While seemingly everyone was talking about the electrification of mobility, a forced pit stop might yield a more favorable entry point for EV stocks to buy. Though electric vehicles are likely the future, the sector suffered a setback as the combination of sharply accelerating inflation and rising borrowing costs took their toll on consumers.
At the end of 2022, the average price of an EV stood at $61,488. With interest rates soaring, consumers outside affluent income categories simply couldn’t afford to go electric. Unfortunately, economic uncertainty meant that even with a price war erupting, demand for EVs fell sharply from their highs. Subsequently, investors questioned putting so much capital at risk in a shaky environment.
To be sure, circumstances haven’t quite rebounded fully. However, the growing pains in the sector may also give certain companies – particularly well-capitalized legacy automakers – a chance to break in. For contrarian gamblers, below are EV stocks to buy on a possible recovery.
Honda Motor (HMC)
As an auto manufacturer, Honda Motor (NYSE:HMC) is practically everywhere. Here on my side of the pond, the brand is synonymous with import culture. However, as an investment idea, HMC doesn’t really get that much love. Honestly, I can’t remember anyone talking up shares as a compelling opportunity. That’s a bit strange, though, because HMC has quietly printed a nearly 34% return in the past 52 weeks.
Just as well, Honda could be a sleeper bet when it comes to EV stocks to buy. Sure, I get that Tesla (NASDAQ:TSLA) has become synonymous with the space. However, the Japanese auto giant has been making serious inroads into the future of mobility. Earlier this month, Electrek reported that the company seeks to build a $14 billion EV and battery plant in Canada.
Such a move aligns with Honda’s pivot toward the EV space. Per its website, the automaker’s all-new, all-electric Prologue SUV should hit showroom floors early this year. Given that the brand will want to maintain its reputation for supreme reliability, HMC ranks among the intriguing EV stocks to buy.
Volkswagen (VWAGY)
One of the most popular automotive manufacturers in the world, Germany’s Volkswagen (OTCMKTS:VWAGY) presents an intriguing case for EV stocks to buy. Yes, it’s an over-the-counter play, meaning that VWAGY doesn’t trade on a proper exchange. Rather, you buy shares through broker-dealer networks. Still, as a long-term idea, Volkswagen cold pull off a surprise or two.
First, it’s relatively de-risked from its June 2021 highs. That by itself doesn’t guarantee that shares won’t drop more, just to be clear. However, you’re getting a top-tier enterprise near its spring 2020 doldrums. That might be a bit excessive in terms of a market discount. However, in the spirit of full disclosure, VWAGY trades at only 4.34X trailing-year earnings. That could be a value trap, per investment data aggregator Gurufocus.
However, the other side of the argument is that Volkswagen is bulking up its core EV offerings, including the upcoming ID.Buzz and the ID.7 fastback sedan. While the former is quirky and the latter is riveting, both offer an alternative to the same-old, same-old design of Tesla.
Toyota (TM)
A Japanese automaker that earned a reputation for reliability and quality, Toyota (NYSE:TM) might seem a strange bet for EV stocks to buy. After all, former Toyota CEO Akio Toyoda stated that a “silent majority” within the automotive industry has doubts about pursuing an EV-only approach. However, this contrarian attitude didn’t last. Toyoda is no longer head of the automaker. Subsequently, Toyota has begun a conspicuous pivot toward electrification.
Still, what I like about TM as one of the EV stocks to buy is that the underlying enterprise has much to prove. You read that right. Because of its prior contrarian attitude, Toyota lost some ground to other legacy manufacturers in the electrification race. However, that also means that it needs to distinguish itself from the competition. It can do so by doing some Toyota things.
Stated differently, by going back to its roots, the company can deliver on reliability, quality and excellent bang for the buck. That should clearly differentiate the brand from Tesla, which features notorious quality issues – including some serious ones.
