The electric vehicle (EV) sector was nearly as frothy as the “pandemic stocks” in 2020. It wasn’t that the EV sector was dormant during the Trump administration.
But, as the saying goes, elections have consequences. And Wall Street understands they can make money in any administration. And as a bet that Joe Biden would win the presidency, electric vehicle stocks soared.
For starters, the Biden administration has already said it will prioritize climate change like no administration ever has. And one way they are going to do that is to incentivize the production and purchase of electric vehicles.
And to take advantage of this shift towards electric vehicle stocks, many private companies raced to get in on the action. The preferred way for many of these companies to go public was via a Special Purpose Acquisition Company (SPAC). A SPAC is basically a shortcut to the traditional IPO process.
However, what goes up frequently goes down and since late February, EV stocks have been getting battered. But this is creating an opportunity because the electric vehicle is still supposed to see exceptional growth over the next five years.
To help you take advantage of this we’ve created this special presentation that includes seven stocks that appear to be ready to take the next leg up.
Quick Links
- Tesla
- Nio
- Ford
- General Motors
- Canoo
- Romeo Power
- ChragePoint
#1 - Tesla (NASDAQ:TSLA)
No list like this would be complete, or accurate, without including Tesla (NASDAQ: TSLA). The top three EVs sold in the United States last year were all from Tesla. The Tesla Model 3 sold 38,000 vehicles. The Tesla Model Y and Model X sold 18,000 and 9,000 vehicles respectively. Tesla also benefits from having approximately 5,500 Tesla charging stations around the nation.
That’s just the United States. Tesla also doubled its sales in China to $6.6 billion. That represents about 20% of Tesla’s 2020 revenue.
Still, Tesla stock is down approximately 12% in 2021. I guess you can chalk this up to all good things coming to an end. It has to give the Tesla bears some satisfaction. Even if their bearish takes (of which I had one or two) are like a broken clock; at least this is one of those times.
But the current downturn in Tesla stock really appears to be more of EV fatigue (and maybe a little bit of the company’s Bitcoin decision) rather than a lack of belief in the company. That’s not likely to last long.
About Tesla
Tesla, Inc designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services.
Read More - Current Price
- $421.06
- Consensus Rating
- Hold
- Ratings Breakdown
- 17 Buy Ratings, 14 Hold Ratings, 9 Sell Ratings.
- Consensus Price Target
- $272.06 (35.4% Downside)
#2 - Nio (NYSE:NIO)
A year ago, I would have laughed at myself for including Nio (NYSE:NIO) as an EV stock ready for a resurgence. What a difference a year makes.
Nio is now well-positioned to be one of the leading EV manufacturers in China. And its becoming increasingly likely that the company may successfully branch out to Europe and, maybe, to the United States.
NIO stock is down nearly 30% for the year at the time of this writing. And it’s hard to pinpoint exactly why. The company’s latest earnings report was solid. The company is on pace to 90,000 vehicles this year. And their battery-as-a-service (BaaS) initiative is an innovative solution to an issue that is critical to creating EV adoption.
Maybe investors are saying that fundamentals matter. If they do, then they’re certainly not grading Nio on a curve. Because while the company will not be free cash flow positive for some time, they did cut their net loss by nearly half in 2020. And Nio president Lihong Qin believes the company can be profitable in one to two years.
About NIO
NIO Inc designs, manufactures, and sells electric vehicles in the People's Republic of China. The company is also involved in the manufacture of e-powertrain, battery packs, and components; and racing management, technology development, and sales and after-sales management activities. In addition, it offers power solutions for battery charging needs; and other value-added services.
Read More - Current Price
- $4.54
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $5.71 (25.8% Upside)
#3 - Ford (NYSE:F)
Unlike the Tesla or Nio, Ford (NYSE:F) stock is up for 2021, and quite substantially. The legacy auto maker’s stock is enjoying a compelling 44% gain. However much of this recent success has to do with the unexpectedly high demand for its relaunch of the Ford Bronco, an SUV with an internal combustion engine.
But while the Bronco may be Ford’s present, the company has made it clear that electrification is its future. In fact, the company made that commitment many years ago. But the market hasn’t really rewarded Ford for that effort. Partly because investors understood that a true electric future was years away.
But it’s getting a lot closer. And now investors are starting to like what they’re hearing. The company plans to go all-electric in Europe by 2030. And it will only offer electric and hybrid models in Europe as of 2026. And here in the United States, Ford plans to launch over a dozen EVs in the next two years. Leading the way will be the Mustang Mach-E which will be available this summer.
About Ford Motor
Ford Motor Company develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments. The company sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to commercial fleet customers, daily rental car companies, and governments.
Read More - Current Price
- $9.88
- Consensus Rating
- Reduce
- Ratings Breakdown
- 3 Buy Ratings, 7 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $11.83 (19.8% Upside)
#4 - General Motors (NYSE:GM)
General Motors (NYSE:GM) along with Ford is the other legacy automaker on this list. GM stock is up approximately 40% in 2021 despite a recent 5% pullback in the stock. But that is largely due to the automaker’s current struggle to deal with the global chip shortage.
However, General Motors stock is not soaring to a new five-year high because of its internal combustion cars and trucks. Rather, GM is pledging to be all-electric by 2035. And the company’s path to this future is its Ultium Platform. The platform, which GM describes as “revolutionary” will be a part of the 30 EV’s the company plans to have available globally by 2025.
