3 Picks & Shovels Ways to Play the EV Sector in 2023
There are many ways to play the long-term growth EV sector stocks provide. Of course, top-tier EV producers are often the first choice among many investors, and they haven’t been wrong. One only needs to look at the kinds of returns companies like Tesla (NASDAQ:TSLA) have provided over the past decade to see why there’s so much interest in such companies.
That said, investors may be better off focusing on top lithium stocks or EV charging stocks, instead of individual electric vehicle brands, to capitalize on the growth potential of this sector long-term. Betting on the underlying commodity that unites all EV manufacturers can offer more reliable gains.
With the EV market expanding, top EV, battery, and lithium stocks offer significant potential for high returns. Lithium’s versatile applications across various industries are expected to drive a surge in demand, making it an opportune time for investors to explore these stocks.
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Here are three picks and shovels ways to play the EV sector in 2023.
Lithium Americas (LAC)
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The global shift towards decarbonization and the growing popularity of electric vehicles have boosted interest in Lithium Americas (NYSE:LAC). However, the company’s financials show some worrisome aspects, including negative net income and a deficit in levered free cash flow.
Additionally, the stock’s high beta indicates potential volatility, and it appears to be trading above its intrinsic value, leading to concerns about possible price drops. This makes it one of those EV sector stocks to buy.
LAC stock at $20 presents an attractive opportunity compared to its peak at $33. Acquiring Arena, with a majority stake in Sal de la Puna project, positions LAC for long-term growth. Despite being pre-revenue, LAC has three valuable resources with substantial long-term return potential. As one of the high-potential EV charging stocks, it offers a 50% upside and the possibility of doubling investments.
ChargePoint (CHPT)
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ChargePoint (NYSE:CHPT) experienced a surge in options trading volume, with 86,266 contracts traded, equivalent to 83.7% of its average daily trading volume over the past month. The $9 strike call option expiring on August 11, 2023, saw significant activity, with 30,880 contracts traded, representing about 3.1 million underlying shares of CHPT.
Despite facing competition from Tesla, ChargePoint holds 65% of the market share and has a strong global presence with charging stations across multiple markets. While it is yet to achieve profitability, the company’s revenue growth and positive EPS performance make it an appealing EV charging stock with significant upside potential.
ChargePoint has a substantial presence in North America and is also established in 16 European countries, providing a broad addressable market for robust revenue growth in the future.
Luminar Technologies (LAZR)
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Luminar (NASDAQ:LAZR) is a significant player in the lidar industry, providing solutions for autonomous vehicles ranging from level 3 to level 5. The company has over 50 global partnerships and aims to enhance vehicle safety by eliminating accidents through advanced lidar technology. Lidar stands for light detection and ranging, utilizing lasers to create 3D maps of the surroundings. Luminar envisions a future where lidar is standard on all vehicles and capable of predictive accident prevention.
LiDAR technology is still evolving and becoming more affordable. Luminar Technology leads the way, making it a promising investment. LAZR stock is undervalued, with high sales growth and a positive gross margin, reducing cash concerns. Analysts predict strong sales growth of 112% YOY in 2023 and 207% next year. A compelling buy!
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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