Investing in EV stocks offers investors the opportunity to benefit from the world’s green energy transition. The automotive sector will play a significant role in major economies’ commitment to net zero emissions by 2050.
Transportation accounts for approximately one-fifth of global GHG emissions. This presents a prime investment opportunity to benefit from the divestment in internal combustion engines (ICE) and increased expenditure for EVs and lithium-ion batteries.
With the global EV market expected to surpass more than $1.5 trillion by 2030, these three EV stocks are poised for outsized returns.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is the largest EV company in the world by market capitalization.
In 2022, Tesla saw record annual revenue of $81.46 billion, an increase of 51% year over year (YOY). Net income increased to $12.6 billion, up 128% YOY. Also, free cash flow grew substantially to $7.5 billion, up 51% YOY. The stock has responded favorably to the company’s future growth prospects, despite price cuts and weaker margins in 2023.
In March 2023, TSLA announced a new gigafactory in Monterrey, Mexico. Investment totaled more than $5 billion, with the factory estimated to produce more 2 million EVs annually. However, news from Mexico’s governor Samuel Garcia surfaced earlier this month that planned investment has now tripled to $15 billion.
Tesla is also making strides in its FSD technology with the release of V12. It has begun to break ground with its Cybertruck and Tesla Semi trucks. The company invested $3.6 billion in its Nevada Semi truck facility, expected to produce more than 50,000 trucks by 2024.
If investors are looking for a long term EV investment, Tesla should be their first choice.
ON Semiconductor Corp (ON)
ON Semiconductor (NASDAQ:ON) has been a sleeper stock that has flown under the radar over the last five years. The company’s wide range of products largely serve the automotive and EV market, with stock delivering nearly 400% in shareholder returns.
Semiconductor companies are thriving this year as demand for critical power modules for EVs remains high. While top line revenue growth remained stagnant, investors should look at the bigger picture.
In Q2 2023, On’s revenue increased over 35%, surpassing $1 billion for the first time. Silicon carbide (SiC) revenue grew 4X, on pace to surpass $1 billion in 2023. The silicon carbide market is still in its infancy stages. The company’s end-to-end solutions for SiC modules will drive revenue growth and EBITDA margins over the next decade.
Currently trading at 16X its FY 2023 sales, the stock is attractive compared to its peers. As one of the world’s top semiconductor suppliers for the automotive industry, their products are critical to push the global EV industry forward.
Clearly, ON is one of the best high potential EV stocks for 2023.
Albemarle (ALB)
Albemarle (NYSE:ALB) history dates back to 1887, and now it’s leading the production of lithium for EV batteries. During the pandemic in 2020, the stock saw an impressive run on the back of EV hype and clean energy speculation. It then came to a halt after hitting an all-time high of $334.55 per share in 2022.
However, the company has remained extremely resilient and has seen robust sales and EPS growth this year despite supply chain constraints and lithium price volatility. Net sales for Q1 and Q2 2023 surged 129% and 60%, respectively. Also, the company has seen strength in their energy storage business, expected to further drive FY 2023 adjusted EBITDA.
On Sept. 12, Albemarle announced a $90 million grant from the U.S. Department of Defense to further boost lithium production and strengthen U.S. supply chains. The funding will support manufacturing at its Kings Mountain mine in North Carolina. When fully operational in 2026, the mine will power more than 1.2 million EVs annually.
In addition, Albemarle raised its FY2023 guidance. It expects net sales to grow from 40% to 55% with adjusted EBITDA in the $3.8 billion to $4.4 billion range, making Albemarle a top cheap EV stocks to buy.
On the date of publication, Terel Miles 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.
