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From Chinese automakers to a hydrogen fuel leader, these companies stand poised to ride the EV sector wave
When we invest and do so with smarts, we scrutinize the numbers. But beyond those that individual companies report, we must embrace sector-centric statistics. And when it comes to electric vehicle stocks, the data speaks volumes. Electric cars, which accounted for 2.6% of global car sales and about 1% of global car stock in 2019, registered a 40% year-on-year increase from 2018. That’s according to a June 2020 report from the non-profit International Energy Agency.
So what did 2020 hold? The overall EV numbers aren’t quite tabulated. But it’s bound to be an increase worthy of a 1.21 gigawatt electric jolt to a hopped up DeLorean. (Remember Back to the Future?) And as for 2021, expect the EV numbers to climb up, up, up – in terms of vehicles made, technologies upgraded and investments ready to zip, zip, zip.
A word of caution: Burgeoning sectors, much like the gold rushes of old, invite their share of charlatans, also-rans and salesmen of snake oil (or, I suppose, snake lithium-ion). So I’ve taken care to weed such companies out. Dishonorable mention here goes to Nikola Corp. (NASDAQ:NKLA). It fooled investors by filming a hollow EV rolling downhill and called it the real thing. Also beware of QuantumScape (NYSE:QS). It’s now the target of multiple class-action lawsuits for allegedly overstating its progress on making vehicle-ready solid state batteries.
Ah, but then we have winners ushering in the age of EVs and alternative vehicle fuel sources. My picks for eight electric vehicle stocks to watch (and buy) are:
- Xpeng (NYSE:XPEV)
- Plug Power (NASDAQ:PLUG)
- Tesla (NASDAQ:TSLA)
- Hyliion Holdings (NYSE:HYLN)
- Lordstown Motors (NASDAQ:RIDE)
- ElectraMeccanica Vehicles (NASDAQ:SOLO)
- CIIG Merger (NASDAQ:CIIC)
- Fisker (NYSE:FSR)
One more thing: After less than a month in office, President Joe Biden has already sent clear signals on the trajectory of his transport and energy policies. Killing the Keystone XL pipeline and freezing new drilling on federal lands sent two more body blows to the petroleum industry. Rejoining the Paris Accord, naming John Kerry as climate czar and the youthful Pete Buttigieg as transportation secretary all signal a fresh start in a greener direction. Mark my words: Electric vehicle stocks as a whole and related green energy investments will flourish in 2021.
And when my portfolio skyrockets, maybe I’ll celebrate by buying a spiffy vehicle from one of the companies below.
Electric Vehicle Stocks: Xpeng (XPEV)
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Not a lot of U.S. investors know much about XPEV stock. But I expect that to change big time in 2021. The Chinese automaker belongs on our electric vehicle stocks leaderboard and here’s why: the luxury P7 sedan. You can only purchase it in China but one look and you’ll wish it was available here. No lumpy utilitarian vehicle is this. French designer Rafik Ferrag brought it to life and it definitely turns heads.
So far, the P7 is a huge hit. Sales have from May 2020 have increased in every month but one through December 2020. Looking closer, 192 P7s were sold in May. In August, the tally landed four shy of 2,000. And in December, 3,691 P7s were sold – a month-over-month jump of 35%.
Already up 8% in 2021, XPEV is priced attractively and brims with promise. CNN Business shows a buy consensus for XPEV stock, with seven of 11 analysts giving it a “buy” rating, two a “hold” and two a “sell.” Earnings per share are underwater at -$1.03 – but here’s where it gets exciting. The median price target over the next 12 months is expected to climb by 580%.
Plug Power (PLUG)
There’s been some blowback among the short-sell types in regard PLUG stock. To my mind they’re full of hot air, though it’s definitely not hydrogen. Plug Power is a company that makes hydrogen fuel cells for forklifts and the like, and as an alternative fuel powerhouse in the making earns a spot on my electric vehicle stocks list.
Following a 2020 when PLUG stock finished up by 950%, 10 of 12 analysts cited by the Wall Street Journal call it a “buy,” with just two calling it a “hold.” With its third-quarter report on Nov. 9, the company disclosed gross billings of $125.6 million, which reflects year-over-year growth of 106%. That made for the best third quarter run in the company’s history.
Many will note, rightly so, that an investor rush helped propel PLUG stock to stratospheric levels. However, that doesn’t take away from the fact that no matter what Plug Power does or doesn’t accomplish in 2021, hydrogen fuel is here to stay. The hydrogen economy for vehicles of all kinds will become a mature market for cars, vans, buses and trucks by 2025, according to McKinsey.
Electric Vehicle Stocks: Tesla (TSLA)
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Is Tesla CEO Elon Musk the world’s richest man? Or Jeff Bezos? Or Bill Gates? Really, who cares? What’s relevant here is that Musk made his billions in large part due to his TSLA stock, and has likewise made wealthy investors of those who bought into his luxury EV dreams.
As EV makers go, it’s fair to say Tesla got the ball rolling for today’s hot auto and truck companies. TSLA endured years of profitless quarters. But it did cap 2020 with profits in every single quarter and delivered 499,550 vehicles, just 450 below its half-million goal. New versions of the Model S and X are on the way and if those catch on, U.S. consumers will grow even more accustomed to thinking of Tesla as an automotive household name, electric or otherwise.
To be sure, TSLA stock may sit at a climax top where it’s bound to fall some in 2021. But I’d treat that as a great buying opportunity. Musk expects 50% average annual growth in vehicle deliveries in the years ahead – and an even higher percentage in 2021.
