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In this article we will take a look at the 10 best EV stocks to buy now. You can skip our detailed analysis of the EV industry’s outlook for 2021 and some of the major growth catalysts for EV stocks and go directly to 5 Best EV Stocks To Buy Now.
The EV industry presents a strong investment opportunity as governments, businesses and individuals are collectively pouring billions into the industry, driven by a need to cut carbon emissions, increased efficiency of electric vehicles and cost effectiveness. Data by IHS Markit suggests global sales of battery electric vehicles (BEV) and other EVs are expected to have reached 2.5 million in 2020, and expected to jump a whopping 70% in 2021. China and Europe remain the biggest EV markets, with 44% and 28% market shares, respectively. By 2025, EV sales will hit 12.2 million units, according to the IHS data. In Europe, governments are adapting a stick-and-carrot approach to increase electrification, offering tax exemptions and incentives to customers buying EVs. The IHS report said that under the Green Deal framework, governments will get stricter to cut carbon emissions by 2030. This will further accelerate the EV market.
Best EV Stocks to Buy Now
A February 20201 report by BlueWave Consulting said that the EV market should grow from $121.8 billion in 2020 to $236.3 billion by 2027, representing a CAGR of 10.6% in the period. The industry is seeing a lot of new entrants — car manufacturers, EV software providers, EV battery makers, EV parts suppliers and full-cycle EV companies. But the traditional car companies like GM, Ford and Volkswagen are spending billions to change their business models and launch new electric vehicles to tackle EV giants like Tesla, Nio and Geely.
Even though the current U.S. EV market is dominated by Tesla, almost every major U.S. car company has an electric vehicle in the pipeline. Some latest EV models by major car companies include Ford Mustang Mach-E, Volkswagen ID.4, Lucid Air, Audi e-tron GT, Lordstown Endurance, Mercedes-Benz EQS, GMC Hummer and Nissan Ariya.
The arrival of Joe Biden in the White House will also fuel the EV revolution in the country. The Biden administration plans to build half a million public chargers by 2030.
It's no secret that the EV stocks will gain value in the future. But which EV stocks should you pick? That's where smart stock-picking skills are needed. Choosing the right stocks is becoming difficult than ever. Even the smart money is struggling with this skill, thanks to the rising financial volatility. The hedge fund industry that once used to post sterling gains is also feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context and industry outlook in mind, let’s start our list of 10 best EV stocks to buy now.
10. Aptiv PLC (NYSE: APTV)
Number of Hedge Fund Holders: 44
British auto parts company Aptiv is also a key player in the EV industry. Morgan Stanley recently named the stock in its detailed report on the state of vehicle safety. The report noted that vehicle-related accidents are rising despite declining vehicle miles and safe design of cars. Human error remains the core reason behind millions of car accidents. In this environment, Morgan Stanley’s Adam Jonas believes, Aptiv is well-position to take advantage in the ADAS (advanced driver-assistance systems) market. The stock ranks 10th in our list of the best EV stocks to buy now.
As of the end of the fourth quarter of 2020, Impax Asset Management owns 2.7 million shares of Aptiv worth $351.6 million. APTV accounts for 2.23% of Impax Asset's total portfolio.
Sound Shore Management, in their Q4 2020 investor letter, mentioned Aptiv PLC (NYSE: APTV) and emphasized their views on the company. Here is what Sound Shore Management has to say about Aptiv PLC in their Q4 2020 investor letter:
"As mentioned earlier, periods of uncertainty often create the best opportunities for our strategy. Sound Shore’s ability to remain nimble while preserving a long-term view is a definitive competitive advantage, and increasingly rare in the investment industry. Though we reduced our portfolio’s exposure to original equipment auto manufacturers (OEM) during the selloff in March, we pivoted to opportunities our team identified in the specialty suppliers to the OEMs. One such company is Aptiv, our strongest contributor for the year. Formerly Delphi Automotive, Aptiv is a global technology and parts supplier to the transportation industry that makes electrical and active safety solutions for legacy vehicles as well as for the electric and automated cars of the future. We initiated our position in Aptiv during the market sell-off in March 2020 when the stock pulled back more than 60%. Our investment team has been following the company for a number of years and, given the opportunity to add the name at less than ten times normalized earnings, we acted quickly. Aptiv is a technology-driven business with excellent growth prospects. As global auto demand recovers, Aptiv’s content per vehicle will continue to increase and its business will benefit from the evolution of the automotive industry.”
9. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 68
Despite concerns of “hype” and soaring valuation, Tesla remains on the of the best EV stocks to buy now. Tesla has big plans to expand its operations beyond the U.S., into emerging and lucrative markets in Asia. Tesla stock recently received a stunning $3000 price target from Cathie Wood. Ms. Wood isn’t alone. Tesla is receiving extremely bullish price targets from the Wall Street. A few days ago, Mizuho's Vijay Rakesh gave a $775 price target for Tesla, calling the EV company the “one hundred year disruptor.”
According to our database, the number of TSLA’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 68 hedge funds that hold a position in Tesla compared to 67 funds in the third quarter. The biggest stakeholder of the company is Cathie Wood's ARK Investment Management, with 4.1 million shares, worth $2.92 billion.
"Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions. The stock increased on strong financial results, including profitability that exceeded market forecasts and strong growth across different geographies and vehicle programs. Indeed, in the third quarter, Tesla delivered almost 140,000 total vehicles – with strong unit level economics of 27.7% GAAP automotive gross profit margins – and another quarter of GAAP profitability and strong free cash flow (almost $1.4 billion). Recently, Tesla announced a record of over 180,000 total vehicle deliveries for the fourth quarter, effectively hitting its goal of 500,000 deliveries for the calendar year, a projection given before the COVID pandemic. In addition, we believe newly released full selfdriving functionality should yield further improvements in unit economics and open exciting new growth opportunities. Lastly, Tesla joined the S&P 500 Index, a meaningful milestone that significantly expands the potential shareholder base.”
8. Lordstown Motors Corp. (NASDAQ: RIDE)
Number of Hedge Fund Holders: 17
Lordstown Motors is one of the most promising EV startups. With a $75 million investment from General Motors, the company is focused on making light duty electric trucks primarily for industrial fleet customers. The company went public in 2020 via SPAC. The stock ranks 8th in our list of the best EV stocks to buy now.
As of the end of the fourth quarter, there were 17 hedge funds in Insider Monkey’s database that held stakes in RIDE. There were no hedge funds in our database of 887 funds that held stakes in the company in Q3'20. This shows that the smart money is turning bullish on RIDE. The total value of the 17 hedge funds' stakes in the company at the end of 2020 is over $99 million.
7. Canoo Inc. (NASDAQ: GOEV)
Number of Hedge Fund Holders: 17
California-based Canoo ranks 7th on the list of 10 best EV stocks to buy now. The stock recently received a Buy rating with a price target of $23 from R.F. Lafferty. The firm said in its note that Canoo’s “lifestyle” EVs offer customization over the lifespan of the vehicle under different owners. The report also noted the company’s partnership with Hyundai Motor Group for the development of an EV platform using Canoo's modular skateboard technology. The company recently said it plans to launch electric pickup trucks in 2023.
The company is also getting the attention of the smart money, as 17 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 16 funds a quarter earlier.
6. Fisker Inc. (NYSE: FSR)
Number of Hedge Fund Holders: 18
Ranking 6th on the list of 10 best EV stocks to buy now is Fisker. The company is behind the world's first luxury plug-in hybrid electric vehicle, Fisker Karma. Earlier in March, Citi said in a report that it has gained confidence in the long-term thesis for Fisker. The firm likes increasing retail reservations in March and upcoming catalysts for 2021. The firm has a Buy rating for the stock, and increased its price target to $31 from $26.
A total of 18 hedge funds tracked by Insider Monkey were bullish FSR at the end of the fourth quarter, up from 17 funds a quarter earlier.
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Disclosure: None. 10 Best EV Stocks To Buy Now is originally published on Insider Monkey.