A bright future for electric vehicles (EVs) sent the stocks of EV companies soaring over the last couple of years. The resultant high valuations of EV stocks have so far kept value-seeking investors at bay. That may, however, change soon. Several top EV stocks have corrected to some extent recently, making them more attractive.
Here are my favorite five EV stocks that look attractive right now.
1. ChargePoint Holdings
The stock of leading electric vehicle charging company ChargePoint Holdings (CHPT -3.88%) has fallen 69% in a year and 34% so far in January. The stock's steep fall has made it more attractive. Investors adopted a more cautious approach toward EV stocks, including ChargePoint, after their significant rise in early last year.
ChargePoint stock's forward price-to-sales (P/S) ratio has fallen to nearly 11 from more than 28 in July last year. The ratio is also lower than ChargePoint's average ratio of 19 in the last year.
CHPT P/S Ratio (Forward 1 year) data by YCharts
ChargePoint's ratio compares favorably with its peers Blink Charging and EVgo, though it's higher than Volta's ratio.
ChargePoint is growing its network and revenue quickly. It has around 163,000 charging ports globally. In the third quarter, the company's revenue grew 79% year over year. However, profitability is a key challenge for ChargePoint. Notably, none of the EV charging companies are profitable yet.
Still, EV charging companies should become profitable in the future, considering that the demand for EV charging infrastructure is expected to remain strong and grow over time. It remains to be seen how EV charging companies will monetize this growth, but as a leading company, ChargePoint looks better placed than others to benefit from this growth.
Image source: Ford Motor Company.
2. Ford Motor Company
Ford Motor Company (F -1.27%) is investing heavily in electric vehicles. It intends to spend more than $30 billion on EVs through 2025. Its plans include setting up a nearly 6-square-mile campus in Tennessee to build electric F-Series pickups and batteries. Also, the company has partnered with Korea's SK Innovation to set up two battery plants in Kentucky. Ford is setting up an EV plant in Germany as well.
Ford intends to make 40% to 50% of all its vehicles electric by 2030. The automaker wants to become the second-largest electric vehicle manufacturer in the next couple of years. Notably, even if Ford delivers according to its plans, half of its sales would still be internal combustion engine (ICE) vehicles by 2030.
Even if Ford's profit margins and stock prices don't rise dramatically from the current levels, Ford looks poised to grow in the EV segment. Ford seems to have a better chance of establishing itself as a top EV maker than most of the new pure-play EV companies.
Image source: Volkswagen.
3. Volkswagen
Volkswagen (VWAGY -1.55%) delivered 8.9 million vehicles globally in 2021. Of these, 452,900 units, or 5.1%, were battery electric vehicles (BEVs). That's significantly higher from 2020 when BEVs accounted for just 2.5% of Volkswagen's total vehicle sales. In the U.S., Volkswagen sold 37,200 BEVs in 2021, capturing the second-highest share of the U.S. BEV market.
Though BEVs are a small percentage of Volkswagen's total sales right now, the company expects half of its sales to be electric by 2030. Volkswagen intends to spend 52 billion Euros on electrification through 2026. In short, the top automaker is positioning itself to be a key player in the EV market in the long term.
Image source: Lucid Group.
4. Lucid Group
Among pure-play EV companies, Lucid Group (LCID -5.10%) looks interesting. Starting deliveries in October last year, Lucid beat established EV maker Tesla in terms of range. With a range of 520 miles, Lucid's Air model offered at least 100 miles of additional range over Tesla's Model S. Attractive designs and features helped Lucid Air bag MotorTrend's Car of the Year Award.
The company has more than 17,000 reservations for the Lucid Air. Moreover, Lucid has robust growth plans. It plans to expand in international markets, starting with Saudi Arabia and Europe. Lucid plans to launch a new model, Gravity, in 2023. Overall, things look positive for Lucid so far. The company has immense growth potential and a long runway.
It is, however, important to note that Lucid faces stiff competition from new EV companies as well as legacy car companies. Secondly, though Lucid's initial deliveries have received a positive response, the company has yet to produce profitably at scale. In short, spreading your bets across top stocks could be the best way to invest in the volatile and evolving EV sector.
Image source: Getty Images.
5. BYD
Chinese automaker BYD (BYDDY 1.11%) (BYDD.F 1.36%) is the fourth-largest EV maker in the world after Tesla, Volkswagen, and SAIC. BYD sold roughly 320,000 BEVs in 2021.
The company has been growing its sales rapidly. In the first nine months of 2021, BYD's sales grew 38% year over year. In December, plug-in vehicles accounted for almost 95% of BYD's vehicle sales. In addition to vehicles, BYD derives a chunk of its revenue from mobile handset components, rechargeable batteries, and solar products.
BYD controls about 18% of the Chinese plug-in vehicle market and is an attractive way to bet on China's EV growth.
