3 Strong Buy EV Stocks to Add to Your February Must-Watch List
The electric vehicle (EV) market may be heading toward a slump in 2024. During Tesla’s Q4 earnings call, CEO Elon Musk warned the famed EV maker could experience slower growth in 2024. Although Elon Musk is not the only industry expert to warn of a potential slowdown, that doesn’t mean investors should not actively be looking for EV stocks to put on their must-watch list.
Supportive government policies, technological advances and changes to consumer preferences will continue supporting demand for EVs in the long run. Even though there may be hiccups in terms of growth, the EV trend is likely here to stay. Below we explore three EV stocks that have received “Strong Buy” ratings from Wall Street.
BYD (BYDDY)
Source: shutterstock.com/Trygve Finkelsen
BYD (OTCMKTS:BYDDY) earned numerous spots on my ‘buy’ lists in recent months. The EV maker’s growth in both China and abroad appear unmatched at this point in time. Last year, BYD became the world’s top EV maker in 2023, trouncing its American rival, Tesla (NASDAQ:TSLA) in terms of electric vehicle sales. In Q4 2023, BYD sold 526,409 electric vehicles, while Tesla sold 484,507.
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BYD has also diversified its business into not only manufacturing electric vehicles but also supplying the batteries that power them. The automaker became a key player in the battery market, ousting LG Energy Solutions as the world’s number 2 EV battery supplier.
Despite the success, BYD’s share price growth has continued to lag behind that of Tesla’s. China’s sluggish economic recovery and BYD’s exposure to mainland China stock exchanges are partially to blame for this. Wall Street, however, is still pleased, with numerous analysts rating BYD shares a “strong buy”.
The Chinese EV maker has enough secular tailwinds behind it, and investors should start to pay serious attention to what BYD does next.
Li Auto (LI)
Source: Andy Feng / Shutterstock.com
Li Auto (NASDAQ:LI) is another leading electric vehicle (EV) manufacturer in China. This EV maker particularly focuses on producing smart SUVs with extended-range technology, and the company also has received a “Strong Buy” rating from Wall Street analysts. The company’s flagship model is the Li L7, a five-seater premium SUV that can run on both electricity and gasoline and competes directly with Tesla’s (NASDAQ:TSLA) Model Y.
Li Auto’s shares have received more love from investors. In 2023, the EV maker’s Nasdaq-listed shares rose 83.5%. Consistent monthly sales growth continues to show Li Auto’s vehicles are in high demand in the world’s largest auto market. Li Auto’s total deliveries increased 182% on a year-over-year basis in 2023 to 376,030. The automaker has so far deliveries over 600,000 vehicles.
Since the start of trading in 2024, Li Auto’s share price has certainly taken a beating, falling more than 17%. Still, interested investors desiring exposure to China’s burgeoning EV market could see this as an opportunity.
Aehr Test Systems (AEHR)
Source: Sergii Chernov / Shutterstock.com
Final in our list of “strong buy” EV stocks is a semiconductor equipment manufacturer: Aehr Test Systems (NASDAQ:AEHR). Aehr Test Systems is a global provider of test systems for burning-in and testing logic, optical and memory integrated circuits.
The company is famous for providing testing equipment and services for electric vehicle (EV) microchip components. Demand for electric vehicles continued throughout 2023, which in turn benefitted AEHR revenue growth. However, recent speculation of an EV market slowdown has led AEHR shares to tumble more than 58% over the past 12 months. AEHR shares currently trade at 17.0x forward earnings, which is much lower than some of the vaunted and well-known semiconductor companies.
As EV demand remains uncertain, AEHR should definitely be a stock that investors watch over the coming months.
On the date of publication, Tyrik Torres 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.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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