Amid escalating climate change concerns, electric vehicles (EVs) continue to gain traction among U.S. consumers. EV stocks include manufacturers of electric cars, as well as the companies operating behind the scenes to provide the raw materials for these vehicles, or the battery technology needed to advance future iterations of these vehicles. As it happens, I believe investors should own a mix of these stocks.
While some leading EV companies are growth stocks with relatively uncertain profit trajectories, allocating a portion of your portfolio to these stocks can provide impressive upside potential, while also potentially contributing to a greener future. It’s a win-win for investors focused on ESG-friendly returns.
For those looking to play the EV space, here are three stocks I think are worth plugging into right now.
Lithium Amercias (LAC)
Lithium Americas (NYSE:LAC) is among the leading lithium producers in the U.S. The company’s Thacker Pass mine, set to start in 2026, holds a $5.7 billion potential net present value, according to some experts. Thus, Lithium America’s current valuation of approximately $1 billion clearly factors in some significant headwinds with the company being able to break ground moving forward. Those who believe that will be the case, and the projections of analysts, should be buying this stock in build right now.
In addition to the company’s Thacker Pass mine, Lithium Americas has two other projects, Sal de la Puna and Pastos Grandes, in development. Additionally, the company has found a potential lithium-rich site in a U.S. supervolcano. The company recently split into two entities, with one focusing on Argentina and the other on projects like Thacker Pass. Plus, Lithium Americas also received a $650 million investment from General Motors (NYSE:GM). All these factors bode well for those looking for reasons to buy and hold this stock for the next five to 10 years.
As far as options within the lithium mining and battery technology space are concerned, LAC stock remains a top pick of mine. I simply think this stock is far too cheap relative to its long-term growth prospects.
Byd Co. (BYDDF)
BYD (OTCMKTS:BYDDF), Warren Buffet’s favored EV company, outpaced Tesla (NASDAQ:TSLA) in the most recent quarter to become the top EV seller globally. With 431,000 BEVs sold, it’s closing in on Tesla’s lead in the battery electric space, but from an overall plug in hybrid and BEV standpoint, BYD is the leader.
There are many reasons BYD has been able to generate this impressive lead. The company excels in in-house part production, keeping costs low and profiting. It also manufactures Blade Battery, a cost-effective and efficient alternative to lithium-ion batteries.
The company is also expanding with a new sub-brand offering SUVs, off-road vehicles and sports cars, matching consumer demand. Its global presence and vertical business segment integration reduces the impact of Chinese regulations, making BYDDF stock a strong investment.
Li Auto (LI)
Li Auto (NASDAQ:LI) hit $47.30 per share earlier in the year. Now trading at $33.90 apiece, LI stock certainly seems undervalued, with potential to double by the end of 2024. The company’s Q3 2023 deliveries grew 296.3% year-over-year, boosted by new models and retail expansion in China.
Li Auto is on track to reach $4.59 billion in the next financial quarter, showing its consistent sales performance. Analysts project a 75% earnings growth in the next five years, supported by low debt and a $10.2 billion cash reserve.
Citi and Bank of America raised their price targets for LI, showing strong confidence. Li Auto aims to achieve 40,000 monthly sales by Q4 and is set to challenge leading luxury brands. With China’s EV industry set to grow 27% this year, Li Auto is a promising addition to many portfolios.
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.
