly, investors can take opportunities to accumulate quality EV stocks.
Of course, not all EV stocks remain buys right now. Valuations for certain key players have approached levels that may not be sustainable.
And so, for those looking to ride the momentum in this sector higher, here are three of my top picks.
BYD Co. (BYDDF)
BYD Co. (OTCMKTS:BYDDF) is a major competitor to Tesla (NASDAQ:TSLA) in the EV industry. With strong sales numbers and a focus on growth, BYD has the potential to outperform Tesla.
The company is set to launch a new electric SUV, the N7, which has already received significant pre-orders. Trading at $33, BYDDF stock appears undervalued with significant upside potential. If BYD continues to meet delivery targets, it could pose a long-term threat to Tesla’s dominance.
BYD, a major Chinese auto manufacturer supported by Berkshire Hathaway, is experiencing remarkable growth in vehicle sales. With a target of three million sales this year, nearly double that of the previous year, the company has achieved record-breaking sales in Q2. BYD holds a significant market share in the Chinese EV market, surpassing Tesla. The company’s success can be attributed to its lineup of new and refreshed models, including the Seagull EV. BYD’s ability to manufacture batteries and chips internally has contributed to its rapid expansion.
In recent BYD news, the company has proposed a $1 billion investment plan to the Indian government. The plan involves forming a joint venture with Megha Engineering and Infrastructures to introduce a full lineup of BYD-branded electric vehicles in India. It spans from hatchbacks to luxury sedans. BYD currently offers various brands, including the budget-friendly Seagull city car and the high-end YangWang luxury marque. These will produce electric supercars and off-roaders.
ChargePoint (CHPT)
EV charging infrastructure companies are poised for significant growth as the demand for electric vehicles continues to rise.
In the U.S., the number of charging stations is projected to quadruple by 2025 and grow eightfold by 2030. Europe also requires substantial infrastructure investment to meet the increasing EV charging demand. ChargePoint (NYSE:CHPT) stock appears appealing following a consolidation period in the first half of 2023, and a potential breakout is anticipated after the previous year’s sell-off.
In Q1 2024, ChargePoint’s revenue grew 59% year over year to $130 million, with an improved 23% gross margin. Recurring revenue drives growth as charging stations increase. ChargePoint leads in North America and 16 European countries, ensuring sustainable revenue momentum. Moreover, ChargePoint’s partnership with Tesla and expansion in the charging market strengthen its market position and revenue growth. It’s a recommended EV charging stock to watch as the industry grows.
Li Auto (LI)
Li Auto (NASDAQ:LI) is a top EV stock with strong potential for high returns. It has outperformed its Chinese peers, Nio (NYSE:NIO) and XPeng (NYSE:XPEV), with impressive delivery growth and surpassed 2022’s total deliveries in the first half of 2023.
The company’s expansion and launch of new models contribute to its positive momentum. Additionally, it achieved a vehicle margin of 19.8% in Q1 2023, resulting in a robust free cash flow of $975.9 million. The company’s healthy financial position provides ample flexibility for innovation and retail expansion.
Li Auto has continued to impress with its Q2 performance, surpassing expectations by selling a remarkable 466,140 units, marking an 83% increase in deliveries compared to the previous year. The company’s strong sales record and the Chinese government’s support for clean energy vehicles make this a promising investment. With China’s large population and expanding middle class, consider significant market opportunities LI stock.
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.
