In this article, we discuss the 10 cheap EV stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to Forget Tesla: 5 Cheap EV Stocks to Buy Now.
Last month, the European Commission, the executive branch of the European Union, outlined ambitious targets as part of a European Green Deal, mandating a 55% cut in carbon emissions by 2030, and 100% cut by 2035. As part of this plan, the EU plans to ban the internal combustion engine in the region by 2035, much sooner than other areas of the world. The announcement has given a boost to American EV stocks that have an expanding presence in Europe, like Tesla, Inc. (NASDAQ: TSLA) and ChargePoint Holdings, Inc. (NYSE: CHPT).
Tesla, Inc. (NASDAQ: TSLA), the largest EV maker in the world in terms of market capitalization, recently beat market expectations on earnings per share and revenue for the third quarter. ChargePoint Holdings, Inc. (NYSE: CHPT), the premier EV infrastructure firm in North America, recently acquired the largest electric vehicle solutions provider in Europe. Finance experts are bullish on the long-term future of the industry. According to a report by the International Energy Agency, EV sales in the first quarter of 2021 were up 140% year-on-year.
Tesla, Inc. (NASDAQ: TSLA): Not an Ideal EV Stock Pick for Beginner Investors?
“Egregiously Overvalued”
Investors are naturally keen to gain some exposure to the EV market but the share price of Tesla, Inc. (NASDAQ: TSLA) often discourages those who cannot afford the stock. There is also a lot of chatter around the firm being overvalued. In April this year, Craig Irwin, a senior research analyst at Roth Capital Partners, told news platform CNBC that the firm was ‘egregiously’ overvalued, noting that the firm had a market cap that was more than the total value of the automotive industries in the US and Europe.
“Nothing Short of Bad” Sales in China
On August 10, the bearish outlook on Tesla, Inc. (NASDAQ: TSLA) gathered momentum after investment firm GLJ Research maintained a Sell rating on the stock and lambasted the China sales numbers of the company. Gordon Johnson, an analyst at the firm, termed the 69% month-over-month decline in shipments of China-made cars as “nothing short of bad” for the firm and further said that the company may have peaked in China. However, for all the bearish predictions, there are as many bulls of the EV maker as well.
Stocks Better than Tesla?
For those who want to avoid the expensive option, there are some fantastic stocks in the EV space that are presently trading at comparatively cheap prices and have explosive growth potential. These include Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO), among others discussed in detail below. NIO Inc. (NYSE: NIO) recently reported that it had delivered 7,931 EVs in July, up 124% year-on-year.
Electric cars have revolutionized transport in much the same way the fintech firms have transformed access to finance. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
The basic idea behind this piece is to provide those who cannot afford Tesla, Inc. (NASDAQ: TSLA) or have apprehensions about the valuation of the firm in the long-term with alternatives. With this context in mind, here is our list of the 10 cheap EV stocks to buy now. These were ranked in ascending order according to the number of hedge fund holders in each firm. Data from the 866 funds tracked by Insider Monkey was used for the purpose. Analyst ratings for each stock were also considered, with only companies that have positive analyst sentiment featuring on the list. Finally, special importance was given to the basic business fundamentals of each firm to identify the stocks that have the best chances of soaring in the coming weeks and months. The prices of each stock are also mentioned alongside other details about the company for further clarity.
Forget Tesla: Cheap EV Stocks to Buy Now
10. BYD Company Limited (OTC: BYDDF)
Number of Hedge Fund Holders: N/A
Price as of August 13, 2021: $35.20
BYD Company Limited (OTC: BYDDF) is a Chinese company that makes and sells automobiles around the world. It is placed tenth on our list of 10 cheap EV stocks to buy now. Some of the EV-related items the company sells include battery-electric passenger vehicles and lithium-ion as well as nickel batteries. It has a market cap of over $118 billion and posted close to $24 billion in revenue last year. The firm is one of the largest EV firms in China in terms of sales. In March, the firm reported that it had sold 16,301 EVs.
In March, investment advisory Goldman Sachs upgraded BYD Company Limited (OTC: BYDDF) stock to Buy from Neutral with a price target of RMB249, noting a recent selloff as the primary reason behind the ratings update.
In early June, BYD Company Limited (OTC: BYDDF) announced that it dispatched 100 electric vehicles to Norway as part of a deal to export 1,500 EVs to the country. The firm revealed that all units dispatched were the Tang SUVs made by the firm.
Just like Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO), BYD Company Limited (OTC: BYDDF) is one the best EV stocks to buy now for those who want to avoid Tesla, Inc. (NASDAQ: TSLA).
