When you mention EV stocks, I bet most people immediately think of Tesla (NASDAQ:TSLA), Elon Musk, American legacy manufacturers releasing electric versions of popular models, and perhaps a few Chinese makers like Nio (NYSE:NIO). I’d also bet that most of the money to be made in those stocks has already been made.
What I’m getting at here is the idea that in order to find higher returns in EV stocks, investors need to think differently. That means it’s necessary to identify undervalued sleeper stocks that aren’t necessarily unknown, but that also aren’t yet in high demand. EVs have already reached a critical mass: They aren’t a fad, they are here to stay. That means investing in up-and-coming EV stocks can and will yield strong returns.
Polestar (PSNY)
Polestar (NASDAQ:PSNY) is currently going through growing pains that present an opportunity to investors in PSNY stock. The company delivered a record 51,491 vehicles in 2022. That had many investors riding high last year and brought share prices higher with it.
But in 2023, Polestar is facing inevitable growing pains that have taken some of the shine off its shares. A big part of the problem is that the production starts of Polestar’s 3 SUV has been delayed. The result is that Polestar now anticipates delivering between 60,000-70,000 vehicles in 2023. That would still represent 36% growth at the upper end.
It’s just that the Polestar 3 will now begin production in early 2024. The Polestar 4 remains on schedule for a Q4 production start in China and early 2024 elsewhere.
The company, like so many others, is focused on efficiency this year. It has instated a hiring freeze and other cost-cutting measures. That’s all good and well, but investors should also note that the company already posted a very minimal loss in Q1. It’s pretty well run as it is.
Fisker (FSR)
Fisker (NYSE:FSR) has just entered the sales stage. The company delivered its first vehicle on May 25. That means investors will have a much better idea of its top-line performance in a few months.
Right now, we only know that Fisker is spending a lot of money to get operations going while receiving a few hundred thousand per quarter in revenues.
Q2 will basically be two-thirds of a normal quarter for the company in terms of sales. Yet investors only know that Fisker expects to produce between 1,400-1,700 vehicles in Q2. We have no idea how many deliveries it expects. That is an important factor in forecasting sales.
Anyway, Fisker has entered the production stages. Up to 36,000 Ocean SUVs will be produced in 2023. The company now has to focus on balancing deliveries and liquidity concerns. Fortunately, the company has $652 million in cash and equivalents and expects $610 million in total expenses at most this year.
Magna International (MGA)
Investors should really consider Magna International (NYSE:MGA) stock because it is already in the middle of a great experiment that can propel it much higher. The problem — if it can be called that — is that investors have shiny object syndrome.
What I mean is that Magna International has fallen out of the limelight. The company successfully began production of the Ocean SUV for Fisker on time on Nov. 17 of last year. This is essentially a test trial for Magna International. The company generally acts as a third-party manufacturer for lower volume, niche models. It has now effectively become a contract manufacturer in the EV space.
What that means is that Magna International may already be set up to be the go-to solution for outsourced EV manufacturing. If the Fisker Ocean proves to be a quality vehicle then MGA stock will suddenly have a lot more upside.
The positive news is that based on the target price, MGA stock already has approximately 20% upside. That also doesn’t take into account the dividend yielding 3.5% currently.
Toyota (TM)
When it comes to legacy manufacturers and EVs, Toyota (NYSE:TM) stock hardly gets the recognition it deserves. Ford (NYSE:F) and General Motors (NYSE:GM) tend to get much more press.
That’s arguably a function of Toyota’s laggard status. It had remained stalwart in a hybrid-first strategy under the leadership of Akio Toyoda. But Toyoda, the grandson of the founder, stepped down in January.
New CEO Koji Sato intends to release 10 new battery electric vehicles by 2026. That brings Toyota into the all-electric fold and makes it competitive with other EV giants. Tesla sold 1.3 million EVs in 2022. Toyota expects to sell 1.5 million by 2026.
Current expectations are that GM and Ford will be producing similar volumes by that time, perhaps more. But who would you trust to build the higher-quality vehicle? I know I’d bet on Toyota 10 times out of 10 to do so. And that’s going to matter over the long run just as it has with those brands’ respective fossil fuel vehicles.
FREYR Battery (FREY)
FREYR Battery (NYSE:FREY) stock could hold the answer to the question of how environmentally friendly EV batteries really are.
FREYR Battery markets itself as “clean battery solutions.” And some of its operations are located in Norway, which is one of the greenest countries in the world. The company is producing current-generation lithium-ion batteries fueled by hydroelectric and wind energy. All of those factors combine to potentially make FREYR Battery a real green solution. It provides a strong counter to arguments related to CO2 emissions and EV batteries.
FREYR Battery is building parallel operations that include a U.S. manufacturing base, Giga America, and a Norway manufacturing base, Giga Arctic. The solution allows the company to judge the efficacy of both in parallel and adjust accordingly. Right now, Giga America is receiving greater attention due to the Inflation Reduction Act’s EV provisions.
In time, FREY stock should grow as it represents a partnership between a leading green nation and U.S. aspirations to build partnerships in EVs with politically stable nations.
Aptiv (APTV)
Aptiv (NYSE:APTV) supplies automotive technology and was formerly known as Delphi Systems under General Motors. The company has deep experience in the integration of software and automotive systems. It is particularly focused on autonomous driving safety, making it especially relevant as EVs gain wider acceptance.
That wider acceptance will partially hinge on the development of autonomous driving in EVs. Aptiv has a real opportunity to establish itself as an authority in that realm. Back in 2019, Aptiv formed a joint venture with Hyundai focused on Level 4 and Level 5 self-driving technology. Share prices have gone up and down since then, but the positive news is that there’s plenty of upside now.
Aptiv’s sales and net income both continue to grow. Those high-level figures provide a reasonable snapshot of overall health. So, Aptiv continues to do well and grow despite overarching concerns about the economy. The greater the level of autonomous driving adoption, the better for Aptiv.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) is an EV stock that gets overshadowed by bigger-name competitors in the space. But for aggressive investors seeking high growth, Blink Charging offers more.
Let’s put some numbers to that growth just to give you an idea of how fast Blink Charging is growing. Total revenues increased by 121% year-over-year, reaching $21.67 million in Q1. Service revenues more than tripled during that period. And network fees jumped by 911%.
However, net losses also nearly doubled, up 97% to $29.8 million. There’s clearly risk inherent in investing in Blink Charging stock. One obvious risk is interest rate risk as it pertains to growth shares like BLNK stock. They fall when rates rise and do well when rates stabilize or fall.
Rate hikes are coming nearer to an end, so that works in Blink Charging’s favor. If more investors become aware of the growth metrics underpinning the company, those two factors could conspire to send BLNK shares higher very quickly.
On the date of publication, Alex Sirois 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.
