In this article, we discuss the 5 EV stocks to buy for long-term gains. If you want to read our detailed analysis of these stocks, go directly to Forget Rivian Automotive Inc (RIVN): 10 EV Stocks to Buy for Long-Term Gains.
5. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 30
NIO Inc. (NYSE:NIO) markets smart electric vehicles. Since the company is based in China, the stock has suffered, like other dual-listed Chinese firms in the US, over the past few months. However, analysts are exceedingly bullish on the future prospects of NIO Inc. (NYSE:NIO) despite these China-US tensions. On January 12, Macquarie analyst Erica Chen initiated coverage of NIO Inc. (NYSE:NIO) stock with an Outperform rating and a price target of $37.
Despite the dramatic pullback in the share price of NIO Inc. (NYSE:NIO), there hasn’t been a corresponding hedge fund exodus from the stock, affirming the confidence that elite investors display in the company. At the end of the third quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $1 billion in NIO Inc. (NYSE:NIO).
In its Q2 2020 investor letter, McLain Capital, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE:NIO) was one of them. Here is what the fund said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
4. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 51
Ford Motor Company (NYSE:F) is an automobile manufacturer based in Michigan. The launch of the Ford Lightning EV, the Maverick Pickup, and the Ford Mustang Mach-E over the past few years has helped the company develop a solid reputation in the EV space. However, orders for new cars have been hit in the last few months as a chip shortage hits production. Ford Motor Company (NYSE:F) also sells an EV-powered commercial van named the Ford E-Transit. The company recently said demand for commercial EVs will remain strong in 2022.
Ford Motor Company (NYSE:F) is one of the most popular auto firms among hedge funds. At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Ford Motor Company (NYSE:F).
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) is perhaps the most-well known EV stock on the market. The stock went on an incredible rally in the past few months but shares have declined sharply since the start of 2022 as concerns around inflation grow and batter EV firms. However, analysts remain bullish on the long-term potential of the firm. On January 31, Credit Suisse analyst Dan Levy upgraded Tesla, Inc. (NASDAQ:TSLA) stock to Outperform from Neutral with a price target of $1,025, noting the recent sell-off of the shares had created an “attractive entry point” given the “growth story” of the EV maker.
Hedge funds concur with analysts with regards to Tesla, Inc. (NASDAQ:TSLA) as well. At the end of the third quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ:TSLA), the same as in the previous quarter worth $9 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
2. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
Freeport-McMoRan Inc. (NYSE:FCX) is a mining firm with interests in copper and lithium, along with other metals. Copper and lithium are essential materials for EV manufacture and thus Freeport-McMoRan Inc. (NYSE:FCX) is a long-term EV stock. Freeport-McMoRan Inc. (NYSE:FCX) has also set aside billions of dollars for ambitious growth projects in the coming years to keep ahead of competition in the mining industry on copper. The fundamentals are constantly improving too and the firm has decreased debt by $19 billion since 2015.
Freeport-McMoRan Inc. (NYSE:FCX) remains a preferred hedge fund stock to play the mining market. At the end of the third quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Freeport-McMoRan Inc. (NYSE: FCX).
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 67
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells semiconductor products. It is the biggest chipmaker in the world and as the demand for EVs rises, so will the demand for high-end chips, like those made by Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). While other chip makers around the world play catch-up, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is already well-positioned to take advantage of a boom in chip prices as supply chain problems persist.
Hedge funds are also bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as 2022 begins. At the end of the third quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $9.5 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), up from 64 in the preceding quarter worth $10 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was one of them. Here is what the fund said:
“Taiwan Semiconductor is the world’s largest outsourced foundry of logic semiconductor chips. TSMC’s shares appreciated 8.9% during the quarter.
Similar to last quarter, the supply-demand imbalance in semiconductor chips continues to benefit TSMC. To fuel new technological advances and meet the current supply imbalance, we see significantly increased capital spending across the industry over the coming years.
TSMC has an extraordinary track record of return on these large investments despite their rapid historical cadence of expansion. I remain hopeful that the large capital expenditure plan they now have ($100 billion of investment over the next three years) will be money well spent and not lead to industry oversupply in the medium term. Hopefully, future returns on these investments will look as good as those of the past.”
You can also take a peek at 10 Stocks That Benefit from Global Chip Shortage and 10 Fintech Stocks Redditors are Buying.
