Electric vehicle stocks were once the most-watched sector on Wall Street. Every investor was looking to find the next Tesla and any company which was remotely related to the EV sector was heavily bought. EV charging companies say a boost, and related infrastructure shot sky high as demand mounted. However, the hype has since waned. Today, high interest rates and diminishing consumer sentiment have relegated EV stocks to Wall Street’s backburner.
So when will EV stocks rebound? While investors see this market as a more cyclical beast, a rebound is most likely bound to happen when the Federal Reserve agrees to begin cutting its interest rates. Until then, if you are bullish on EVs for the long term, this is a great opportunity to load up on some of Wall Street’s continued favorite EV stocks. Here are three for May with strong buy ratings from analysts to consider.
Top EV Stocks: Tesla (TSLA)
Tesla (NASDAQ:TSLA) is the world’s largest automaker by market cap and offers five popular EV models worldwide. The struggles for Tesla have been well-documented this year but Wall Street analysts have remained bullish on the future of the company. In April, the stock saw more than 12 buy ratings from analysts including an “Overweight” rating from Cantor Fitzgerald and a price target of $230.
Bulls have been patient with this stock and the company itself. Tesla is preparing to unveil its CyberCab project in August which will showcase the company’s FSD or Full Self Driving technology. The stock also popped earlier this month when CEO Elon Musk reported that China will test the latest autonomous driving software from Tesla. As the company sets out to hand out thousands of layoffs too, it looks like Tesla is finally starting to cut costs and innovate toward the future.
Tesla’s recent struggles have deflated its once-high price multiples which often was the forefront of the bearish argument. Now however, shares are trading at a historically low 6.2x sales with a ten-year revenue CAGR of 47%. As the stock continues to provide great shareholder value, new investors should start scooping up Tesla shares quickly before a rebound.
General Motors (GM)
General Motors (NYSE:GM) is often thought of as a traditional automaker. However, the company has rapidly been advancing into the EV sector with eight fully electric vehicle offerings. Analysts agree that GM should be on your radar as 20 of 28 analysts who provided recommendations in April rated GM stock as a Buy or Strong Buy.
GM recently announced that it had delivered 441,000 vehicles to the Chinese market in the first quarter. Its number of EVs has also grown by 42.6% from last year to hit 128,000 or about 30% of GM’s vehicles sold in China. Looking even more forward, GM expects to continue expanding its product offering with several new EVs to China this year including the Cadillac Optiq EV and an EV version of Buick’s GL8 minivan.
On a price multiple basis, GM trades at very attractive levels. Shares of GM are trading at just 0.34x sales and 4.79x forward earnings. One caveat is that GM’s sales growth is slower than other EV makers like Tesla. Despite this, its strong 4% CAGR over the past five years and low price multiples maintain GM as an attractive up-and-coming EV pick.
Lithium Americas Argentina Corp (LAAC)
Lithium Americas Argentina Corp (NYSE:LAAC) is an American lithium supplier that focuses on EVs and clean energy infrastructure. Of the nine analyst recommendations in April, six of them were a Buy or Strong Buy rating. Analysts also have an average price target of $9.48 which is more than double the stock’s current price.
This company is a leading operator of the production of lithium in Argentina. Lithium Americas has long had a strong partnership with legacy automaker General Motors. GM has made significant equity investments in Lithium Americas expects to see a ramp in production for both the EV and tech hardware sectors.
Financially, Lithium Americas has had a rough few years. Not only has it recently split into two segments, but a new CEO has left the company quite volatile these past few months. Given its expensive 89x sales ratio and 15.8x forward earnings, it will take quite some faith to buy this dip in LAAC. Nonetheless, for risk-seeking investors, now might be a great time to cost average into one of the strongest lithium names on the market.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