9. Ideanomics, Inc. (NASDAQ: IDEX)
Number of Hedge Fund Holders: 7
Price as of August 13, 2021: $2.40
Ideanomics, Inc. (NASDAQ: IDEX) is a New York-based firm that offers services which make it easier for companies and individuals to adopt electric vehicles. It is ranked ninth on our list of 10 cheap EV stocks to buy now. On August 2, the firm announced that it had made an investment worth $9 million to acquire a 30% stake in Prettl Electronics, a German company focusing on making and selling industrial components for the automotive and other industries. The share price of the American firm jumped 3% after the announcement.
In April, investment advisory Roth Capital initiated coverage of Ideanomics, Inc. (NASDAQ: IDEX) stock with a Buy rating and a price target of $7, noting that the firm was targeting emerging markets with a strong strategic plan.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $20 million in Ideanomics, Inc. (NASDAQ: IDEX), up from 5 in the preceding quarter worth $3.4 million.
In addition Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO), Ideanomics, Inc. (NASDAQ: IDEX) is one the best EV stocks to buy now for those who want to avoid Tesla, Inc. (NASDAQ: TSLA).
8. Arrival (NASDAQ: ARVL)
Number of Hedge Fund Holders: 14
Price as of August 13, 2021: $11.87
Arrival (NASDAQ: ARVL) is placed eighth on our list of 10 cheap EV stocks to buy now. The company is headquartered in Luxembourg. It designs, assembles, and distributes commercial electric vehicles and buses. On August 5, the company revealed that it had agreed to a partnership with software giant Microsoft to use the cloud services of the latter to develop digital fleets and vehicle capabilities. The company noted that the goal of the deal was to simplify data sharing within the mobility and freight ecosystem.
On June 3, investment advisory Barclays initiated coverage of Arrival (NASDAQ: ARVL) stock with an Overweight rating and a price target of $25, underlining that the firm was positioned to take a large share in the electric vans and buses segment.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $164 million in Arrival (NASDAQ: ARVL), up from none in the previous quarter.
Alongside Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO), Arrival (NASDAQ: ARVL) is one the best EV stocks to buy now for those who want to avoid Tesla, Inc. (NASDAQ: TSLA).
7. Canoo Inc. (NASDAQ: GOEV)
Number of hedge fund holders: 16
Price as of August 13, 2021: $7.64
Canoo Inc. (NASDAQ: GOEV) is ranked seventh on our list of 10 cheap EV stocks to buy now. The company operates from California and makes and sells electric vehicles. On June 17, the firm announced that it would concentrate on building a US-based mega factory while VDL Nedcar, the manufacturing partner of the company, manufactures vehicles designed by the firm for the US and European markets. The Nedcar facility will make up to 1,000 units to be sold across the two continents in 2022.
On July 26, investment advisory RF Lafferty maintained a Buy rating on Canoo Inc. (NASDAQ: GOEV) stock and raised the price target to $19 from $18, noting that the price target was based on the 2023 revenue estimate for the company.
At the end of the first quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $14.8 million in Canoo Inc. (NASDAQ: GOEV), down from 17 in the previous quarter worth $96.6 million.
Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO) are some of the best EV stocks to buy now for those who want to avoid Tesla, Inc. (NASDAQ: TSLA), just like Canoo Inc. (NASDAQ: GOEV).
6. Li Auto Inc. (NASDAQ: LI)
Number of hedge fund holders: 18
Price as of August 13, 2021: $30.11
Li Auto Inc. (NASDAQ: LI) is a Chinese firm that makes and sells electric SUVs. It is placed sixth on our list of 10 cheap EV stocks to buy now. The company debuted on the Hong Kong Stock Exchange on August 12 in a muted debut that saw the stock fall 2.1% during trading and finish the day down 0.7%. The company recently raised more than $1.5 billion from a stock offering and plans to use the proceeds to fund research and development, expand production, and launch new EV models for customers.
On August 12, investment advisory Goldman Sachs reiterated a Buy rating on Li Auto Inc. (NASDAQ: LI) stock with a price target of $62, keeping the firm on a list of Conviction picks of the advisory. Fei Fang, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $493 million in Li Auto Inc. (NASDAQ: LI), down from 31 in the previous quarter worth $497 million.
Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO) are some of the best EV stocks to buy now for those who want to avoid Tesla, Inc. (NASDAQ: TSLA), in addition to Li Auto Inc. (NASDAQ: LI).
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Disclosure. None. Forget Tesla: 10 Cheap EV Stocks to Buy Now is originally published on Insider Monkey.
