The electric vehicle (EV) market happens to be one of the fastest-growing consumer focused segments in the transportation sector. However, some of these companies might have hit a speed bump. Last week, Tesla (NASDAQ:TSLA) reported its Q4 earnings and investors were not happy. Not only did the famed automaker miss Wall Street’s earnings estimates, but it warned of weaker growth to come in 2024.
This bit of news hit Tesla’s shares hard, but the list below doesn’t involve Tesla. Rather, we will go through three EV stocks in January 2024 that have maintained stellar growth potential in a tough EV market. These EV stocks have also received “Strong Buy” ratings from Wall Street analysts.
Rivian (RIVN)
Rivian (NASDAQ:RIVN) is an EV stock that Wall Street analysts seem to be loving. According to Koyfin, the EV maker has a “Strong Buy” rating. Rivian generated more than $3.7 billion in revenue over the last twelve months, based on robust delivery.
I have written previously that investors should proceed with caution as they consider investing in Rivian shares. Rivian is certainly overvalued, producing and delivering only a minimal number of vehicles compared to its sizable market capitalization. Not to mention, Rivian is not yet profitable and has been significantly depleting its cash balance — $18.1 billion in 2021 to $11.6 billion at the end of 2022.
If Rivian’s deliveries continue this upward trend, as they did for much of 2023, the EV maker could conceivably take some of Tesla’s luxury segment customers.
BYD (BYDDY)
I think it will be hard to create an EV buy list in 2024 without mentioning the Chinese electric vehicle and battery manufacturer, BYD (OTCMKTS:BYDDY). This EV maker has garnered a number of achievements recently. In tandem with having an undisputed market position in China, the company also became the world’s top EV maker in 2023. The Chinese EV maker was able to trounce its American rival, Tesla (NASDAQ:TSLA) in terms of electric vehicle sales. In Q4 2023, BYD sold 526,409 electric vehicles, while Tesla sold 484,507. Moreover, BYD also dethroned Volkswagen (OTCMKTS:VWAGY) as the number one selling car brand in China.
BYD has also diversified its business into not only manufacturing electric vehicles but also supplying the batteries that power them. The automaker became a key player in the battery market, ousting LG Energy Solutions as the second EV battery supplier in the world. These glowing characteristics coupled with the company’s remarkable growth make it easy to understand why Wall Street has rated BYD shares a “Strong Buy”. While BYD is less known in the U.S., it has a dominant presence in China and is growing its sales in overseas Asian markets.
Tesla’s Elon Musk has also warned Chinese EV makers like BYD will find tremendous success outside of China and will likely “pretty much demolish” most other EV competitors.
Li Auto (LI)
Li Auto (NASDAQ:LI) is one of leading electric vehicle (EV) manufacturers in China that focuses on producing smart SUVs with extended-range technology, and the company also has received a “Strong Buy” rating from Wall Street analysts. The company’s flagship model is the Li L7, a five-seater premium SUV that can run on both electricity and gasoline and competes directly with Tesla’s (NASDAQ:TSLA) Model Y.
Li Auto has been growing rapidly in recent years, as it benefits from the increasing demand for EVs in China. Consistent monthly sales growth continues to show Li Auto’s vehicles are in high demand in the world’s largest auto market. Li Auto’s total deliveries increased 182% on a year-over-year basis in 2023 to 376,030. The automaker has so far deliveries over 600,000 vehicles.
From a valuation perspective, Li Auto’s stock remains attractive. The stock is trading at only 18.8x forward earnings, which puts its valuation well below that of Tesla’s. Investors willing to bet on the dynamism of China’s EV sector should give Li Auto a look.
On the date of publication, Tyrik Torres 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.
