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These electric vehicle players are worth considering right now
When most investors think about investing in EV stocks, one name comes to mind – Tesla (NASDAQ:TSLA). The company that started it all, Tesla remains the gold standard. Most EV companies aspire to reach Tesla’s success, in terms of mass market adoption and brand power.
However, the EV market is expanding, with competition increasing rapidly in the U.S. and globally. It thrived last quarter, selling over 300,000 in the U.S. and showcasing the surging demand for eco-friendly vehicles. Experts predict that by 2025 half of global car sales will be EVs, with 85% in the U.S.
Despite fierce competition, the EV sector holds substantial growth potential. While relatively new, it offers profit opportunities. Let’s explore this sector with three promising EV stock picks.
China’s automotive giant BYD Co. (OTCMKTS:BYDDF), a formidable rival to Tesla, also happens to be the world’s second-largest battery manufacturer.
Its Blade Battery has proven itself more superior and cost-effective than traditional lithium-ion batteries, earning recognition from Tesla. Furthermore, BYD is expanding its offerings with a new sub-brand. It will be introducing SUVs, off-road vehicles, and sports cars, thereby showcasing astute market insights. The company’s financial performance is equally remarkable, with profits surging by 204% in just six months.
Also, BYD Co. from China is set to establish its first European plant in Hungary instead of Germany, with an official announcement expected by year-end. Construction is planned to commence within two years. BYD already operates an assembly plant for electric buses and trucks in northern Hungary. The country, led by Prime Minister Viktor Orban, has become a prominent European center for the electric vehicle industry.
Amid China’s economic slowdown, both the EV and semiconductor industries have thrived. However, BYD’s shares have only seen a 23% increase this year. As a result, BYD’s forward earnings multiple stands at 19.0x. And, its forward EBITDA multiple at 9.8x, making it more affordable than its primary rival, Tesla.
Li Auto (NASDSAQ:LI) exceeded Q3 delivery targets with 105,108 units, impacting expected revenues between $4.46 billion and $4.59 billion. High expectations surround the upcoming November 9 quarterly results. Q2 showed an EPS of 36 cents, with a 228% year-over-year (YOY) revenue surge to $3.95 billion. Li Auto achieved its monthly delivery goal with 40,422 cars in October.
Despite a 73% year-to-date (YTD) increase, the stock, at $36, seems undervalued. It holds potential for substantial growth in 2024. If quarterly results surpass expectations, further stock surges could make it a standout in the EV sector.
Additionally, the impending LI MEGA launch has generated excitement, signaling strong growth prospects. Li Auto’s rapid retail expansion in China is another accolade. With a healthy $10.17 billion in cash and equivalents at the end of Q2, the company has the financial strength to drive innovation and retail expansion. Upcoming models and the highly anticipated Li MEGA, debuting in December, position the EV giant for success in China.
XPENG Motors (NYSE:XPEV) is beaming proudly over its announcement of a recent accolade.
The international edition of its high-tech sedan, the XPENG P7, was nominated for the Premium Electrical Car of the Year award for 2023/24 by Lyd & Billede Home. The 2023 Euro NCAP test awarded XPENG P7 a 5-star safety rating. It showcased its outstanding safety features and body structure, impressing the European market.
Further, Europe’s EV industry hinges on establishing 250 battery plants in the next decade. It projects global EV battery market growth of 800% in five years. These plants are vital as EV performance relies on the batteries they use. Europe offers incentives to attract battery plant investments. In fact, Chinese manufacturers are eyeing this opportunity due to favorable regulations.
Recently, XPeng delivered its largest export batch to Israel, despite overseas rules. Partnered with Israel’s Frisbee, the Chinese EV maker customizes products to meet consumer preferences. XPEV expanding successfully beyond China’s competitive market, emphasizing growth and profitability. XPeng stands out as an EV stock worth considering.
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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
Automotive, Battery, Consumer Discretionary, Electric Vehicles, Lithium, Energy, Renewable Energy
Article printed from InvestorPlace Media, https://investorplace.com/2023/11/3-ev-stocks-that-are-a-much-better-buy-than-the-one-that-started-it-all/.
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