The electric vehicle (EV) realm was considered a lucrative growth sector over the past few years but recently hit a few bumps in the road. Since 2022, the narrative around the most promising EV stocks has been marred by underperformance, throwing shade on the sector’s investment appeal.
Nevertheless, it is important to understand that not everyone can take home the gold, especially when the stakes are as high as they are in the EV sphere. As economic turbulence sweeps away, the less sturdy ventures, promising EV stocks, will likely emerge much stronger than others.
Although the path may be paved with challenges, targeting EV stocks with growth potential to buy is a quest worth undertaking for the patient investor. Moreover, according to Grand View Research, the global EV landscape could balloon to an impressive valuation of $1.21 trillion by 2027. Let us delve into three high potential EV stocks ready to electrify your investment portfolio.
Tesla (TSLA)
EV pioneer Tesla (NASDAQ:TSLA) stormed through the earnings season, flexing its muscles. Though its share in the U.S. EV market dropped to 60% in the first quarter from more than 70% last year, it delivered a stunning tally of deliveries. Tesla delivered 422,875 vehicles during the first quarter, effectively surpassing last year’s figure of 310,000 vehicles.
Despite its margins taking a hit due to aggressive pricing, its escalating delivery figures paint a promising picture of its market dominance. Dipping into the financials, Tesla’s balance sheet projects its strength and stability. The firm unveiled a whopping $16 billion cash pile in the first quarter, boosted by a robust operating cash flow of $2.5 billion.
Moreover, the firm’s ambitious goal to ship 20 million vehicles annually by 2030, coupled with Elon Musk’s dynamic leadership return, a creative spin on advertising, and the launch of the Cybertruck, signals a powerful trajectory for Tesla.
ChargePoint (CHPT)
EV charging infrastructure provider ChargePoint (NYSE:CHPT), renowned for its premium asset-light business-to-business model, holds a leading position in the North American market. The company is poised to ride the wave of the sector and regulatory tailwinds effectively, enabling it to capitalize on the surging adoption of EVs effectively.
ChargePoint boasts a rock-solid track record of growing its top line over the past several years. Moreover, forward sales estimates for the firm are at a spectacular 63%, which should enable the firm to break even within the next 2-3 years effectively. It wrapped up its first quarter recently, delivering nearly 60% growth year-over-year to $130 million.
Also, while declining profits have been a concern, industry pundits are optimistic about the firm’s long-term prospects. Additionally, Refinitiv analysts expect the stock to rise more than 73% from current prices. ChargePoint’s robust record and competitive advantages paint a promising picture for its future.
Nio (NIO)
Nio (NYSE:NIO) is arguably one of the top EV manufacturers in China, with established brand equity in the region. Despite a challenging landscape, Nio delivered an incredible 31,041 vehicles during the first quarter, representing a healthy improvement year-over-year. However, deliveries dropped more than 20% sequentially due to the price war in the Chinese EV market. The price war led to delayed purchases, affecting industry-wide sales.
Nevertheless, Nio has plenty of growth catalysts ahead in this transition phase as it commences deliveries of new models, such as the EC7, its new SUV coupe, and the ET7 sedan. Moreover, you have its foray into European to consider, which could pay many dividends down the road. If the EV player slashes its delivery targets by 30% to 40%, Nio stock could be in for a major rally.
On the date of publication, Muslim Farooque 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