When discussing the best EV stocks to buy, there are a few things to remember. First, the EV market is still in its early stages, so there is a lot of growth potential. Second, EV stocks tend to be volatile, so it’s important to research and choose a stock you’re comfortable with. Third, EV stocks are often expensive, so it’s important to have a solid investment plan.
As always, you must distinguish between companies with strong fundamentals and upstarts with limited prospects.
The electric vehicle industry has taken off, and EV stocks have been some of the best performers over the past few years. This year has been tough for EV stocks as the overall stock market has sold off, though, and macroeconomic conditions have turned negative.
While a few EV stocks are still up from where they were a year ago, they have underperformed in the market in recent months. There are a few reasons for this. First, interest rates have risen, which has put pressure on all stocks, especially growth stocks like EV stocks. Second, inflation is a major factor in declining EV sales.
While there are several EV stocks to buy, these three are some of the best positioned to capitalize on the EV boom and weather the current economic downturn:
Tesla (NASDAQ:TSLA) is never far from the conversation when discussing the best EV stocks to buy.
The company’s vehicles are some of the most popular and iconic EVs on the market, and Tesla as a company has been at the forefront of innovation in the space.
Tesla’s share price has been on a rollercoaster ride in recent years, but overall, it has trended upward. Tesla is a great long-term investment, and will only become more valuable with the continued growth of the EV market.
Initially, the company relied on debt to fuel its expansion. However, the debt level is not growing as much as before. The company racked up 7% more debt in 2020-2021 which is much slower than before.
Meanwhile, the EV giant is doing very well in terms of its financials. It consistently beat analyst estimates throughout 2021 and turned retained earnings positive to the tune of $331 million.
These numbers are a testament to Tesla’s strong growth story. Although there are several challengers, Tesla consistently ranks as one of the top EV stocks to buy.
Some investors believe electric vehicle companies might overtake Ford (NYSE:F) in the coming years.
While it is true that Ford has not always been at the forefront of EV technology, the company is now making a heavy investment in the sector.
Ford has already released many successful EV models, including the Mustang Mach-E. With its rich history and a strong commitment to the EV sector, Ford is poised to continue its reign as one of America’s most iconic brands.
From a fundamentals perspective, Ford is firing on all cylinders. Ford tripled its operating income from the year-ago period in the second quarter. Automotive revenue is also outstanding for the quarter, at $37.91 billion versus $24.13 billion last year.
In the U.S., Ford’s sales rose by 1.8% in the second quarter, and it said shipments to Europe increased by around 22%. This is because of supply chain improvements and demand for its commercial vehicles.
Ford said it would reinstate its quarterly dividend at the same level as before the Covid-19 pandemic, as the automaker reported strong profits for the first quarter.
The company has been under pressure to increase its dividend in recent quarters, and it delivered. Ford also reiterated its guidance for the full year and said it would continue to invest in new products and technologies.
Ford is amidst a historic transformation, which will help it pivot more towards the electric vehicle sector, an area where Ford is spending $50 billion. Under this transformation, a new unit, Ford Model e, will focus on this sector. With a shrewd strategy and robust financials, it is no wonder Ford is among the best EV stocks to buy.
Nio (NYSE:NIO) is the biggest Chinese EV company and is expanding into several European markets.
Nio’s products include the ES8, a seven-passenger all-electric SUV; the ES6, a five-passenger all-electric SUV; and the EP9 sports car. Nio has already delivered more than 200,000 units in China, clearly demonstrating its popularity and staying power.
The stock is down by double digits this year for several reasons. For example, China has instituted a zero-Covid strategy as and when applicable throughout the country. It is causing production delays throughout the country, and Nio is also suffering. Additionally, trade tensions between the U.S. and China are a persistent headwind for EV stocks like NIO.
Nio is doing everything it can to stop the decline. It launched three new models this year, including ES8, ES6 and EC6, based on its NT 2.0 Platform.
Nio’s stock is down significantly from its 52-week high, but this sell-off presents a great opportunity to purchase an EV play at a very attractive discount.
Nio has a strong brand and a differentiated product lineup. It is well-positioned to capitalize on the continued growth of the Chinese EV market. While NIO stock may not be immune to further downside in the near term, the long-term outlook for the company remains very positive.
On the publication date, Faizan Farooque 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.