Investing in electric vehicle (EV) stocks has become a standout trend of the decade. However, it comes with inherent volatility.
As of 2024, global EV demand shows signs of weakening. Despite this, the future of the sector is generally viewed with optimism. Yet, it’s crucial for investors to recognize that not all EV companies may withstand the challenges ahead.
The past decade has seen a surge in the number of EV startups. Many still aren’t profitable and may further struggle to ever achieve profitability. The auto industry is notorious for its fierce competition and high capital demands.
Given these factors, it’s essential for investors to be selective when investing in EV stocks. With EVs increasingly capturing market share, strategically adding EV stocks to your portfolio could be wise for long-term growth.
Here are my top three picks for potentially high-return EV stocks to consider now!
Tesla (TSLA)
Experiencing a notable decline this year, Tesla (NASDAQ:TSLA) stock has dropped nearly 40% year-to-date (YTD). The company faced challenges such as EV demand slowdown and pricing pressures, which have impacted its profit margins. Nevertheless, Tesla remains robustly positioned for future growth due to its expansive market reach and strong competitive edge.
Also, the company is seeing significant advancements in its energy storage segment. A 90% year-over-year (YOY) increase in energy deployments are reported in its Q3 2023 financials. Tesla is planning to expand its capacity to 40 GWh at its megafactory in Lathrop, California.
Further, TSLA is one of those underrated picks for investors to consider due to valuation dropping dramatically, giving it multibagger potential. Currently, it trades at around 34 times earnings, which is substantially lower than its 5-year average.
EVgo (EVGO)
Operating a robust network of fast EV charging stations, EVgo (NASDAQ:EVGO) has over 850 locations across the U.S.. It serves more than 500,000 customers. It’s estimated that 42% of Americans live within 10 miles of an EVgo charger. The company has ambitious plans to triple its size within the next five years.
Despite some analysts’ mixed views on EVgo’s future, many investors and analysts are optimistic about its role in the expanding market for EV charging solutions. This optimism is driven by the increasing EV adoption and the implementation of eco-friendly government policies.
With a 59.24% predicted increase for its revenue in 2024, this also comes with a substantial predicted bottom-line expansion. Profitability for EVGO is expected some time around FY2028. And with it trading at such low multiples, it’s one of those EV stocks that could have multibagger potential.
BYD Company Limited (BYDDF)
BYD Company Limited (OTCMKTS:BYDDF) has significantly impacted the Chinese EV market, making notable strides on the global stage. It is positioning itself as an attractive investment option, especially for those interested in the emerging markets like China. In November 2023, BYD Company Limited set a new record by selling over 170,000 EVs. This achievement is a notable increase from the previous month and surpasses competitors like Nissan in monthly sales figures.
One of the standout achievements of BYDDF is its global delivery of around 70,000 buses. This contributes significantly to reducing CO2 emissions worldwide. In Europe alone, these buses have helped save approximately 150,000 tons of CO2 emissions.
Most of BYDDF’s vehicles are produced in China and then sold domestically within China. This gives the company a competitive edge, as Chinese lawmakers try to ramp up domestic production and consumption of Chinese goods. It’s an unmatched advantage that can’t easily be replicated, providing a robust competitive moat.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
