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These two EV shares have more than 40% upside potential, analysts say
Everyone wants to be a part of the next big thing, and at the moment it looks more and more like electric vehicles (EVs) in the car industry. A combination of social and political pressure promotes motor vehicles, and manufacturers, as well as old-fashioned car manufacturers such as Ford and GM, as well as newer companies such as Elon Musk’s Tesla, are engaged in the design and construction of new vehicles. Growth took a hit last week when EV shares tumbled after a series of negative news events sent sentiment down. A fire hit Tesla’s main production facility while ChargePoint Holdings, which owns and operates a network of EV charging stations, reported a larger-than-expected loss. This was an important data point, as charging stations – an essential part of the EV infrastructure – can be considered as a rough proxy for the health of the EV market. Pure-play EV companies are also under pressure from the big name traditional car manufacturers; Ford, for example, is aggressively developing EVs and has announced an all-electric version of its flagship F-150 pickup. This is not to say that compelling plays cannot be found in the current environment. EVs are growing in popularity, and are also supported by government policies; in the US, the state of California is actively pushing for an all-electric vehicle fleet without emissions by 2035, while the government in China has ordered EVs to make up an increasing share of all vehicle sales, to fill up by 20% by 2030. Government support, coupled with public interest, generally provides support for the EV market. Keeping that in mind, according to Wall Street analysts, we used TipRanks’ database to find two compelling EV stocks. Both tickets have a moderate or strong buy consensus rating and could climb more than 40% higher in the coming year. Canoo (GOEV) We start in North America, where Canoo, based in the Los Angeles area, follows a definite, non-traditional approach to car design. The company is one of the many small EV designers and manufacturers that have emerged in recent years to take advantage of the evolving EV market, and published in December through a merger of SPAC on the NASDAQ index. Canoo is in the pre-production phase, and has two EVs on the drawing board; the MPDV, or multi-purpose delivery vehicle, and a unique van marketed as a ‘lifestyle vehicle’. Both have large interior volumes for their size class, making them highly adaptable for a wide range of uses. The steering wheel on both models is a steering-for-wire system, and the dashboard offers a streamlined design that emphasizes the driver’s view. The lifestyle vehicle is compatible with a smartphone app, which makes it possible to connect the phone to the vehicle’s control system. The van, which is simply called the canoo, is scheduled for release in 2022, with other models to follow. Since GOEV traded publicly less than three months ago, the shares have been very volatile. The most recent stock move, a 15% rise, took place on March 11 when the company planned to launch a sports pickup in 2023. Pre-orders start in 2Q21. All of Canoo’s vehicles operate on the same basic architecture, a ‘skateboard’ chassis whose commonality enables faster development timelines. Analyst Jamie Perez, who covers Canoo for RF Lafferty, sees a clear path forward for this company. “Canoo has potential revenue streams from its engineering and licensing opportunities. This company involves consulting and contract engineering for other EV OEMs, which utilizes the development of its own skateboard technology, ‘Perez noted. In detail, Perez notes the company’s guidelines for sales during the middle part of this decade: “Canoo has several revenue opportunities within the electric vehicle market … If we look forward to 2025, the engineering services could earn $ 450 million , a 39% CAGR from 2021 … Canoo is expected to generate $ 79 million in its first year of lifestyle production, with sales growing by a CAGR of 147% by 2025 and generating $ 1.19 billion in revenue. .. B2B will focus on the last mile delivery market. This segment is expected to grow to $ 700 million by 2025 with a CAGR of 100%. Consistent with these positive comments, Perez GOEV is reviewing a buy, and its $ 23 price target implies a 45% upward one-year to the stock. (To see a record of Perez, click here.) As a new stock in the public markets, Canoo has so far rated only two analysts – but both are for sale, making the Moderate Buy consensus rating unanimous. GOEV shares cost $ 15.70 and have an average price target of $ 26.50, giving them an upward potential of 67% for the coming year. (See GEOV stock analysis on TipRanks) Li Auto (LI) And now let’s go from sunny California across the Pacific to China, home to the world’s largest car market. China has 1.4 billion people, who are growing rapidly urbanized and in prosperity, and the country is becoming a greedy consumer of kinds of material goods – including cars. As noted above, government mandates in China require that by 2030, 40% of all car sales should be in electric vehicles. Founded in 2015, Li Auto currently boasts one of China’s best-selling EV models, the Li ONE. In 2020, despite the coronavirus crisis, Li delivered more than 32,000 units, with 14,464 of the deliveries in the fourth quarter. The company reported US $ 635.5 million in revenue for the quarter and a gross profit of US $ 111 million, an increase of 45% year-on-year. The company’s quarterly net loss fell by more than half from Q3 to Q4, to just US $ 12.1 million, while quarterly free cash flow rose 113% to US $ 245.1 million, respectively. The company’s popularity continues to rise, and Li announced on March 2 that it had delivered 2,300 Li ONE models during February. This was an increase of 755% per annum, and the company said that the cumulative deliveries of the Li ONE since the launch amounted to 41 276 units. The company sells its sales through 60 retail locations in 47 cities in China and supports its vehicles with a network of 125 service centers in 90 cities. New models are planned to be launched in 2022. Among the bulls is Needham’s 5-star analyst Vincent Yu, who is taking a positive stance on LI shares. “We believe the company’s unique value proposition, focused strategy and diligent margin and cost control make it a great asset in the growing EV space,” Yu noted. The analyst added: “We think the lack of charging stations is the main problem for the growing EV markets in China, and Li’s product addresses the issue directly. Li One uses technology with an extensive range, which puts the vehicle on its battery pack, which can be charged by a petrol engine, significantly increases the range (800 km) and reduces vehicle dependence on charging stations Li’s BEV model will be released in 2023, capturing secular backwinds through battery improvements and charging technology. “For this purpose, Yu LI shares are rating a Buy, coupled with a $ 37 price target. (To see Yu’s record, click here.) TipRanks’ data shows a positive camp that supports this EV player. The ‘Strong Buy’ stock has amassed 6 Buy ratings over the past three months, with only one analyst owning it safely with a Hold. The price of LI is $ 25.91 and the average price target of $ 40.21 implies a 55% increase in the next year. (See LI stock analysis on TipRanks.) To find great ideas for EV stocks that are trading at attractive valuations, visit TipRanks’ best-selling stocks, a newly introduced tool that unites all TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the proposed analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.