One of my favorite industries to write about is the electric vehicle industry. Not only because it promises a cleaner and greener future for our coming generations but also because it is all about the latest technology and innovation. Countries across the world are striving to ensure high penetration of EVs and they have offered several incentives and benefits to EV industries. All while creating solid opportunities in EV stocks to buy.
The future is EVs and they do look promising. While the U.S. and China are adopting EVs at a rapid pace, several other countries are still in the nascent stage and it will take a few years for them to be able to achieve their EV adoption targets. This means EV stocks are set to benefit in the long-term and investors who believe in the future of EVs should make their moves before it is too late. Here’s my pick of the top seven undervalued EV stocks to buy this month.
EV Stocks to Buy: Li Auto (LI)
One of the best EV stocks to buy and a personal favorite, Li Auto (NASDAQ:LI) has been standing strong through the market’s ups and downs. The company has seen a solid rise in deliveries and its financials are proof of the progress. It reported a delivery of 34,914 vehicles in August, up 663% year over year. The company aims to deliver 40,000 cars a month in the coming quarter and looking at the way it is growing, I am certain that it could be possible.
Li Auto has also reported stellar second-quarter results and is performing better than many of its competitors. The company also plans to triple the lineup by 2025. LI stock is trading at $40 today and is up 93% year to date. The stock has gone from $20 in Jan to $40 today. Looking at its long-term potential, it looks highly undervalued to me and is a solid buy. Several analysts have a positive sentiment towards the stock.
Another Chinese EV maker, Xpeng (NYSE:XPEV) is a hot stock right now. The company delivered 13,690 vehicles in August — a 43% year-over-year jump. It’s also planning to expand across France, Germany, and Britain in 2024.
XPeng is working on developing two mid-sized EVs for the Chinese market with Volkswagen (OTCMKTS: VWAPY) and has received $700 million from VW to help with the same. It also bought Didi’s smart electric car development business for $744 million. This move will help XPeng enter the mass market and introduce an EV with a lower price range.
While the company is still far from profitable, these moves can help it beat the competition. XPeng reported a loss of $384.5 million in the second quarter which was wider than analyst expectations while the revenue came in at $698 million. XPEV stock is currently exchanging hands for $18 and is up 80% year to date. Buying the stock below $20 is a smart move.
EV Stocks to Buy: BYD Co. (BYDDF)
The biggest Tesla (NASDAQ:TSLA) competitor and Warren Buffet’s favorite EV company, BYD Co. (OTCMKTS:BYDDF) is a very strong player in the industry. For one, it just reported better delivery numbers than Tesla and is also the second-largest battery manufacturer in the world.
Two, the company saw a significant 65% rise in profits in the second quarter which hit $936 million. It delivered 700,244 vehicles in the quarter, which led to a rise in revenue and profit. Three, the company is growing globally and has a new facility planned in Thailand, which will begin operations next year.
There is no stopping the momentum of BYD Co. and I believe the stock will continue to generate solid returns in the long term. It is currently trading for $31 and is up only 22% year to date which means there is ample upside potential from the current level. Several analysts including Goldman Sachs have a buy rating for the stock.
Ford Motor (NYSE: F) is slowly, but steadily increasing its hold in the EV industry. At the moment, Ford is losing money on electric vehicles but is still determined to move forward with EV plans. In addition, the company remains committed to EV expansion and has a target of 400,000 EVs by the end of this year.
One reason to bet on Ford is that it is not a pure-play EV stock just yet. That means the company will continue to generate revenue from the other vehicles while it gains a foothold in the EV space. The Ford Motor stock is trading at $12 today and is up 7% in the past six months. While there are issues concerning the dispute with the United Auto Workers, it does have the strength to navigate through the temporary setbacks.
General Motors (GM)
I believe General Motors (NYSE: GM) has enough experience in the auto industry to be able to navigate through the EV transition. The company just reported impressive second-quarter results with the EPS coming at $1.91 and sales hitting $44.75 billion. Better, it’s looking to double its EV production by the end of this year and has already rolled out 50,000 EVs. The company continues to introduce new models from time to time and there is a loyal customer base who eagerly waits for them.
General Motors has the leadership and the liquidity to excel in the EV space and it is also working towards the in-car software which will generate significant revenue in the next five years. Trading at $33 today, the stock is trading much lower than the 52-week high of $43. It is one of the best EV stocks to own this month.
Chinese EV maker, Nio (NYSE:NIO) is one of the most undervalued stocks to watch. While the company did not have a good start to the year and has suffered from China lockdowns and supply chain issues, its numbers are showing big signs of improvement. For example, in August, Nio delivered 19,329 vehicles, an 81% year-over-year jump. It’s also gaining a bigger presence in Germany, Norway, Sweden, and Denmark.
China’s EV market is highly competitive and Nio is standing strong with its wide product offering. The company joined the EV price war in June and had predicted a significant rise in deliveries in the second half of the year which has played out well in August. While it is still making losses, Nio has the potential to bounce back — with patience.
Lithium Americas (LAC)
While not an EV maker, Lithium Americas (NYSE:LAC) is indirectly associated with the EV industry. It plays a significant role in the growth of the EV sector and has been making news for several reasons. Since the company is planning to split the U.S. and Argentina business, it is set to unlock value in the near term.
Another solid reason to bet on this company is the Thacker Pass project. It could become a major source of cash flow for the company and has a mine life of 40 years. Another positive catalyst is the company’s discovery of a major lithium deposit in a volcano on the border of Oregon and Nevada. Both could lead to significance cash flow for the company.
On the date of publication, Vandita Jadeja 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.