We recently compiled a list of the 7 Best EV Stocks Under $50. In this article, we are going to take a look at where Stellantis N.V. (NYSE:STLA) stands against the other EV stocks under $50.
EV Sales are Growing
Since 2018, electric vehicle (EV) sales have been rapidly growing as the world tries to reach its carbon neutrality goal by 2050. According to the International Energy Agency (IEA), only 2% of new vehicles registered globally were electric vehicles, and reached 18% by the end of 2023. Even though most of these sales were concentrated in China, Europe, and the US, other markets such as India, Thailand, Vietnam, and Latin America have also been adopting the EV trend at a fast pace.
In 2024, while the high costs due to interest rates stalled EV sales a little, they are still growing at a significant pace as the sales reached 3.4 million units in Q1, compared to 2.6 million in the first quarter of 2023, according to the IEA. Furthermore, the accounting and consulting firm, PwC analyzed 21 markets and found out that in the second quarter of 2024, 37% of vehicles sold in these markets were battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), or hybrids, marking an increase from 30% in the same period of 2023. At the same time, overall EV sales rose by 21% compared to Q2 2023, while sales of internal combustion engine (ICE) vehicles declined by 9% during the same period.
BloombergNEF’s Long-Term Electric Vehicle Outlook shows that as technology improves and battery prices drop, EV adoption is increasingly driven by consumer demand. Passenger EV sales are expected to surpass 30 million units in 2027 and reach 73 million units by 2040.
Global EV Market to Reach $63 Trillion by 2050
Despite such progress, strong policy support is still needed, as only 69% of the global car fleet is expected to be electrified by 2050 in the base case scenario, short of the 100% target in the Net Zero scenario.
Heavy trucks and other segments lag in reaching net zero and full combustion vehicle sales need to stop by 2038 to reach the goal. The report states that the global EV market could reach $63 trillion by 2050, with significant investment needed in battery production and charging infrastructure.
According to estimates by Fortune Business Insights, the global EV market is expected to grow at a compound annual growth rate of 13.8% from 2024 to 2032, and Asia is currently the dominant region with a 51.24% market share. This is the time for investors to take positions in EV stocks, as the EV market is just getting started and is poised for a lot of growth.
Our Methodology
For this article, we used the FinViz stock screener to identify over 25 electric vehicle manufacturers with a stock price of under $50, as of August 7. We narrowed down our list to 7 stocks that were most widely held by institutional investors and listed the stocks in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up view of a modern automobile with its sleek curves and luxurious body.
Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 35
Share Price as of August 7: $15.39
Stellantis N.V. (NYSE:STLA), one of the Big Three automakers, is involved in the design, engineering, production, distribution, and sale of automobiles, light commercial vehicles, and engines, among other products.
Formed through the merger of Fiat Chrysler Automobiles and PSA Group, the company offers a range of vehicles, including luxury and premium models, as well as SUVs. The company markets its vehicles under a diverse range of brands, such as Abarth, Alfa Romeo, Chrysler, Citroën, DS, Dodge, Fiat, Jeep, Maserati, and others. It is one of the best EV stocks under $50.
Stellantis (NYSE:STLA) is driven by its strong global and local presence. With a broad portfolio of well-established brands, the company effectively caters to various markets and consumer preferences. The company is ambitiously shifting towards electric vehicles, setting a target to have all its sales in Europe and half in the U.S. come from battery electric vehicles (BEVs) by the end of the decade.
Additionally, Stellantis (NYSE:STLA) aims to achieve 5 million global BEV sales annually by 2030. In Europe, the company’s electric models are performing exceptionally well. The Fiat 500e ranks among the top-selling EVs in Italy, and the Peugeot e-208 was the leading EV in France during the first quarter of 2024.
On July 31, Nomura analyst Anindya Das upgraded Stellantis (NYSE:STLA) to Buy from Neutral with a price target of EUR 21, down from EUR 24. This upgrade reflects optimism about the company’s plans to tackle challenges in North America. The company has invested significantly in launching a range of new, cost-effective products in Europe, following a consolidation of its production platforms.
The efforts are expected to help the company navigate slower sales growth in the European market. With its current share price offering a 10% dividend yield, the analyst sees the company as an attractive investment, combining strong future growth prospects with substantial shareholder returns.
According to our database, 35 hedge funds held stakes in Stellantis (NYSE:STLA) in the first quarter, with positions worth $556.400 million. TOMS Capital is the largest shareholder of the company, as of March 31, and has a stake worth $137.821 million.
Ariel Global Fund stated the following regarding Stellantis N.V. (NYSE:STLA) in its first quarter 2024 investor letter:
“We added multinational automotive manufacturing company, Stellantis N.V. (NYSE:STLA), which was formed from the merger of Fiat Chrysler Automobiles and the French PSA Group in the period. With deal synergies lowering overall operating expenses and contributing to healthy free cash flow generation, management has begun increasing shareholder returns through dividends and share buybacks. Although some investors remain on the sidelines over concerns auto sales and margins have peaked, STLA’s average transaction price is growing year-over-year. We think this momentum will continue and expect STLA to deliver double-digit operating profit margin as it further expands its leading position in the Middle East and South America. Furthermore, the company’s Leapmotor joint venture presents a unique way to benefit from the strengths of Chinese original equipment manufacturers. Meanwhile, in the current electric vehicle slowdown environment, we believe STLA is best positioned to weather the storm. Management believes it can maintain profitability and is open to rationalizing its 14 brands. STLA seeks to be number one in the commercial vehicle segment by 2027, which comes with high customer stickiness, solid profitability and recurring revenue streams.”
Overall STLA ranks 3rd on our list of the best EV stocks to buy. You can visit 7 Best EV Stocks Under $50 to see the other EV stocks that are on hedge funds’ radar. While we acknowledge the potential of STLA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than STLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
