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.
- Li Auto
- ON Semiconductor
- 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. 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.
Tesla has an IBD Composite Rating of 98 and an EPS Rating of 93. TSLA stock earns an RS Rating of 90, meaning that it has outperformed 90% of all stocks in IBD’s database over the past year.
The EV giant’s latest surge followed news of legacy automakers General Motors (GM) and Ford (F) adopting Tesla’s charging system.
Tesla makes four models, primarily the Model 3 sedan and the Model Y crossover SUV. Its long-awaited Cybertruck is due in the third quarter. It also plans the Semi and Roadster, for which launch dates have been pushed back.
The global EV leader expects to grow EV deliveries 50% annually. In 2022, vehicle sales jumped 40%, year over year, to 1.31 million. Production increased 47% to 1.37 million.
BYD (BYDDF) earns an EPS Rating of 97 and RS Rating of 86. BYD stock trades over the counter in the U.S.
In 2022, BYD sold more than 1.85 million electric cars, including hybrids. It also switched last year to producing only all-electric or hybrid-electric vehicles.
China auto giant BYD (for Build Your Dream) has forecast selling at least three million vehicles this year, with hopes for 3.6 million, nearly doubling vs. 2022. Sales are off that pace so far, in part due to the China EV price war led by Tesla.
But BYD has hopes for ramping up sales with several new and refreshed models. Its new Seagull EV, an affordable mini city car, is seen as a potential growth driver.
Its sprawling EV portfolio includes the Han, Qin, Song and Yuan models.
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.
China EV startup Li Auto (LI) carries a Composite Rating of 99, EPS Rating of 84 and RS Rating of 94.
After a strong 2022, Li Auto continues to outsell rival startups Nio and XPeng.
LI caters to the market for premium electric SUVs. The company specializes in “extended range” EVs, which use a small gasoline engine to increase driving range.
Its new L7 SUV is off to a strong start. Li’s first all-electric vehicle is due by end of 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 broke out in May on strong earnings and guidance.
ON Semiconductor (ON) holds a Composite Rating of 92, EPS Rating of 85 and RS Rating of 92.
Also known as Onsemi, ON Semiconductor sees big opportunity in electric vehicles.
Its silicon carbide, or SiC, chips can operate at much higher voltages, temperatures and frequencies than traditional silicon-based semiconductors. That makes them a better choice for EVs.
Silicon carbide semiconductors are Onsemi’s fastest-growing product line. The company sees sales of SiC chips growing at a compound annual rate of 70% through 2027. It expects to grab 35% to 40% of the SiC market by 2027, up from 14% now.
ON stock and some of its peers can often be found on several IBD stock lists, including the IBD 50 and Leaderboard. They also appear on the IPO Leaders and Tech Leaders stock lists.
Aehr Test Systems (AEHR) carries a Composite Rating of 99, EPS Rating of 78 and RS Rating of 99.
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.
Aehr touts strong demand for gear to test silicon carbide power chips used in electric vehicles.
The demand for SiC chips is seen increasing exponentially in the decade ahead.
Besides electric vehicles, silicon carbide chips are used in 5G wireless, aerospace, solar and wind energy, and other 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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