As EV stocks like Tesla (NASDAQ:TSLA) see sales slip and margins tighten, many bemoan the industry’s current state. While adoption skyrocketed over the past few years, tightened economic conditions mean consumers can’t afford top-of-the-line EV offerings.
But EVs are here to stay despite short-term headwinds. The industry-wide bearish sentiment lends itself to opening positions in little-known EV stocks as they reprice well below their future prospects.
If you want to expand your EV portfolio, look to hidden gem EV stocks that are agnostic to big-name manufacturers. Specifically, companies servicing a range of EV companies stand to benefit from broad trends rather than betting the farm on a moonshot EV stock that may or may not survive the next decade.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a small-cap semiconductor support stock competing with big names like Nvidia (NASDAQ:NVDA). But AEHR stands apart from the artificial intelligence-focused giants by standing out as a little-known EV stock. Earlier this year, AEHR locked a $25 million order to support EV production from a “leading Fortune 500 supplier of semiconductor devices with a significant customer base in the automotive semiconductor market.”
While the announcement is vague by design, you can likely guess which company AEHR’s press release refers to. As EVs become more reliant on semiconductors, manufacturers of all types and sizes will begin relying on testing and quality control companies like AEHR more frequently.
Since AEHR is a semiconductor support stock, they’re uniquely positioned. No matter who wins the semiconductor race to the top or which EV company dominates the road, AEHR benefits. AEHR is diversified, supporting 5G implementation, self-driving cars and data center infrastructure. This positions Aehr Test Systems as the perfect hidden gem among EV stocks for investors who want to capitalize on multiple emerging tech trends.
LiveWire Group (LVWR)
LiveWire Group (NYSE:LVWR) is sometimes called the “Tesla of motorcycles.” But attaching EV’s biggest name to the brand hides the value behind this EV stock to buy. The company has struggled since spinning off from Harley-Davidson (NYSE:HOG) last year, but its outlook is rapidly improving.
Recognizing shifting consumer trends, LiveWire tweaked its pricing structure to suit household budgets. The move paid off as sales climbed 15% in the most recent quarter, though it does continue operating at a net loss. Its margin is improving, though, as LiveWire posted a $14.58 million loss last quarter, down substantially from more than $40 million the quarter before.
There are effectively zero competitors within the electric motorcycle space, setting LiveWire apart as a hidden gem EV stock. Considering its financial standing and limited (current) market, it’s still risky, but its sales will likely compound as adoption accelerates.
Magna International (MGA)
Magna International (NYSE:MGA) supplies a range of automotive parts to some of the biggest names in the EV industry, including Tesla and General Motors (NYSE:GM). Like AEHR, this wide market props MGA up to win no matter which EV company dominates the driving market.
MGA’s sales are robust and climbed 10% year-over-year in the most recent report. Likewise, the company is using EV tailwinds to raise 2024 income forecasts. Admittedly, its margins are slim. Despite consistently posting revenue exceeding $10 billion, high costs keep income in the sub-$500 million range. Still, MGA’s sales and stats are steady, making it a reliable EV play to anchor a diversified portfolio.
Likewise, MGA’s stability means the company is positioned to return value to shareholders. That’s a rare trait among EV stocks, considering most prioritize growth at the expense of dividend distributions. MGA’s current yield is 3.45%—not a ton of income, but a great tool for a well-rounded EV portfolio.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
