3 Beaten-Down EV Stocks With the Potential to Shift Back Into High Gear
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It’s fair to say that the entire EV sector is maligned at the moment. Stocks throughout the upstart industry have seen their values plummet over the last year. The global EV market slowed down as higher lending rates slashed demand. Speculative SPAC firms failed, and Chinese demand cratered as its economy suffered. Yet, EV sales continue to increase albeit at a slower rate. The industry is continuing to grow. That would make some investors seek for undervalued EV stocks.
It is also becoming more competitive and manufacturers will need to adjust accordingly. EV makers will have to adjust prices downward while finding other efficiencies at the same time. But make no mistake about it, growth is going to continue and that makes these undervalued EV stocks worth considering.
ON Semiconductor (ON)
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ON Semiconductor (NASDAQ:ON) is a leading name in the automotive chip space. It’s one of the first stocks any investor should consider in relation to chips and EVs. The company supplies power and signal management chips to the automotive sector.
There are a few primary reasons that investors should believe in ON Semiconductor at the moment. One of the strongest reasons is that the automotive industry is shifting toward what are known SiC modules. They use silicon carbide semiconductors as switches. ON Semiconductor is a major producer of those modules. The company recently completed the expansion of its SiC manufacturing facility in Korea. It is well positioned to supply the demands of the EV industry for that reason.
The other thing to consider is the performance of ON Semiconductor during the last year. Demand has fallen as the EV sector deals with growing pains. That has affected the company’s top line performance. However, ON Semiconductor managed to provide strong bottom line results in 2023 despite beleaguered demand.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) Stock has experienced a U-shaped recovery in 2024. The year started with optimism around a broader recovery. That optimism stemmed from expectations around rate cuts which would have helped the EV sector overall. However, those have been slow to materialize and shares fell through early February.
Some unforeseen force propelled LAC shares higher from that point until mid-March. Then the company received positive news In the form of a $2.26 billion federal loan. The proceeds from that loan will help The company bring production online at its Thacker Pass site in Nevada. It’s part of general de-risking efforts that will de-leverage lithium production away from China.
Lithium Americas was likely chosen due to the size of the Thacker Pass resource. The lithium reserves at the site are among the largest in the world. That’s a big part of the reason investors should consider Lithium Americas will be likely to multiply in value.
Li Auto (LI)
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Li Auto (NASDAQ:LI) stock suffered after the company cut Q1 delivery guidance by 24% to 77,000 vehicles. That decision is one of many made by the company that will likely serve it well.
In fact, a week later that company revealed that it delivered 80,400 vehicles during the first quarter. That represented a near 53% increase year-over-year. That figure arguably looms larger in investors’ minds than the fact that the company had to cut guidance.
Another positive factor to note is that Li Auto is relatively inexpensive. Its forward sales metrics seem inappropriate for a company that is as strong as Li Auto. The low multiple is more an indication of investor sentiment about the EV sector than it is an indictment of Li Auto.
Remember, Li Auto is profitable in an industry that is notoriously unprofitable. In time investors will realize their error and as a result the company’s relatively weak metrics will improve.
On the date of publication, Alex Sirois did not have (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.