Hyliion Holdings (HYLN)
Not every EV sector superstar will concentrate on making vehicles, let alone working with cars and SUVs. Hyliion takes diesel trucks and transforms them into hybrids or EVs through an ingenious axle attachment, the V1 Hybrid system. Among the EV stocks on this list, it’s a unique play that leverages the logic of targeting commercial vehicles already on the road and much more expensive to replace outright.
To be sure, a dramatic run-up in September has come and gone, making HYLN stock look like a flat tire. But since it reverse-merged with Tortoise Acquisition Corp. in June, shares are still up 56%. What’s more, share prices held their own thus far in the new year, making this an attractive buy opportunity for those seeking a cheap stock in a growth sector.
It may also help to know that the company’s young founder, Thomas Healy, is in this for the long trucker’s haul, you might say. When the reverse merger with Tortoise closed, Healy – all of 28 – was barred from cashing in on his HYLN stock when the deal closed. If he’s in it to win it, you should be, too.
Electric Vehicle Stocks: Lordstown Motors (RIDE)
Some electric vehicle stocks you just root for to win, and RIDE stock is one. The company took over the gargantuan, abandoned GM plant in Lordstown, Ohio, with hopes of writing a new chapter for the local workforce. Lordstown Motors has visions of turning the area into what it calls “Voltage Valley,” with the 6.2 million square feet facility as ground zero.
Then there is CEO Steve Burns, who as public image goes is something of an anti-Elon Musk. By all appearances, he’s a roll-up-your-sleeves kind of guy – what with his outdoor jacket vest that makes him look more like an assembly line plugger than a chief executive. But he’s also laser focused on making his company, and RIDE stock by default, a marketplace force.
Since going public in October through one of those nifty reverse mergers so popular in the EV space these days, RIDE stock is up more than 50%. Get ready for September, when the company expects its Endurance pickup to go into full production. It already has more than 100,000 preorders, a great sign for investors.
ElectraMeccanica Vehicles (SOLO)
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When their companies have small market capitalization, electric vehicle stocks can bounce like tires made of Superball rubber. Such is the case with SOLO stock. When it debuted in September 2017, it jumped up 400% in less than two months, and lost all those gains by August 2018. So why take a chance on it now?
Aside from the fact that the Canadian company’s shares have climbed 233% since October 2020, ElectraMeccanica is hoping to make a big splash in the Silicon Valley, not so much by fundraising as selling its mini vehicles in Marin County, while displaying them currently in San Jose. I think that’s smart: Get in the sight line of the VC big shots and rich EV evangelists, and hope they talk it up.
Personally I’d be frightened but exhilarated to drive a three-wheeler at 80 mph. That’s the maximum road speed the Solo EV is projected to hit once it becomes available in the spring. But what else would you expect from CEO Paul Rivera? He loves to talk about how he played with Matchbox cars as a kid. The best way to describe the Solo (or at the least the one way I can think of) is that it resembles some baby brother of Speed Racer’s Mach 5 racer.
Given the stock’s attractive price point of $8 and change per share, the combination of vehicles hitting the lot and a rosy report for the first quarter of 2021 could send share prices on a nice little spike. All four analysts cited by the Wall Street Journal call SOLO stock a “buy.”
Electric Vehicle Stocks: Fisker (FSR)
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There are two ways to look at FSR stock. On the one hand, it may need some time to blossom as its Fisker Ocean SUV isn’t due to go on sale until late in 2022. The other is that you’d be getting in on the ground floor – or the “Ocean floor” – if you buy shares now. A luxury car that’s the brainchild of A-list Danish auto designer Henrik Fisker, the Ocean promises to occupy the proverbial blue ocean. That’s the economic term for a product that creates a niche all its own. Remember, Fisker is the man who designed James Bond’s famed BMW Z8. Really.
Billed as “the world’s most sustainable vehicle,” the Ocean isn’t merely electric. Currently priced at $37,499, it will have nine glass windows/panels that can open all at once, fully recycled carpeting, and a “vegan interior” with polycarbonate polyurethane surfaces. Whether you eat a Wendy’s Baconator in there is up to you.
The hope here is that even with the long lead time to market, the Ocean will stand out. I think it will, just by virtue of the dashing designer behind it – though an appearance in the next Bond flick wouldn’t hurt, either. Meanwhile, FSR stock has shot up more than 50% since bowing on the NYSE in October. That’s impressive as electric vehicle stocks go.
CIIG Merger (CIIC)
Without a doubt, 2020 was the Year of the SPAC, or special purpose acquisition company. Formed to raise money for a company about to go public through a reverse merger, SPACs dominated the EV sector. They drove a number of high-profile debuts for electric vehicle stocks. In the case of CIIG stock, it’s slated to fold into a U.K.-based company called Arrival sometime in March.
And Arrival is different: different enough to win. To flourish, electric vehicle stocks need wonderful products to back them up. Arrival is going after the commercial and mass transit markets with vehicles that are frankly cute and futuristic as hell. The vans look like rectangular marshmallows and trapezoids on wheels, the buses like resplendent, rolling tubes of glass.
Arrival also plans to construct two “microfactories” that, if you like, reinvent the wheel for making wheels. You have to see these things. They are so compact that you could practically pack one up in a U-Haul. I want to be skeptical these facilities actually work as advertised. But it would be an encouragement to see something with this small a physical and carbon footprint take root.