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Electric vehicle (EV) stocks have sparked divisive opinions among investors over the past few years. Though some feel that EVs still boast significant growth potential, others remain skeptical. Hence, given the market uncertainty, it may be an opportune time to pounce on the best EV stocks to buy.
The sector is up against multiple obstacles at this time, with the industry’s finest shedding a ton of value. You know when a sector is in duress when the bellwethers post year-over-year (YOY) growth in deliveries yet are panned by investors. Additionally, we’ve seen the attempts to lower EV prices haven’t had the desired effect EV companies would’ve wanted. Price reductions have, comically, led to consumers delaying purchases in anticipation of further declines. Nevertheless, a few players still stand out despite the industry turmoil. The article covers the three best EV stocks to buy in the current investing environment.
Li Auto (LI)
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Li Auto (NASDAQ:LI) is a leading Chinese automotive player focusing on high-end smart electric and hybrid vehicles. It is one of the fastest-growing EV companies worldwide, with deliveries increasing by over 1,000% from 2020 to 376,030 units last year. What separates Li from its competition is its superior execution and solid financial position.
As per its latest earnings print, the company had a colossal cash buffer of $14.6 billion, considering it had just $512 million in cash back in 2019. This emphatic result has everything to do with its rapid growth rates, which have averaged over 500% in the past five years. Another major positive for the firm is that it’s profitable on a net profit basis. Profitability has proven elusive for some of the biggest in the EV realm and is perhaps the biggest edge for Li. Moreover, its robust bottom-line position will come in handy as it looks to navigate the current pricing war in China.
BYD (BYDDY)
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BYD (OTCMKTS:BYDDY) is a no-brainer for any EV stocks to buy list. It has ascended the ranks in the EV industry at an impressive pace, arguably becoming the most illustrious growth story in automotive history. It continues to outperform industry pioneer Tesla (NASDAQ:TSLA) in terms of deliveries and margins despite operating in a hotly competitive Chinese EV market.
Moreover, BYD’s global aspirations are bound to ruffle some feathers among Tesla’s executive team. BYD is laying the groundwork for international expansion, with massive investments in EV charging infrastructure to tighten its market hold further. With easing demand, it could turn things up a notch or two as far as its top-line growth is concerned.
Speaking of which, it reported 936,446 sales in passenger vehicles on a year-to-date basis earlier this month, with a roughly 18% jump in pure EV sales to 434,579. Despite the market headwinds, such growth says something about the quality of BYD’s business.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) is arguably the best pick-and-shovel EV play, currently trading at a deep discount. The lithium miner hosts one of the largest lithium projects in history, which could potentially power one million EVs annually. LAC stock, though, has lost its sheen over the past few months, trading more than 75% lower than its peak of $24.31. Moreover, it dipped 31% year-to-date, trading in penny stock territory.
The company is pushing forward to reach full operational capacity at its much-talked-about Thacker Pass Project in Northern Nevada. Construction started early last year and plans to go full-steam ahead in the latter half of 2024. It aims to achieve full productive capacity by 2028, extracting a whopping $3.9 billion in lithium. Moreover, following a massive $2.26 billion commitment from the U.S. Department of Energy and a prior investment from General Motors (NYSE:GM), it has enough resources to switch on the afterburners.
On the date of publication, Muslim Farooque 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.
