Despite predictions of a recession at the end of 2022, the United States economy has defied expectations, showcasing robustness and continued growth. Throughout the first half of 2023, it has remained resilient despite headwinds in interest rate hikes, a politically driven debt default crisis initiated by House Speaker Kevin McCarthy, and a series of bank failures.
This resilience is expected to boost U.S. economic growth due to the Federal Reserve’s careful approach to interest rates, bipartisan resolution of the debt default crisis fostering political stability, and improved financial sector oversight following bank failures. These factors collectively create a favorable environment for sustained economic expansion, especially toward stock market growth in the ever-growing EV industry. Given the innovations and strong financials heading for long-term growth, these three EV stocks should be bought.
EV Stocks: Albemarle Corporation (ALB)
Albemarle Corporation (NYSE:ALB) is a specialty chemical manufacturing company that operates across three divisions – lithium, bromine, and catalysts. Albemarle held the title for being the largest producer of lithium batteries for EVs in 2020.
ALB stock is down 14.29% YTD (as of writing) and is worth $183.84. WSJ forecasts a median 12-month price target on ALB to be $260.50, ranging from $155.00 to $344.00, with over 20 “buy” ratings this month.
The market for lithium batteries is anticipated to increase by over $130 billion at a 14.2% CAGR to reach $187.1 billion. This market has grown due to increasing technological advancements in automated vehicles such as elevating equipment, industrial trucks, and EVs.
Financials for Albemarle are faring well, with 12-month revenue at $9.77 billion, growing 123% YoY. EPS has also risen drastically from $2 last year to $33 now (TTM), or a 440%-plus increase. With a gross profit margin of 40.18%, Albemarle’s Q2 2023 results in a 60% increase in net sales to $2.4 billion.
As the demand for EVs rises in the coming years, the market for lithium batteries will follow. Albemarle’s valuable resources, such as lithium and bromine, are mined in Chile and Nevada, and it holds a 49% share in a lithium mine located in Australia. Albemarle also anticipates increased sales due to recent supply agreements with major automakers such as Tesla and Ford. The company is positioned to capitalize on the growing demand for lithium batteries in the coming years. Specifically, the recent entry into the energy storage market through providing lithium allows Albemarle to forecast a 30 to 40% increase in sales and strong growth over the long term.
With a bright outlook for the lithium battery market, Albemarle is well-positioned to benefit from the rise of EVs and other automated vehicles in the coming years, bolstering long-term stock growth. Thus, this is one of the top EV stocks, in my opinion.
Tesla Incorporated (TSLA)
Tesla Incorporated (NASDAQ:TSLA) is an American multinational automotive and clean energy company that creates EVs and stationary battery energy storage devices. TSLA stock has been seeing strong recent growth, which is up 148% YTD.
Financials for Tesla have also been strong over the years. Revenue of $24.93 billion grew by 47.2% YoY, which beat analyst expectations by 0.81%, and net income of 2.7 billion increased by 19.65% YoY. Tesla’s diluted EPS of $0.78 grew 20% YoY, beating analyst expectations by 11.12%.
Tesla holds a dominant position within the market. In particular, the global automotive energy recovery system market size was valued at $17.12 billion in 2022 and is projected to grow to $29.60 billion by 2030 at a 7.2% CAGR during the forecast period. This will serve as a consistent growth catalyst for Tesla in the long term.
Information from five knowledgeable sources recently reveals that Tesla has embarked on a series of groundbreaking innovations poised to reshape the EV manufacturing landscape. These innovations could cut production costs in half, and Tesla is on the verge of achieving the ability to die-cast the intricate underbody of an EV in a single piece. This innovation promises to revolutionize car development, allowing Tesla to create a fully-fledged vehicle within a remarkably short timeframe of 18 to 24 months as compared to the 3 to 4 years required by its competitors.
Analysts have suggested that Tesla is close to deciding on the location for this one-piece die-casting platform, possibly within this month. Once this reinvention is realized, Tesla’s lead over its competitors is expected to widen significantly, securing its position as the dominant EV manufacturer for the foreseeable decades ahead.
Lastly, Yahoo! Finance reports 36 analysts having a 12-month mean price target on TSLA stock to be $274.39, spanning from $24.33 to $400.00. Investors should buy in on TSLA as Tesla is close to reshaping its EV manufacturing landscape this month alone. This makes it one of the top EV stocks, in my book.
Ford Motor Company (F)
Ford Motor Company (NYSE:F) is an American multinational automobile manufacturer that sells automobiles and commercial vehicles under the Ford brand and luxury cars under its Lincoln brand.
F stock is up 7.96% YTD and has historically been maintaining growth. The global automotive market was valued at $2.73 million in 2021 and is projected to grow at a 3.01% CAGR to $3.27 million by 2028 during the forecast period.
Financials are faring well for Ford. Revenue of $44.95 billion increased by 11.85% YoY, which beat analyst expectations by 2.68%, and net income of $1.92 billion grew by a staggering 187.41% YoY. Lastly, Ford’s diluted EPS of $0.47 grew by 193.75%, which beat analyst expectations by 34.26% YoY, further displaying how Ford has been continually growing its financials.
Recently, Ford partnered with BMW (OTCMKTS:BMWYY) and Honda (NYSE:HMC) to create ChargeScape, a pioneering enterprise equally owned by the three automotive giants. ChargeScape is dedicated to revolutionizing electric vehicle grid services, aiming to unlock unprecedented possibilities in electric mobility. By efficiently managing energy services previously inconceivable with traditional gasoline vehicles, ChargeScape stands to benefit EV enthusiasts, utility companies, and the automotive industry at large. The venture is also exploring avenues to provide financial incentives to electric vehicle owners through innovative grid services while reducing carbon footprints and enhancing grid resilience. With an expected launch early next year, ChargeScape’s inception is poised to elevate Ford’s sales and transform the EV landscape for strong long-term growth.
Yahoo! Finance reports 19 analysts having a 12-month mean price target of $14.64 on F stock, with the range spanning from as low as $11.00 to as high as $23.00. F stock is a worthwhile investment in the long term as the recent partnership will create a long-term growth catalyst to bolster strong financials. That said, this is among the best EV stocks you can buy.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.