In this article, we discuss the 10 best electric vehicle stocks to buy for the long term. If you want to read about some more EV stocks, go directly to 5 Best Electric Vehicle Stocks to Buy for Long Term.
Even as the sales of electric cars skyrocket across the globe, boosting the best electric vehicle stocks to buy for the long term, like Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and General Motor Company (NYSE:GM), the percentage of EVs on the roads compared to gasoline vehicles is still shockingly low. According to a report by The New York Times, of the 250 million cars on the roads in the United States, fewer than 1% are electric vehicles.
Automakers expect EVs to comprise more than a quarter of all car sales by 2035, bridging some of this gap. However, even these projections indicate that by that time, only 13% of the vehicles on the roads will be electric. For context, the European Union is already moving ahead with plans to phase out internal combustion engines by 2035. Per data by the NYT, even by 2050, as electric vehicles comprise 60% of new sales, gasoline cars will still outnumber EVs on the roads in the United States.
US President Biden has recently outlined an ambitious plan to reach net carbon zero emissions by 2050, pushing a new climate bill that includes hundreds of billions in subsidies and tax credits for EV manufacturers and adopters to meet the target. Per the NYT, if the US is to meet this goal and go towards a fully electric fleet on the roads, it would also have to phase out the internal combustion engine by 2035. Investors are already loading their portfolios with EV stocks in anticipation of this EV boom for the coming decades.
On September 14, Needham analyst Vikram Bagri launched new coverage of a number of EV manufacturers, noting that a key takeaway from the industry was that the “growth forecasts for EVs still appear conservative”. The analyst further added:
“The individual OEM targets, government mandates for banning internal combustion engine (ICE) vehicles around the world, and capital being invested in the space all point to stronger growth in EV adoption.”
The analyst elaborated that the rapid rise in gas prices in 2022, increasing availability of EV models, and government support has made the environment for EVs “more constructive than ever”, with adoption picking up rapidly. However, he also cautioned that the bullishness on the EV space overall does not translate to bullishness on all players operating in the industry for the near-term.
Our Methodology
The companies that operate in the EV sector and have long term growth catalysts were selected for the list. The analyst ratings and business fundamentals of the firms are also discussed to provide readers with some additional context for their investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
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“EVs Still Appear Conservative”: Best Electric Vehicle Stocks to Buy for Long Term
10. BYD Company Limited (OTC:BYDDF)
Number of Hedge Fund Holders: N/A
BYD Company Limited (OTC:BYDDF) engages in the research, development, manufacture, and sale of automobiles and related products in China. One of the top arguments for listing the firm as one of the best electric vehicle stocks to buy for the long term is the bullish sentiment on the stock from Warren Buffett, a legendary value investor known for his long-term bets. Buffett owns an 8% stake in the company, purchased back in 2008. BYD Company Limited (OTC:BYDDF) has slowly become the largest EV maker in the world in terms of production.
BYD Company Limited (OTC:BYDDF) is expanding in global markets like Norway as the sales of EVs increases in China as well. The August sales numbers for the company jumped nearly 185% year-on-year.
Just like Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and General Motor Company (NYSE:GM), BYD Company Limited (OTC:BYDDF) is one of the best electric vehicle stocks to buy for the long term.
9. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 9
Lithium Americas Corp. (NYSE:LAC) operates as a resource company in the United States and Argentina. The stock is featured on the list of best electric vehicle stocks to buy for the long term because it is one of the top US-based companies with interests in lithium. Lithium is the most essential material needed for the development of EV batteries. Lithium production and refining facilities are presently monopolized by the Chinese, but the US is subsidizing domestic firms to make them more competitive globally.
On September 19, Piper Sandler analyst Charles Neivert assumed coverage of Lithium Americas Corp. (NYSE:LAC) stock with an Overweight rating and a price target of $38, noting that lithium is an absolute global necessity as the world begins to tackle climate issues.
Among the hedge funds being tracked by Insider Monkey, Singapore-based investment firm Himension Capital is a leading shareholder in Lithium Americas Corp. (NYSE:LAC), with 3.3 million shares worth more than $66.9 million.