Stellantis (STLA)
To be upfront, multinational automotive manufacturing corporation Stellantis (NYSE:STLA) is caught in an awkward moment. While I appreciate the long-term narrative regarding EV stocks to buy, STLA is off to a rough start this year. Of course, 2024 is still young but the company recently announced temporary layoffs at one of its facilities in Italy. The news appeared to spark some unwanted red ink in STLA.
Nevertheless, looking at the broader picture, shares gained nearly 41% of equity value in the past 52 weeks. Once its bought of volatility is over, it could be worth picking up on discount. Currently, shares trade at a practically rock-bottom forward earnings multiple of 3.73X. While that seems like a value trap, keep in mind that Stellantis’ return on invested capital (ROIC) clocks in at nearly 16%.
Basically, that’s a measure of how well a company converts capital into profitable investments. Looking ahead, riveting upcoming products such as the Dodge Charger EV – it’s like a zero-sugar version of a muscle car – should help move the needle.
General Motors (GM)
One of my favorite contrarian ideas to discuss regarding EV stocks to buy, General Motors (NYSE:GM) deserves patience. I understand that its security has been all over the place in 2023. And in the past 52 weeks, GM slipped more than 3% – not a great look by any means. Still, the opportunity to satisfy multiple consumer categories makes me bullish for the long haul.
First, GM is going all-in on EVs. It’s not just about the cars they’re going to roll off the production line. Rather, the company has invested in an all-new modular platform along with what it calls Ultium EV batteries. Moving forward, the Detroit automaker has the capability of electrifying its most iconic brands. In fact, it’s already doing that with the Hummer EV.
Second, General Motors continues to delight automotive enthusiasts, particularly with the latest-generation Corvette. In the upcoming iteration – the Corvette E-Ray – the company will deliver the first hybrid Corvette. At this point, it’s just flirting with inevitability as (in my opinion) a true e-Corvette is probably coming eventually.
So, this is a really exciting space for EV stocks to buy.
EVgo (EVGO)
Now, I could spend my last few moments with the keyboard writing about terrible EV stocks to buy just to fill the space. Or, I could go with compelling EV charging infrastructure players. Let’s do that instead, beginning with EVgo (NASDAQ:EVGO). Per its public profile, EVgo is a DC fast-charging-station network with more than 950 charging locations. Further, its stations are located in 35 states and are compatible with all major auto manufacturers.
Recently, my InvestorPlace colleague Alex Sirois labeled EVgo as one of this quarter’s must-watch enterprises. It’s hard to disagree. During a challenging time for the EV industry, the company managed to increase revenue in the third quarter by 234%, hitting $35.1 million. In turn, the top-line performance helped to significantly narrow losses from more than $50 million to just above $28 million.
As well, EVgo added 106,000 customer accounts during the quarter, pushing the total to 785,000. With the EV market projected to expand at a compound annual growth rate of 18.2% between 2024 and 2028, EVGO seems a reasonable bet for EV stocks to buy.
ChargePoint (CHPT)
When it comes to EV stocks to buy, ChargePoint (NYSE:CHPT) admittedly represents a low-confidence idea. It’s not that I don’t think it stands any chance of recovery. However, even a gambler like myself would look at a 52-week loss of 85% with some trepidation. How could you not? Even against the January opener, CHPT lost 17% of equity value.
So, if you didn’t get the message, ChargePoint is a name that you engage with pocket change that slipped through the cracks between your sofa cushions. That said, TipRanks reporter Marty Shtrubel forwarded an intriguing thought: is CHPT stock on the cusp of a near-death experience or a deep discount bargain?
Due to headwinds such as revenue declines, lack of profitability, and share dilution, investors have grown extremely skeptical about CHPT. That’s more than understandable. However, JPMorgan Chase analyst Bill Peterson projects that U.S. EV sales should grow between 10% to 15% at the least, and up to 30% to 45% realistically in 2024.
If so, ChargePoint could be an interesting idea for extreme speculation. However, that’s all this is – speculation.
On the date of publication, Josh Enomoto 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.
