The 3 Electric Vehicle Stocks Best Positioned for Long-Term Success
Tesla’s recent struggles don’t mean that all electric vehicle stocks are dead in the water
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As sales dwindle and profit margins shrink for megalithic electric vehicle stocks like Tesla (NASDAQ:TSLA), the industry faces scrutiny over its current trajectory. Despite a surge in adoption over recent years, tightening economic conditions are pricing many consumers out of the high-end electric vehicle market.
Nevertheless, electric vehicles are here to stay. Likewise, the industry’s prevailing bearish sentiment offers a strategic opportunity to invest in lesser-known electric vehicle stocks that are currently undervalued relative to their long-term potential.
For those looking to diversify their electric vehicle stocks, finding under-the-radar electric vehicle stocks that support the wider industry is better than betting the bank on a single-source manufacturer or brand. These companies are positioned to capitalize on widespread industry trends and offer a safer bet on the electric vehicle market’s growth, avoiding the risks associated with investing in single, speculative electric vehicle stocks that may struggle to endure over the next decade.
Aehr Test Systems (AEHR)
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Aehr Test Systems (NASDAQ:AEHR) may not be as widely recognized as semiconductor giants like Nvidia (NASDAQ:NVDA). Still the small-cap semiconductor stock distinguishes itself among electric vehicle stocks as a lesser-known but pivotal player. Last year, Aehr snagged a hefty $25.1 million order to support EV production from a “leading Fortune 500 supplier of semiconductor devices” serving the automotive semiconductor market.
The announcement details are intentionally sparse, but the implications are clear. As electric vehicles increasingly depend on sophisticated semiconductor technology, concurrent demand for specialized testing and quality assurance services like Aehr’s will rise.
Beyond its status as an electric vehicle stock, Aehr is in an advantageous position in a burgeoning series of industries. Regardless of which semiconductor manufacturer leads the market or which electric vehicle manufacturer dominates the roads, Aehr stands to benefit. The company’s involvement spans beyond electric vehicles, including critical roles in 5G, autonomous vehicles, and data center infrastructure. This broad engagement makes Aehr Test Systems an ideal investment for those looking to tap into multiple cutting-edge technological trends, marking it as a hidden gem among electric vehicle stocks.
Magna International (MGA)
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Magna International (NYSE:MGA) is a key supplier of automotive parts to major players in the electric vehicle industry, including Tesla and General Motors (NYSE:GM). Much like Aehr, Magna’s broad market presence ensures that it benefits no matter which electric vehicle manufacturer leads the market.
In its latest financial report, Magna’s sales rose by 3% year-over-year, and the company is leveraging the momentum in the electric vehicle sector to increase its income forecasts for the remainder of 2024. Although its profit margins are tight—high operational costs keep profits below $9 million despite consistently generating over $11 billion in revenue—Magna’s financial performance remains stable, securing its position as a solid EV investment within a diversified portfolio.
Moreover, Magna stands out by offering shareholder returns, unlike many electric vehicle stocks that sacrifice dividends for growth. With a current dividend yield of 4.29%, MGA provides a modest yet valuable income stream, making it an attractive option for investors looking to build a well-rounded electric vehicle stock portfolio.
ChargePoint Holdings (CHPT)
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ChargePoint Holdings (NYSE:CHPT) shares suffered mightily in recent years, dropping more than 80% since June 2023. Despite recently reporting a per-share loss of $0.11, ChargePoint’s revenue beat analyst expectations. The company’s struggles are not due to flaws in its business model or its overall market viability but are largely the result of external economic pressures that are showing signs of easing.
Expanding and maintaining a national electric vehicle charging network requires substantial capital. Previously, low interest rates made it feasible for companies like ChargePoint to borrow against future profits for immediate expansion. However, recent Federal Reserve rate hikes curtailed this strategy, forcing ChargePoint to seek alternative financing methods that impacted its profitability. Still, as the market anticipates a series of rate cuts in 2024, ChargePoint’s prospects are improving—and, in penny stock territory, it’s priced to buy. Should these forecasts materialize, ChargePoint’s leading market share could position it as a prime candidate among top electric vehicle stocks.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
