EV stocks have multiplied in Tesla‘s (TSLA) wake and as electric cars look to go mainstream — but not all are created equal. Some car stocks are more ready than others for an electric future. Here are the top-rated EV makers and EV-related plays.
X
- BYD
- Li Auto
- Allegro MicroSystems
- Sigma Lithium
- Aehr Test Systems
Best EV Stocks To Buy Or Watch
The charts of most EV stocks remain under strain. Broadly, both established automakers and startups are a speculative bet on the growth of electric vehicles, itself seen as a nascent field. Growth stocks have been hurt by worries about inflation and recession.
It’s hard to find an EV stock with a good mix of fundamentals and technicals right now. Not including Tesla, these are our picks based on EV sales, strategy and growth plans.
We also consider a stock’s Composite Rating, EPS Rating and RS Rating, each on a scale of 1 to 99, with 99 being the best-possible score.
BYD Stock
BYD (BYDDF) earns an EPS Rating of 97 and RS Rating of 70. BYD stock trades over the counter in the U.S.
In 2022, China auto giant BYD (for Build Your Dream) switched to producing only all-electric vehicles (also known as battery electric vehicles, or BEVs) and plug-in hybrid electric vehicles (PHEVs).
Its new Seagull EV, an affordable mini city car, is seen as a potential growth driver.
BYD sold more than 1.85 million electric cars in 2022, including hybrids. In 2022, as well as in 2021, BYD more than tripled EV sales.
Despite industry headwinds, Warren Buffett-backed BYD saw Q1 2023 sales jump 93%.
Most of BYD’s sales are on home turf, but a big international expansion is underway.
The company makes its own batteries and chips, which has driven its rapid growth.
LI Stock
China EV startup Li Auto (LI) carries a Composite Rating of 68, EPS Rating of 34 and RS Rating of 82.
Li Auto turned in an especially strong 2022 despite supply challenges. It continues to outsell rival startups Nio and XPeng in 2023.
The company specializes in “extended range” EVs, which use a small gasoline engine to increase driving range. It plans to start making all-electric vehicles soon.
LI is one of the best-performing China EV stocks this year. Unlike many EV startups, Li Auto is profitable, though inconsistently so. Analysts expect an annual profit for the first time in 2023.
LI stock raced past buy points May 10, the MarketSmith chart shows. The EV stock soared on strong earnings and guidance the same day.
ALGM Stock
Allegro MicroSystems (ALGM) holds a Composite Rating of 99, EPS Rating of 99 and RS Rating of 93. Shares are attempting a rally after a recent pullback.
The fast-growing Manchester, N.H.-based company makes magnetic sensing and power management chips. Last year, 69% of its sales came from the automotive market.
Allegro has seen its chip content in automobiles grow as vehicles become electrified and offer more advanced safety features.
“Our content opportunity on EVs is twice that on internal combustion engine-driven vehicles, approaching $100 a vehicle,” Chief Executive Vineet Nargolwala has said.
That is helping to drive strong earnings and sales growth.
ALGM stock can be found on several IBD stock lists, including the IBD 50 and Leaderboard. It sometimes appears on the IPO Leaders and Tech Leaders stock lists. It was recently featured in a New America column.
SGML Stock
Sigma Lithium (SGML) carries a Composite Rating of 62, EPS Rating of 8 and a near-perfect RS Rating of 98.
The Canada-based miner aims to promote EV growth by producing low cost and environmentally sustainable lithium products.
Sigma just starting commercial lithium production at its Brazil site.
The Brazilian mine will produce spodumene concentrate, a source of lithium hydroxide for EV batteries.
Buyout buzz has has been around Sigma Lithium. Earlier this year, Tesla was cited as a possible suitor. The Livent (LTHM) merger with Allkem, announced May 10, revived some deal buzz.
Lithium prices are starting to bounce back after plunging for most of 2023.
AEHR Stock
Aehr Test Systems (AEHR) carries a Composite Rating of 90, EPS Rating of 77 and RS Rating of 98. Shares are trying to regain the 50-day moving average, rallying after a pullback to the 200-day line.
Semiconductor equipment maker Aehr offers products for testing logic, optical and memory integrated circuits, as quality and reliability needs increase. The Fremont, Calif.-based company has been growing revenue by double and triple digits.
It touts strong demand for gear to test silicon carbide power chips used in electric vehicles.
The demand for those EV chips is seen increasing exponentially in the decade ahead.
Besides electric vehicles, SiC chips have bright prospects in industrial, solar and wind energy markets.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
Are EV Stocks A Good Buy?
Companies with two characteristics generally make the best candidates for stocks to buy and watch, according to CAN SLIM guidelines. First, they need a strong track record of earnings growth. Second, they should be technically strong and be shaping bullish chart patterns.
Most of the new EV startups have neither. Those EV stocks include Fisker (FSR), Canoo (GOEV), Faraday Future (FFIE), Lordstown (RIDE) and Xos (XOS). In fact, many of the startups aren’t producing electric vehicles yet.
Get Alerts To Stocks Near Buy Points With IBD Leaderboard
Lucid Motors (LCID) and Rivian Automotive (RIVN) are selling EVs.
Meanwhile, Chinese EV startups like Nio (NIO), XPeng (XPEV) and Li Auto (LI) sell tens of thousands of vehicles, but only Li is profitable and just becoming consistently so
Then there are legacy auto giants like General Motors (GM), Ford (F), Volkswagen (VWAGY) and China’s BYD Co. (BYDDF), all transforming into EV powerhouses.
EV Battery Stocks, EV Charging Stocks
The growing universe of EV stocks doesn’t end with carmakers. A constellation of other companies provide car batteries, car charging stations, electric motors and other EV-related products. Among them are ChargePoint (CHPT), EVgo (EVGO), Blink Charging (BLNK) and Wallbox (WBX).
Hyliion (HYLN) is developing electric powertrains for big-rig trucks. Romeo Power (RMO) makes battery packs for commercial EV fleets. QuantumScape (QS) targets solid-state lithium metal batteries.
Magna (MGA) supplies battery enclosures and e-drive gearboxes. It’s also an EV contract manufacturer.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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