In its Q1 2021 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Lithium Americas Corp. (NYSE:LAC) was one of them. Here is what the fund said:
“Lithium Americas Corp. (NYSE:LAC): The volatility noted above in LAC has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.
High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on LAC that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on LAC will result in us owning the shares with committed capital of -$0.28 per share.
Although we believe in the fullness of time LAC warrants a $30+ valuation, the prices achieved in early January of this year were not justified by the underlying fundamentals. Some will argue we should have sold down our position. We had already established our option positions and believe LAC is an emerging major in the lithium mining industry. Thus, we decided to maintain the position unchanged. Although still relatively high, the current $15 per share valuation is not crazy compared to where we think the firm should be trading based on fundamentals, so we are no longer overly concerned with the position as is..(click here to read more)
8. ChargePoint Holdings, Inc. (NYSE:CHPT)
Number of Hedge Fund Holders: 17
ChargePoint Holdings, Inc. (NYSE:CHPT) provides electric vehicle (EV) charging networks and charging solutions. The firm is listed on the best electric vehicle stocks to buy for the long term because it is one of the first firms with a charging network spread across the United States, along with an expanding global presence. EV charging stations are essential to the increase in adoption rates for EVs. The US is likely to inject hundreds of millions of dollars into the development of EV charging stations at par with fuel stations in the country in the coming years.
On September 7, Credit Suisse analyst Maheep Mandloi initiated coverage of ChargePoint Holdings, Inc. (NYSE:CHPT) stock with an Outperform rating and a price target of $22, noting the firm benefits from a capital-light growth model and first-mover advantage.
At the end of the second quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $22.8 million in ChargePoint Holdings, Inc. (NYSE:CHPT), compared to 16 in the previous quarter worth $34.7 million.
7. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 39
Albemarle Corporation (NYSE:ALB) develops, manufactures, and markets engineered specialty chemicals worldwide. The company is one of the best electric vehicle stocks to buy for the long term since it makes and sells several chemicals that are used in the manufacture of electric vehicles. As EV adoption increases, the demand for these chemicals is rising. Since Albemarle is one of the best legacy chemicals stocks in the market, it is likely to emerge as one of the winners from this EV boom.
On September 9, Citi analyst P.J. Juvekar maintained a Buy rating on Albemarle Corporation (NYSE:ALB) stock and increased the price target to $345 from $294, noting that the lithium supply/demand balance was still tight.
At the end of the second quarter of 2022, 39 hedge funds in the database of Insider Monkey held stakes worth $600 million in Albemarle Corporation (NYSE:ALB), compared to 44 the preceding quarter worth $454 million.
In its Q3 2021 investor letter, Carillion Tower Advisers, an asset management firm, highlighted a few stocks and Albemarle Corporation (NYSE:ALB) was one of them. Here is what the fund said:
“Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The firm’s shares outperformed in the quarter, driven largely by the current robust demand environment for lithium used in the manufacturing of electric vehicle batteries. As the global push towards the reduction of carbon emissions continues to gain steam, Albemarle is well positioned to benefit from the accelerating adoption of electric vehicles.”
6. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 42
Amphenol Corporation (NYSE:APH) primarily designs, manufactures, and markets electrical, electronic, and fiber optic connectors. The firm is among the best electric vehicle stocks to buy for the long term since the products it sells are used in the manufacture of electric vehicles. As EVs become computers on wheels, the products marketed by the firm are increasing in demand as EV makers use them to make their products stand out from competitors. The stock is also often undervalued in the EV space but offers the same bang for the buck.
On August 23, UBS analyst Chris Snyder maintained a Buy rating on Amphenol Corporation (NYSE:APH) stock and raised the price target to $93 from $88, noting that the firm had multiple quarters of margin runway.
At the end of the second quarter of 2022, 42 hedge funds in the database of Insider Monkey held stakes worth $962 million in Amphenol Corporation (NYSE:APH), compared to 40 in the preceding quarter worth $939 million.
Along with Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and General Motor Company (NYSE:GM), Amphenol Corporation (NYSE:APH) is one of the best electric vehicle stocks to consider for the long term.
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Disclosure. None. “EVs Still Appear Conservative”: 10 Best Electric Vehicle Stocks to Buy for Long Term is originally published on Insider Monkey.