These three EV stocks are certainly worth a look right now
- These three vehicle stocks are among analysts’ top picks right now.
- Tesla (TSLA): This stock has been in a massive slump, but can rise again in 2023.
- Nio (NIO): Nio increased EV sales by 34% in 2022. Will it set a new record in 2023?
- Li Auto (LI): Li Auto has increased its sale by 47% in November, with expectations this can continue in the coming quarters.
It’s often said that the stock market is more of a market of stocks. That saying refers to the idea that picking good stocks can boost investors’ performance during these turbulent times. When it comes to electric-vehicle stocks, that’s especially true.
The valuations of these high-growth companies took off in 2020 and 2021, as investors and analysts increased their growth outlooks amid the rosy economic period. However, with the Federal Reserve’s foot firmly on the break, the space’s valuations are coming down, as tight monetary policy is not so great for high-growth stocks.
That said, the three electric-vehicle stocks I’m going to discuss in this article are all top-notch names. They have positive ratings from analysts, strong growth outlooks, and established manufacturing bases. For those concerned about weakening demand and potential price pressures during a potential economic downturn, these firm are the most recession-resistant EV makers.
With that said, let’s dive into three electric vehicle stocks to buy right now.
The obvious choice among most investors in the EV space, Tesla (NASDAQ:TSLA) has been leading the pack for some time. The most valuable electric vehicle stock by far, TSLA has provided massive gains to long-term investors who bought its shares around the time of its IPO.
Of course, the stock’s recent performance hasn’t been great, even in relation to other tech stocks in the Nasdaq. Additionally, I think the company will perform badly in the near term and the medium term.
That said, for long-term investors looking to buy a relatively small amount of TSLA stock and add more later, the shares could be a great pick. The company released its third-quarter results in October. The EV manufacturer posted earnings of $1.09 per share and revenue of $21.5 billion. Analysts, on average, had expected the firm to report $22.5 billion of revenue and earnings per share of $1.01.
Notably, the company’s year-over-year revenue growth rate of 55.9% makes it a good fit for growth investors. While its sales gains are likely to slow in the near-term, it has plenty of room to grow over the long term as it boosts its manufacturing capacity.
The first of the Chinese electric vehicle stocks on this list is Nio (NYSE:NIO). Nio is among the leading pure-play EV stocks in China, and it has a truly domestic focus. For those bullish on the Chinese EV market, Nio is among the best picks due to the company’s quality tech and interesting battery-swapping stations.
The company enables consumers to lease batteries for their vehicles and obtain new, charged batteries when they run out of power as opposed to buying batteries outright. As a result, the purchase prices of Nio’s cars are relatively cheap, increasing their attractiveness to consumers.
With China looking to massively boost EVs’ market share, Nio has plenty of room to grow, despite the intense competition it faces. The company reported that its Q3 deliveries jumped 29% versus Q3 of 2021 to an impressive 31,607.
Nio also reported a loss per share of 36 cents and revenue of $1.8 billion for the quarter, though its revenue did rise 20% versus the same period a year earlier.
Fundamentally-speaking, Nio has work to do to become profitable. However, it’s still early in the game for this fast-growing company. Those thinking about the long term may be well-rewarded if they buy the stock slowly over time.
Like Tesla, Nio’s shares could fall further in the near term. But over the long term, this company has one of the best outlooks of any of the stocks on this list.
Li Auto (LI)
Li Auto’s (NASDAQ:LI) stock price has recovered nicely after it fell from about $40 per share to as low as $14. Today investors need to pony up around $22 for a share of Li. That price is closer to its true value, in my view.
However, many analysts are more bullish than I am about the company’s near-term prospects. DBS Bank recently initiated LI with a “buy” rating and a $29 price target. According to TheFly.com, Jefferies also started the shares with a “buy” rating. Placing a $20.66 price target on Li, the bank referred to the EV maker as its “preferred [EV] start-up.”
Li, whose deliveries soared 51% in December and 31.5% all of last year, is providing plenty of growth. Try finding that growth in any other sector.
Among Chinese EV companies, Li is one of the smaller players, but its shares can climb tremendously. Thus, for long-term investors looking for an aggressive pick, LI stock may be a great name.
Of course, no one knows how this sector will shape up a year from now, never mind in a a decade or two. However, for investors with long-term outlooks, the EV sector is worth looking at, given its low valuations.
This post originally appeared at InvestorPlace.
On the date of publication, Chris MacDonald 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.