Weakness will often lead to opportunity. In fact, weakness is how some of the most well-known investors made their fortunes. For example, Warren Buffett still tells folks “fearful when others are greedy, and greedy when others are fearful.” Sir John Templeton taught us to buy excessive pessimism. Even Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” With that precedent, let’s look at today’s oversold EV stocks.
Over the last few weeks, some of the top EV ETFs plummeted. The Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) fell from about $27.50 to $23.53. The Krane Shares Electric Vehicles and Future Mobility Index ETF (NYSEARCA:KARS) fell from about $34.50 to $29. Even the Global X Lithium ETF (NYSEARCA:LIT) dropped from about $69 to $57.
Eventually, this weakness will lead to opportunity, all while global leaders push for a greener future and for millions of EVs. For timely investors, not only do those ETFs offer opportunity but also these oversold EV stocks.
Livent Corp. (LTHM)
One of the most oversold lithium stocks is Livent Corp. (NYSE:LTHM). I don’t think it’ll be this cheap for long, though. For one, it’s technically oversold at strong support. Two, it’s technically over-extended on RSI, MACD, and Williams’ %R. And three, we have to remember that lithium supply cannot keep up with demand. In fact, there’s no telling when that will even happen.
We also have to consider that recent earnings weren’t terrible. In fact, as I noted late last week:
“While second-quarter revenue of $236 million was down quarter-over-quarter with lithium price declines — it was still up 8% year-over-year. Its GAAP net income of $90.2 million was also down about 22% for the quarter but was still up by about 50% compared to last year.”
Plus, the company’s recent $10.6 billion all-stock merger with Allkem (OTCMKTS:OROCF) will help create the third-largest lithium producer in the world. In addition, analysts over at KeyBanc recently raised their price target on LTHM to $35 from $32.
Tesla (TSLA)
With patience, Tesla (NASDAQ:TSLA), the EV industry’s giant, will come back strong. While earnings weren’t great all around, revenue of $24.93 billion was well above expectations for $24.47 billion. EPS of 91 cents was better than estimates for 82 cents. Unfortunately, an operating margin of 9.6% was disappointing. However, I believe it’s just temporary weakness. The stock has come back from worse. Also, when it comes to Tesla, crisis is often used as an opportunity.
Technically, there’s a lot to like here. One, it just found strong support just above $212 a share and is already starting to pivot higher. Two, it’s also pivoting from over-extensions on RSI and MACD. From a current price of $245.72, I’d like to see the TSLA stock refill its bearish gap around $299.29 initially.
Amplify Lithium & Battery Technology ETF (BATT)
Or, if you just want to diversify at a low cost, there’s always the ETF route, particularly Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT). After falling from about $14 to $11.80, the ETF is starting to pivot from support dating back to February. From a current price of $12.05, I’d like to see it closer to $14 again soon.
With an expense ratio of 0.59%, the ETF diversifies with companies generating income from the development, production, and use of lithium battery technology, including 1) battery storage solutions, 2) battery metals & materials, and 3) electric vehicles, as noted by AmplifyETFs.com. Some of its top holdings include Tesla, BYD Company (OTCMKTS:BYDDY), Li Auto (NASDAQ:LI), and BHP Group (NYSE:BHP) to name a few.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
