Whether you're new to investing or have been doing it for decades, one of the best ways to open a starter position in a new company is to simply buy one share. One share may not be much money unless we're talking about a stock whose share price is hundreds or thousands of dollars. But a stake, no matter how small, can mean a lot from a psychological standpoint.
A share of a company represents ownership in a real business. Whether you have one share or 1,000 shares, you're essentially participating in the future of a company and saying that you believe in it and are willing to have skin in the game. When you're just getting started following a company for the first time, it's usually a bad idea to acquire too large of a position anyway. After all, it's not good to own stock unless you understand the fundamental business.
Folks interested in the electric vehicle (EV) industry can create a basket of five growth stocks for just $130 if they buy one share each of Rivian Automotive (RIVN +2.56%), Lucid Group (LCID 7.61%), Nio (NIO +4.20%), Ford (F 1.85%), and ChargePoint Holdings (CHPT 1.76%). Here's a brief overview of the pros and cons of each company.
Nio's ET7 luxury electric sedan. Image source: Nio.
Rivian
Few companies embody the 2021 EV euphoria better than Rivian. In November, the company went public and quickly saw its valuation balloon to a market cap of over $150 billion before delivering a single vehicle. By March 14, the stock had fallen nearly 80% from its high. Rivian stock remains down 70% from that high.
Rivian's allures include its technologically impressive R1T electric pickup truck, its R1S electric SUV, and its Rivian Commercial Van (RCV) platform, the first model of which is called the Electric Delivery Van (EDV).
Like other automakers, Rivian has gotten off to a rocky start producing and delivering cars due to supply chain constraints that have led to higher production and delivery costs from a shipping standpoint. However, Rivian has the technology, the demand -- with 83,000 net preorders for the R1T alone -- and the existing and planned production capacity needed to deliver those vehicles. The company said it can deliver over 50,000 vehicles in 2022 but believes supply chain constraints will allow it to only deliver 25,000 vehicles.
NASDAQ: RIVN
Key Data Points
Lucid
Lucid is in the same boat as Rivian. A recently public company, its niche is in the luxury sedan market. Its first model is called the Lucid Air, which comes in four trims, the first two of which are already in production. Lucid's big goal for 2022 is to produce the Air Touring and then the Air Pure (the two less expensive trims). The Pure is expected to be a basic version of the Air Dream Edition for less than half the cost. Lucid also has plans to produce an SUV called the Lucid Gravity, which has been delayed till 2024.
Lucid has fewer reservations than Rivian and less production capacity, but it is also burning through less cash. The big question for both companies is whether they can outlast the challenging market environment, establish their respective brands, scale production, and eventually become profitable.
Nio
Nio is a Chinese automaker that is more established than Rivian and Lucid. In the summer of 2020, it had delivered 50,000 vehicles. By the end of February 2022, Nio had delivered 182,000 vehicles.
The stock has been as volatile as ever due to challenges in the auto industry and concerns that Chinese companies will have to delist from U.S. exchanges. However, Nio has an advantage over EV newcomers in that the market has successfully received its products. Its brand is more high-end, and most importantly, it is directly targeting the growing Chinese EV market, the largest market in the world right now. Even after the recent rebound, Nio shares remain down 65% off their all-time high.
Data by YCharts.
Ford
Ford is one of the more balanced automakers out there. The legacy automaker is investing aggressively in battery production and vehicle production. In early March, it announced the split of its EV business from its internal combustion engine (ICE) segment. The restructuring illustrates Ford's commitment to EVs. But it also sets the stage for spinning off the EV business in the future as a completely separate public company.
Out of all the companies on this list, Ford is probably the safest buy. Its core business is profitable, and it can use extra cash flow to scale EV production. It has over 200,000 reservations for the Ford F-150 Lightning electric pickup truck. And it pays a dividend.
ChargePoint
ChargePoint is one of the leading EV charging companies. Its goal is to build as many ports as possible in Europe and the U.S. so that it's ready to capture revenue as EV adoption accelerates.
ChargePoint has an attractive business model. It isn't selling electricity to vehicle owners, but rather it is selling the charging stations themselves to businesses, residential customers, and fleets.
ChargePoint has made it clear that it will continue blowing through cash to improve its technology and grow its market share as quickly as possible. The top-line growth has been unbelievable: ChargePoint grew revenue by 65% in 2021, and forecasts 2022 revenue growth of 96% in 2022 versus 2021.
A word of caution
The EV industry is chock-full of opportunity. But it's important to manage risk and not overweight companies that still have a lot to prove. Despite their potential, all five of these companies are aggressively spending money in the hopes that EV adoption will take considerable market share from ICE over the coming years. It's a bold bet with its share of risks, as well as a lot of upside potential.
