There is no denying the fact that the future of transportation is electric, and the sooner we adapt to it, the better it is. However, electric vehicle (EV) adoption has been low across the world, and there is a long way to go. Governments across the globe have laid out incentives to ensure higher adoption of EVs. That means there will be massive demand for EVs and EV charging networks.
We have already witnessed the success of Tesla (NASDAQ:TSLA) over the years, and several other EV players are grabbing market share and reporting strong revenue numbers. While shares of some EV companies are already at a premium, you can buy several other stocks to take home big gains in the next few years. Here, we look at the top EV stocks to own as they become a significant part of the EV ecosystem and look highly undervalued today. Here are three EV stocks to buy now.
EV Stocks to Buy Now: Li Auto (LI)
One of the best EV stocks to buy now is Li Auto (NASDAQ:LI). LI stock continued to perform steadily, even during periods of high inflation and supply chain issues. The financials prove the company is gaining momentum and moving in the right direction. In the recent quarter, it saw a 229.7% rise in revenue, hitting $3.86 billion, and it enjoys a free cash flow of $1.33 billion. Li Auto has a cash balance of $10.17, providing enough liquidity to continue with expansion plans while also investing for innovation purposes.
Currently exchanging hands for $38, the stock is undervalued, dropping from $46 in August. However, the stock is up 83% year-to-date (YTD) and it has the potential to double your money. The company also reported record deliveries for August with 34,914 cars. It aims to deliver over 40,000 cars in the coming months.
For the third quarter, it expects deliveries between 100,000 and 103,000 vehicles, and it has already delivered 69,048 cars in July and August. That means it only needs to deliver 30,952 cars to meet the lower end of the projection. Its prominent player, L7 SUV, is one of the top cars in the Chinese market and is high in demand.
The growing monthly delivery numbers are proof that the customers are satisfied with the car and its performance is at par with other top players. A lot of people worry about Chinese companies due to the regulations, but that might not be true for Li. The company has managed to design a car that meets the needs of customers and has successfully managed to capture a large part of the market share.
ChargePoint (CHPT)
EV charging equipment company ChargePoint (NYSE:CHPT) is not a pure EV play, but it has a crucial role in the success of EVs across the world. The company reported impressive financial numbers for the second quarter. Its revenue hit $150.5 million, showing a 39% year-over-year (YoY) growth. It expects to report revenue of $605 million to $630 million for the full year. If you simply look at the numbers, revenue growth looks promising and could help the company grow from the current level.
Another positive sign is that it saw a higher subscription revenue as compared to the network charging system revenue. The subscription revenue comes from the software and services, and with an increase in charging stations across the world, the subscription revenue will continue to rise.
However, it still reported losses and saw a net loss of $125.3 million, higher than the previous quarter. That was because of the inventory impairment charge — a one-time thing — meaning the margins could significantly improve in this quarter.
ChargePoint has over 200,000 charging ports and is expanding steadily. Many believe that Tesla’s charging network could give it stiff competition, but that might not be the case since Tesla’s charging stations are only present in the U.S.
As the world moves towards EVs, the demand for charging stations will rise and that is where ChargePoint is set to gain. It expects to turn EBITDA positive by the end of 2024, and while the chances are low, the third quarter results will speak a lot about the progress ahead. Trading at $5.37, the stock is a solid buy, and it could double your money by the end of the year.
Lithium Americas (LAC)
Another EV stock worth adding to your portfolio before it soars to new highs is Lithium Americas (NYSE:LAC). It plays a huge role in the success of the EV industry, ensuring there are enough batteries to keep the EVs running. LAC stock dropped 35% in the past year and this is a good chance to grab it.
I like the stock for several reasons. One is the Thacker Pass project, which has massive potential. It offers an after-tax net present value of $5.7 billion, and the EBITDA from the asset could be $2 billion. Once the project commences, there will be no looking back, and it will create significant value for the company. That’s when the stock will gain upside momentum.
Further, the company has recently discovered a lithium deposit in a volcano on the border of Nevada and Oregon, which could be the world’s largest. While not much is known about the economic feasibility of using lithium for batteries, if it works out for the company, it could make LAC one of the best companies in the world.
The company owns the hottest commodity right now. LAC stock is trading at $18.86 today, much lower than the 52-week high of nearly $30. You might not see a significant upside shortly, but it is worth holding the stock for the next few years if you want to take home big gains.
On the date of publication, Vandita Jadeja did not hold (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.
