The 3 Best EV Stocks to Own for the Next Decade
As the world shifts toward cleaner energy and environmentally sustainable practices, demand for electric vehicles and related products and services has soared. This has caught the attention of growth investors on the hunt for the best EV stock…
As the world shifts toward cleaner energy and environmentally sustainable practices, demand for electric vehicles and related products and services has soared. This has caught the attention of growth investors on the hunt for the best EV stocks to own. And while the sector has corrected sharply in the past year and a half, there’s no denying the potential of the companies that are at the forefront of the EV revolution.
The names below — two EV manufacturers and one EV-related service company — have strong long-term growth outlooks and upside potential as private and public investment in the electric vehicle space increases.
Let’s dive in.
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First on this list of best EV stocks to own is Nio (NYSE:NIO), a leader in the Chinese electric vehicle market. Nio offers investors a pure play on the sector in the largest EV market in the world.
Like many of its peers, NIO stock has been hit hard, falling more than 40% in the past year as growth stocks were revalued lower. That said, Nio isn’t your ordinary early-stage EV manufacturer. In fact, the company has already demonstrated significant manufacturing prowess. In the first two months of 2023 alone, the EV maker delivered 20,663 vehicles, up 30.9% from the same period a year ago. In total, Nio has delivered 310,219 EVs.
Nio’s recent financial results have done little to assuage investor concerns. The company reported $2.3 billion in revenue and a quarterly loss of 44 cents per share, both of which were worse than analysts anticipated. Management’s guidance for the current quarter also came in below estimates. However, the company said it plans to deliver roughly 32,000 EVs in Q1, up 24% at the midpoint of its guidance.
Although the company’s Q1 revenue projections are modest, growth in deliveries could raise revenue later in the year. For all of fiscal 2023, analysts are projecting Nio will grow its revenue by 84%, while its losses are forecast to narrow.
The company has several positive catalysts to watch, including plans for a new EV factory for European exports and ongoing work on its mass-market product. The company also plans to launch five new models this year, adding to its existing lineup of three models and offering a broader range of price points that should appeal to more consumers.
The long-term outlook for Nio is positive. I think it is one of the best EV stocks to own and a great buy-and-hold investment.
BYD Company (BYDDF)
Source: T. Schneider / Shutterstock
Another Chinese electric vehicle manufacturer to make the list of best EV stocks to own is BYD Company (OTCMKTS:BYDDF). Backed by Warren Buffett, BYD is officially the world’s largest EV company when factoring in both battery electric and hybrid vehicles. The company’s battery electric vehicle sales reached 911,141 in 2022, showing remarkable year-over-year growth of 184%. Plug-in hybrid sales hit 946,238, up 247%.
As Forbes reports, the company is selling more vehicles than Tesla (NASDAQ:TSLA). BYD sold 1.62 million cars between January and November 2022, while Tesla sold just 1.37 vehicles in all of 2022.
Not only does BYD have a pricing advantage over Tesla, but there is significant potential for growth in multiple countries due to its aggressive global expansion plans. The company has started selling EVs in Japan, the world’s fourth-largest auto market. It is also exporting to India and Thailand and intends to invest $1.2 billion to build a battery factory in China. Furthermore, it is exploring potential sites for a new EV assembly plant, with Vietnam, Indonesia and the Philippines all hoping to host the company.
BYD is financially stable with strong growth prospects. February vehicle deliveries, including hybrids, grew by 119% year over year and were up 28% from January. That kind of growth is hard to argue with.
Source: YuniqueB / Shutterstock.com
Rounding out this list of the best EV stocks to own is ChargePoint (NYSE:CHPT), a leading EV charging technology company with more than 200,000 active public charging stations globally. The company is growing its market share in Europe and the U.S. in the commercial and residential charging market.
Demand for EV charging solutions should lead to pricing power down the road. With solid financials and scalability, this is a stock that’s likely to outperform its peers. Trading at less than $10 a share, I think CHPT stock has plenty of upside potential.
Analysts seem to agree. According to TipRanks, the stock is a “moderate buy.” Their average target price of $16.57 implies upside of 79% from current levels.
On March 2, ChargePoint reported Q4 and full-year results, including a loss of 13 cents per share. However, this was better than the 16-cent per-share loss analysts were anticipating. And although revenue of $152.83 million missed estimates, it was up 89% year over year. Even better, the company’s revenue grew 94% in 2022 to $468 million, and annualized subscription revenue surpassed $100 million for the first time.
Finally, the U.S. government’s aim to have a network of 500,000 public EV chargers by 2030 is a big catalyst for ChargePoint. This is a company with strong backing and secular tailwinds that I think EV investors would be remiss to ignore.
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.
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