The EV market has seen rapid growth over the past few years. Companies like Tesla went from obscure, relatively irrelevant companies, to, suddenly, one of the most important companies out there. The issue of global warming only exacerbates the need for green vehicles, making the companies covered today uber-important. While it is true that at the moment, EVs are facing a bit of a struggle; whether it be online, where car enthusiasts have developed a predominantly negative stereotype around these vehicles, or in real life, where issues with power grids are significantly slowing down the development of commercial chargers.
However, the automobile industry stands united, with multiple companies coming together to make technology that helps alleviate these issues. This leads me to believe that there will be significant growth in EV adoption over the upcoming years. Here are three EV stocks to buy that will benefit the most from this.
Rivian Automotive (RIVN)
Rivian Automotive (NASDAQ:RIVN) is primarily responsible for developing, making, and selling Electronic Vehicles (EVs). They have a wide array of vehicles available to consumers, including pickup trucks. RIVN also provides vehicular-adjacent services to consumers. It is trading at $11.96 as of market close on June 26th and is up 14.78% over the last month.
The company’s financials appear to be great. While management does need to work on improving the profit and operating margins, which are currently sitting at -111.09% and -123.26% respectively, the company is growing at a rapid pace. It recently saw year-over-year quarterly earnings growth of 82.10%. Analysts have set a price target of $15.92, representing a growth potential of a staggering 33.11%.
The stock rapidly gained value today, after Volkswagen Group announced that they would invest up to $5 billion into RIVN. This comes at a very good time for RIVN, as it allows them to invest in more research and development while showing investors potential. For their investment, VW was granted access to shared EV infrastructure and software, making this a win-win. It also heavily contributes to RIVN becoming a buy stock.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is a leading supplier of semiconductor-based solutions, including intelligent power and sensing technologies. The company’s products are used in various applications, such as automotive, industrial, cloud computing, and consumer electronics.
ON stock is currently trading at $67.84 with a market cap of nearly $29.19 billion. The stock has gone down 23.45% in the last year, a trend which I can see reversing. It has reliable profit and operating margins, of 26.67% and 28.27% respectively. Analysts have set a one-year average price target of $83.66 for the stock, indicating a potential profit of 23.3% – suggesting the stock is underpriced. Additionally, the company’s free cash flow of $2.07 billion is another positive indicator
The stock has consistently beaten EPS predictions over the past year, with an average surprise of 5.1%. ON has a diverse customer base due to the number of products offered by the company, which means it does not have to be reliant on one industry. This makes the company resilient to industry slumps. Even though growth is stagnant right now, it’s poised to grow in the long run, making it a definite EV stock to buy.
General Motors (GM)
General Motors (NYSE:GM) designs, builds and sells trucks, crossovers, cars, and parts globally under brands like Buick, Cadillac, Chevrolet, and GMC. It operates through segments including GM North America, GM International, Cruise, and GM Financial, offering vehicles and after-sale services to retail dealers, fleet customers, and governments.
GM stock has seen pretty good financials. A positive profit and operating margin of 6.13% and 8.88% respectively, along with a year-on-year (YOY) quarterly earnings growth of 24.40% is certainly promising. The stock has also consistently beaten EPS predictions over the past year and shows certain growth prospects. Although the heavy debt load of $124.6 billion does raise some red flags, the company has been profitable for the past four years.
GM released their first EV in 1996, 28 years from now. Like ON Semiconductors, General Motors also has a diverse product lineup, although mainly dealing in the automobile industry. The company has also upped its production of battery modules by 300%, as evident by its Q1 2024 reports. All this makes GM a safe bet and a promising EV stock to buy.
On the date of publication, Achintya Pasricha did not hold (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.
