The current year is significant in terms of the markets clearly deciding between the winners and laggards in the EV industry. Some electric vehicle stocks have surged higher while the likes of Lucid Group (NASDAQ:LCID) has plunged. This was bound to happen as intense competition is followed by a phase of Company failures and industry consolidation. I believe that some of the best EV stocks will continue to rally next year backed by strong financial performance.
This column discusses three of the top EV stocks to buy and hold. Without doubt, I am bullish on these stocks for 2024. However, I would not hesitate in holding these electric vehicles stocks until 2030. From current levels, multibagger returns seem likely backed by innovation driven growth.
It also goes without saying that industry tailwinds will remain positive. The global adoption of electric vehicles is still at an early stage and the companies discussed are likely to be the leading players. Let’s discuss the reasons to be bullish on these stocks.
Li Auto (LI)
Li Auto (NASDAQ:LI) stock has started trending higher again after a correction driven by profit booking. With stellar growth numbers, LI stock remains attractively valued at a forward price-earnings ratio of 30. I would be betting on 70% to 100% returns from the stock next year.
For Q3 2023, Li reported revenue growth of 271.6% on a year-on-year basis to $4.6 billion. For the same period, vehicle gross margin was 21.2% and Li Auto reported robust free cash flow of $1.8 billion.
Additionally, with $12.13 billion in cash and equivalents, the company has high financial flexibility to pursue aggressive retail expansion in China. The robust liquidity buffer will also support research and development activities as Li Auto continues to launch new models.
Recently, the company unveiled LI MEGA with orders for the model exceeding 10,000 in two hours. With commercial deliveries commencing in February 2024, deliveries growth momentum is likely to remain strong in the coming year. As cash flows swell further, LI stock is likely to maintain positive momentum.
Panasonic Holdings (PCRFY)
Panasonic Holdings (OTCMKTS:PCRFY) is possibly the best bet among EV battery stocks. From a valuation perspective, PCRFY stock looks attractive at a forward price-earnings ratio of 10.3. Further, the stock offers a dividend yield of 2.23% and I am bullish on healthy dividend growth.
I must mention that I am bullish on the stock surging higher in 2024 on the back of valuations and ambitious growth plans. However, I view Panasonic as a long-term hold than a trading bet for the next few quarters. By 2031, the company plans to quadruple battery production capacity as compared to the last financial year. This will translate into healthy revenue and cash flow upside in the next few years.
Panasonic is also on the forefront of innovation. Be it sold-state batteries or an increase in battery density, the company has exciting developments lined-up. Entry into solid-state batteries space for drones also looks promising. Of course, these are long term plans, but it also implies that PCRFY stock can be a potential multibagger.
It’s been a year of strong comeback for Tesla (NASDAQ:TSLA) stock with a year-to-date rally of 116%. I believe that the positive momentum is likely to sustain for TSLA stock next year.
In terms of growth, the commencement of deliveries for Cybertruck is likely to be a catalyst in 2024. The launch of Tesla Roadster and Tesla Semi is also on the cards within the next 24 months. The entry into commercial EVs is likely to be rewarding in the next five years.
Wedbush Securities analyst Dan Ives believes that Tesla’s Supercharger network will represent 3% to 6% of Tesla’s total revenue by 2030. This segment will have an impact on valuations in the coming years.
I must add that Elon Musk had talked about an ambitious target of selling 20 million electric vehicles by 2030. In the next five years, I expect multiple new factories wit some potential locations being Indian and Indonesia.
On the date of publication, Faisal Humayun did not hold (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.