And similar to Tesla, GM has formed a partnership with EVgo, a company with the largest public fast-charging network. Over the next five years, the two companies will work to add more than 2,700 of EVgo’s fast chargers.
About General Motors
General Motors Company designs, builds, and sells trucks, crossovers, cars, and automobile parts; and provide software-enabled services and subscriptions worldwide. The company operates through GM North America, GM International, Cruise, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Baojun, and Wuling brand names.
Read More - Current Price
- $51.81
- Consensus Rating
- Hold
- Ratings Breakdown
- 10 Buy Ratings, 9 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $58.70 (13.3% Upside)
#5 - Canoo (NASDAQ:GOEV)
You may notice that this list of stocks has been lacking some of the SPAC stocks that proliferated in 2020. There’s a reason for that. They’re speculative stocks. And right now, I’m looking at stocks that I believe have a stronger case. One of them is Canoo (NYSE:GOEV).
The key to Canoo’s success may be that it is offering something that is truly different. Its initial offering is expected to be a multipurpose delivery vehicle (MPDV) that is somewhat like a “party bus.” The company uses a “by wire” system as part of its “skateboard” platform. This will be a key to any autonomous driving capability.
And Canoo is also getting into the commercial space with a last-minute delivery vehicle that uses the same skateboard platform.
Another feature of Canoo that shows a lot of promise is that rather than selling their vehicles, it plans to use an SaaS model. Consumers lease the vehicle for a specified term. When they’re finished they return it. This will allow the company to lease the car to several different owners.
About Canoo
Canoo Inc, a mobility technology company, designs, develops, markets, and manufactures electric vehicles for consumer, commercial fleet, government, and military customers in the United States. the company utilizes its multi-purpose platform architecture, a self-contained, fully functional rolling chassis that directly houses the critical components for operation of an electric vehicle, including its in-house designed proprietary electric drivetrain, battery systems, advanced vehicle control electronics and software, and other critical components.
Read More - Current Price
- $0.09
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 5 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $22.71 (26,428.4% Upside)
#6 - Romeo Power (NYSE:RMO)
In addition to being a year when many electric vehicle stocks went public, 2020 will also be known as the year when battery technology took center stage. That’s where Romeo Power (NYSE:RMO) comes in. Romeo Power is creating a battery that checks two of the most important boxes when it comes to EV batteries.
First, the batteries will have 25% higher energy density allowing vehicles to go further on a single charge. The lithium-ion battery will also be able to operate at optimal temperature even in areas that are subject to extreme climates. This is a key to making batteries a practical option throughout the country.
The company is only targeting the commercial sector for now, specifically Class 1 to Class 8 commercial trucks. But this is a key sector. Although fleet operators scaled back on their EV initiatives during the pandemic, they are planning to accelerate their plans as a way of managing their fleet costs.
About Romeo Power
Romeo Power, Inc, an energy storage technology company, designs and manufactures lithium-ion battery modules and packs for vehicle electrification in North America. The company designs and manufactures battery modules, battery packs, and battery management system technologies; and provides non-recurring engineering services, such as design, prototype, and testing services.
Read More - Current Price
- $0.35
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - ChragePoint (NYSE:CHPT)
If the nation is going to adopt electric vehicles on a mass scale, the nation will need a reliable, widespread charging network. And ChargePoint (NYSE:CHPT) has the world’s largest EV charging network with over 109,000 charging stations.
ChargePoint came public via a reverse merger with the SPAC Switchback Energy (NYSE:SBE). But since trading publicly under the CHPT ticker, the stock is down 32%.
An investment in ChargePoint comes with a belief that the company will be able to expand on its network of charging stations. Given the likelihood that the nation will need tens of thousands of new charging stations, it’s likely the company will be able to do just that. This is particularly true since the company was able to raise its cash position by $615 million which the company is likely to put towards aggressive growth.
However, it’s not a sure thing. As evidenced by Tesla, EVgo, and ChargePoint’s main competitor, Blink Charging (NASDAQ:BLNK), this space will continue to get crowded.
About ChargePoint
ChargePoint Holdings, Inc, together with its subsidiaries, provides electric vehicle (EV) charging networks and charging solutions in the North America and Europe. The company serves commercial, such as retail, workplace, hospitality, parking, recreation, municipal, education, and highway fast charge; fleet, which include delivery, take home, logistics, motor pool, transit, and shared mobility; and residential including single family homes and multi-family apartments and condominiums customers.
Read More - Current Price
- $1.24
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $2.46 (98.0% Upside)
As 2021 is almost ready to enter its fourth month, the EV enthusiasts must be starting to wonder when the payoff is going to come. The political class may be wondering as well. In March, two California senators implored the Biden administration to set a firm date for phasing out gas-powered passenger cars and trucks.
This temporarily gave the sector a bump. But the sustained gains you’re looking for will require more hope than hype. The research firm Blastpoint found that EV sales increased by 30% in 2020. The report stated that 345,000 EVs were sold in the U.S. in 2020. That boosted the total number of EVs to 1.5 million higher than the 1.12 million in March of the previous year.
And the company projects a 71% increase in 2021. This corresponds to a 25% increase in charging stations in 2020.
And most of the stocks in this presentation have proven results that should ensure that they will be among the leading companies as this sector continues to mature.
More Investing Slideshows:
