EV stocks have multiplied in Tesla's$Tesla Motors(TSLA)$ wake and as electric cars look to go mainstream — but not all are created equal. Some car stocks are more ready than others for an EV future. Here are the top-rated electric vehicle makers and EV plays.
Companies with two important characteristics generally make the best candidates for stocks to buy and watch, according to CAN SLIM guidelines. First, they need strong track records of earnings growth. Second, the stock should be showing elements of market outperformance, and be shaping bullish chart patterns.
But most of the new EV stocks have neither. They include Fisker$Fisker Inc.(FSR)$, Canoo$Canoo Inc.(GOEV)$ , Faraday Future$Faraday Future Intelligent Electric Inc.(FFIE)$ , Lordstown$Lordstown Motors Corp.(RIDE)$ and Xos$XOS Inc.(XOS)$ . In fact, many of these EV startups aren't producing or delivering electric vehicles yet.
However, two startups have begun selling their first electric vehicles, bringing in revenue. Lucid Motors$Lucid Group Inc(LCID)$ began deliveries of the Lucid Air, a luxury electric sedan, on Oct. 30. Rivian Automotive$Rivian Automotive, Inc.(RIVN)$ has also started delivering the R1T, an electric pickup, with the R1S SUV due early this year.
Meanwhile, Chinese EV stocks like Nio$NIO Inc.(NIO)$ , Xpeng$XPeng Inc.(XPEV)$ and Li Auto$Li Auto(LI)$ sell tens of thousands of vehicles, but remain unprofitable for now. Then there are legacy auto giants like General Motors$General Motors(GM)$ , Ford $Ford(F)$ and China's BYD Co. $BYD Co., Ltd.(BYDDF)$ that are transforming into electric-vehicle powerhouses.
Ferrari$Ferrari NV(RACE)$ plans to launch its first all-electric supercar in 2025, joining the ranks of EV stocks after resisting the shift to electric vehicles for decades.
Electric Car Stocks Include Battery Stocks, Charging Stocks, EV Suppliers
The growing universe of EV stocks doesn't end with carmakers. A constellation of other companies provides car batteries, car charging stations, electric motors and other EV-associated products. Among them are EV charging networks ChargePoint$ChargePoint Holdings Inc.(CHPT)$ , EVgo$EVgo Inc.(EVGO)$ , Blink Charging$Blink Charging(BLNK)$ and Wallbox$Wallbox Inc.(WBX)$ .
Hyliion$Hyliion Holdings Corp.(HYLN)$ is developing electric powertrains for big-rig trucks as well as powertrains that can be compatible with renewable natural gas and hydrogen fuel cells.
Romeo Power$Romeo Power, Inc.(RMO)$ makes battery packs for commercial EV fleets. QuantumScape$Quantumscape Corp.(QS)$ touts a major breakthrough in solid-state lithium metal batteries. And Global X Lithium and Battery Technology ETF (LIT) holds a basket of stocks, from lithium miners to battery producers, poised to benefit from the rise of electric vehicles.
Magna$Magna(MGA)$ , a Chevy Bolt supplier, will make battery enclosures for GM's new Hummer electric truck. Magna already makes e-drive gearboxes for Nio and Xpeng. The company also will make the Fisker Ocean SUV, due out late next year.
Best EV Stocks To Buy Or Watch
The charts of most EV stocks are under fresh strain after severe damage in the past year. Broadly, both established automakers and startups are a speculative bet on electric vehicles, itself seen as a nascent field. They have suffered as a risk-off sentiment prevails in the current market, and as shortages of key components drag on.
Tesla stock, the top auto and EV stock by market capitalization, has an IBD Composite Rating of 89 and an EPS Rating of 75. Shares tried to clear a 1,208.10 double-bottom buy point on Jan. 3, then slid. On a weekly chart, the IBD Leaderboard stock is trying to get back above its 40-week moving average after falling below the 10-week average, and its relative strength line is lagging. In the longer term, the RS line shows a big uptrend.
Tesla predicts 50% average annual growth in vehicle deliveries. In 2021, Tesla grew deliveries 87% to 936,172 vehicles. Its first electric pickup truck, the Cybertruck, is due in late 2022. The new Model S Plaid is Telsa's fastest car yet, going from zero to 60 miles per hour in less than two seconds.
Ford stock has a Composite Rating of 53 and an EPS Rating of 22. Ford shares are below their 40-week moving average and well below a falling 10-week line, after ripping higher in the past year. On March 2, Ford announced a new business, Ford Motor e, which will exclusively develop and scale electric vehicles, such as the new Mustang Mach-E SUV and the F-150 Lightning pickup truck. The Lightning is due in the spring. Ford also owns 12% of Rivian. By 2025, Ford plans to spend $30 billion to develop and scale electric vehicles. By 2030, Ford expects half of its global sales to be fully electric vehicles.
Li Auto Stock, Lithium ETF
Li Auto stock has a Comp Rating of 73 and an EPS Rating of 71. Like most China-based stocks, Li Auto trades in American depositary receipts. The EV stock is below the 10-week average, which has fallen below its longer-term, 40-week counterpart, which is a negative.
The China EV startup makes a single premium electric vehicle — the Li One SUV. Among its unique features, the Li One includes a gasoline-driven engine, used only to charge the vehicle's battery, extending the range the car can travel. Li Auto continues to grow EV sales at a robust pace, after nearly tripling 2021 sales. It plans to expand its product line with more new vehicles, both all-electric EVs as and "EREVs," or extended-range EVs, like the Li One. Li Auto is growing quarterly revenue at a triple-digit pace, though consistent profits are a way off.
The Global X Lithium and Battery Technology ETF rallied sharply for most of 2020 and 2021. The ETF fell sharply from a November peak and remains below both its 10-week and 40-week lines. It has a Relative Strength Rating of 48 out of a possible 99. That means it has outperformed 48% of all stocks in IBD's database during the past year. Its largest holdings include Albemarle (ALB), as well as China's BYD and Tesla. The LIT fund also invests in miners and refiners of lithium, as well as battery producers. Most of today's all-electric vehicles and plug-in hybrid EVs use lithium-ion batteries.
Global automakers, including GM and Ford, have set goals for an all-electric future. Regulators in the U.S., China and Europe are pushing EV adoption. Over the next five years, forecasts call for lithium demand to increase by more than 200%, Global X says.
BYD (BYDDF) has no Composite Rating and an EPS Rating of 24, but it is profitable. Shares are below the 10-week and 40-week averages, but ran shaply in the latter half of 2021. The risk of companies delisting from U.S. exchanges, and industry-wide shortages of critical components, are just two factors weighing on China EV stocks. BYD is Hong Kong-listed, trading over the counter in the U.S.
The Chinese car and battery giant is ramping up on electrification. BYD grew EV sales 764% in February, year over year, after more than tripling EV sales in 2021. Month over month, February sales fell for both BYD and Li Auto amid EV subsidy cuts and other woes. Backed by Warren Buffett's Berkshire Hathaway$Berkshire Hathaway(BRK.B)$ $Berkshire Hathaway(BRK.A)$ , BYD has begun selling the Tang electric SUV in Norway. It will likely substantially increase exports in 2022, with Europe and Australia among the key markets. A major EV battery maker and supplier, BYD also makes its own chips, which allowed rapid expansion in 2021.
In the near term, EV stocks will continue to face chip constraints but those are starting to lessen. Battery costs and shortages could be an issue in the mid-term, as supplies of lithium and other raw materials struggle to keep up with demand. Longer term, more government support is likely headed for electric vehicles, while greater EV production should help bring down vehicle prices.
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