Plagued with post-pandemic turmoil and interest rate hikes, the initial public offerings (IPO) industry has seen lackluster performance. Recent circumstances may be signaling that this period of IPO market decline is shortly coming to an end. On June 15th Cava (NYSE:CAVA) went public and sold 14.4 million shares with its stock nearly doubling in two weeks. This outstanding introduction has garnered optimism among investors and issuers alike. Similarly, the electric vehicle (EV) industry has been experiencing the same growth trends. For instance, intermittent renewable energy every year has been seeing increased consumer demand. Specifically, competition for EV batteries to power fossil-fuel cars to boats has increased prices to $235 per kilowatt hour in late 2022. Lets take a look at three undervalued EV stocks to buy before their valuations become fully charged.
Lucid Group Incorpoated (LCID)
Lucid Group Incorporated (NASDAQ:LCID) is an American electric vehicle manufacturer that focuses on advanced luxury vehicles. Despite the fact that the company reported a Q1 GAAP EPS of negative 43 cents, it has shown excellent revenue growth. The company’s revenue of $149.43 million experienced a 159.1% year-over-year (YoY) increase. Additionally, Lucid produced 2,314 vehicles this quarter and delivered 1,406 vehicles, a 225% and 291% increase YoY respectively. Lucid also ended Q1 with approximately $4.1 billion in total liquidity, which is expected to be able to fund the company into at least Q2 of 2024.
LCID’s biggest competitive advantage has remained its unique and powerful technology, with its Lucid Air having the longest range and fastest charging capability of any electric vehicle currently on the market. The company is in the process of adding 2.8 million additional square feet to its Arizona facilities, which will help increase production. In addition, Lucid is looking to expand to China, the world’s largest EV market. This is a powerful opportunity that serves as an excellent growth catalyst. If it plays out LCID could get its name crossed off investors’ lists of undervalued EV stocks.
Li Automotive Incorporated (LI)
Li Automotive Incorporated (NASDAQ:LI) is a Chinese EV manufacturer and is a relative newcomer to the market. Its first model released in 2020. The company boasts healthy financials, evident through its YoY revenue growth of 65.2%. For Q1 2023 LI’s earnings per share was 19 cents, and the company’s revenue of $2.71 billion was $37.5 million over analyst expectations.
One of LI’s growth catalysts is success in vehicle deliveries. LI hit a record high of 28,277 vehicles delivered in May 2023, an 146% YoY increase. With this increase, monthly sales have reached a new high of over $130 million. The increase in sales can be attributed to the newly released Li L7 SUV. With over 10,000 L7s sold in April and May, LI has positioned itself as the new leader of the EV SUV market in China.
Additionally, LI is looking to expand beyond the SUV market, announcing plans to expand its model line from four vehicles in 2023 to eleven vehicles by 2025. LI also plans to build 300 Supercharging stations across 4 major Chinese economic regions by the end of the year. With its current level of success, LI has the potential to no longer be among undervalued EV stocks.
BYD Company (BYDDY)
BYD Company (OTCMKTS:BYDDY) is a large-scale vehicle manufacturing company that is made up of two subsidiaries. Their BYD Auto and BYD Electronic manufacture things such as automobiles, buses, railway systems, trucks, forklifts, solar panels and rechargeable batteries. BYD’s main revenue is segmented into automobiles, automotive parts and batteries which results in 76% of its total revenue.
BYD has been performing extremely well since its inception, and operates extremely efficiently. This is seen by their YoY return on equity growth of 307% significantly outpacing the sector median of negative 14%. BYD’s fiscal year 2022 revenue was $2.4 billion which was an annual increase of 403% in comparison to 2021. The company sold 1.85 million vehicles in 2022 however, the company’s president Wang Chuanfu has set a goal to sell 3.6 million in 2023.
The main reason that BYD has acquired such a stronghold in the EV world is its Blade Battery, which is the most advanced EV battery to date. Their batteries offer maximum safety while also offering more durability, range and lifespan than any other competitors’ options. The battery is so highly revered that even Tesla (NASDAQ:TSLA) has started using it for some of their vehicles. Based on BYD’s strong performance, robust growth projections in the global EV market, efficient operations and its innovative technology, investors are recommended to buy BYDDY stock for long-term gains.
On the date of publication, Michael Que 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.
