The crisis is becoming an opportunity for down, but not out, EV stocks.
All thanks to a resurgence of strong electric vehicle sales.
As noted by Cox Automotive, “Electric vehicle sales in the U.S. grew by 11.3% year over year in the second quarter, reaching a record-high volume of 330,463 units, according to new estimates from Kelley Blue Book.” Even now, with sales only expected to accelerate, we need more EV charging stations. Unfortunately, we’re still waiting for that to happen.
Even better, many of the top automakers in the world are seeing EV sales accelerate year over year. Ford Motor (NYSE:F) sales jumped 86.1% in the first quarter. Mercedes (OTCMKTS:MBGYY) sales were up about 67%. BMW (OTCMKTS:BMWYY) EV sales jumped about 58%, while Toyota’s (NYSE:TM) EV sales rocketed by nearly 86%.
With those numbers only expected to grow, now is a great time to invest in EV stocks. That includes electric vehicle stocks such as:
Tesla (TSLA)
When I last mentioned Tesla (NASDAQ:TSLA), I said, “It’s time to buy the fear. Sales have slipped, but it’s still dominating the market. With EV sales regaining momentum, I’d like to see Tesla initially retest $205 from that last traded price.”
That was on June 17, as Tesla traded at about $173.
It’s up to $240 and is still a buy on its recent slight pullback.
Granted, analysts at Barclays are still cautious about the stock, concerned about headwinds, including its newer focus on robot axis. But I don’t think there’s much to be concerned about.
Analysts at Baird have an outperform rating on Tesla ahead of earnings, noting that they’re buying the stock ahead of that event.
As noted by Investing.com, “Baird’s positive outlook stems from a more stable pricing environment during the quarter, higher revenue from full self-driving and a significant beat in the Energy Segment as factors supporting a strong quarter.”
Albemarle (ALB)
Growing demand for electric vehicles will translate into growing demand for more lithium.
While Albemarle (NYSE:ALB) has certainly seen better days, the pullback has become overkill, making it a buying opportunity. Better, as we wait for the eventual rebound in lithium and ALB, we can collect the stock’s dividend of just over 40 cents a share, payable Oct. 1 to shareholders of record as of Sept. 13.
With plenty of fear now priced in and a potential near-term recovery in lithium prices thanks to EV sales, it’s time to buy the excessive fear here. In addition, if the Federal Reserve cuts interest rates this year, as expected, it could drive even higher electric vehicle sales and related EV-related investments.
Helping, recent earnings growth wasn’t too shabby. In its first quarter, the company posted adjusted earnings per share of 26 cents, which beat by a penny. Also, its total revenue did rise to $1.36 billion, which was better than the $1.29 billion forecast.
Global X Autonomous & Electric Vehicles ETF (DRIV)
Or, if you want greater exposure to electric vehicle (EV) stocks at less cost, look at the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV).
With an expense ratio of 0.68%, the ETF currently invests in 75 stocks involved in the development of autonomous vehicle technology, electric vehicles and EV components and materials. Some of its top holdings include Nvidia (NASDAQ:NVDA), Toyota, Microsoft (NASDAQ:MSFT), Tesla and Apple (NASDAQ:AAPL).
After rallying from about $22 to a high of $5.20, DRIV is pulling back with the broader market. However, I’d use this weakness as an opportunity to buy the ETF for the long haul. For one, I expect EV sales to accelerate even more moving forward. Second, if the Federal Reserve does cut interest rates around September, it would be another strong catalyst for electric vehicles.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
