EV stocks tend to rise and fall with Tesla (NASDAQ:TSLA). The pioneering force in the EV industry has been trending upward since mid-August, which bodes well for the industry’s smaller players.
The industry itself is a polarizing one, to be sure. Its emergence touches upon many politically divisive issues. That said, love it or hate it, the EV industry is here to stay. It has reached a point of mass adoption, which means there is no turning back.
The good news for investors is that the industry’s annual growth rates near 10% are bound to support some emerging winners. Investments made now will result in solid returns.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) stock represents a networked EV charging services provider growing quickly. The reason to believe that BLNK shares are ready for a breakout lies in that growth story and the state of the economy in terms of interest rates.
It appears that interest rate hikes will be paused at the next meeting of the Federal Open Market Committee (FOMC). That sets up potential rate reductions sometime in 2024. Growth stocks perform well as rates decline and capital becomes cheaper. Thus, Blink Charging as a growth stock may soon break out.
Its growth narrative is incontrovertible. Q2 revenues increased by 186%, reaching $32.8 million. Service revenue growth was even more impressive at 211% year-over-year. That said, Blink Charging continues to produce substantial losses – $41.5 million in Q2. The market will be more interested in that narrative in a falling or steady-rate environment.
So, invest in anticipation of that scenario because Blink Charging is projecting EBITDA breakeven by December 2024.
Li Auto (LI)
Li Auto (NASDAQ:LI) has grown rapidly in 2023, with the stock nearly doubling during the period. Based on Wall Street expectations, it still has room to grow roughly 30% beyond current levels. While the China-based EV manufacturer isn’t as well known as Nio (NYSE:NIO) and XPeng (NYSE:XPEV), it is absolutely worth considering.
The company is fundamentally strong, and its business is growing following the launch of multiple vehicles. Li Auto’s deliveries skyrocketed by 202% in the second quarter, reaching 86,533 vehicles. Surging sales have allowed the company to enact a fundamental turnaround. Losses have become net gains, and margins are increasing. It’s reasonable to assert that Li Auto has reached an inversion point and is clearly in positive territory.
The company has $10.2 billion in liquidity on its balance sheet and is poised to continue expanding throughout China and perhaps internationally to compete with its main rivals. Delivery growth is expected to be even higher in Q3 at a rate between 277% and 288% and should eclipse 100,000 vehicles.
Fisker (FSR)
Investors won’t get much clarity regarding Fisker (NYSE:FSR) stock by analyzing analyst ratings. While they suggest a substantial upside, those estimates are evenly divided across the ‘buy,’ ‘hold,’ and ‘sell’ categories. I’m firmly in the buy camp. Fisker is going to face the cash crunch that most startups encounter. So, the question for investors is why we should anticipate that Fisker will emerge stronger soon.
The answer isn’t because Fisker hasn’t had trouble in delivering its vehicles. It has. Suppliers required extra time in the second quarter, resulting in a lowered 2023 production outlook. That said, July’s daily vehicle production increased to 140 vehicles from 80 in June. Beyond that, though, I believe Fisker vehicles will be plagued by fewer issues than its competition.
The company outsourced production to Magna International (NYSE:MGA), a very experienced vehicle OEM firm. The result is that the Ocean SUV should be of higher quality. In turn, the company will spend less time on quality control issues and more ramping up production, thus avoiding a cash crunch.
On the date of publication, Alex Sirois 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.
