11 Cheap EV Stocks To Buy
In this article, we will be taking a look at 11 cheap EV stocks to buy. To skip our detailed analysis of the electric vehicle sector, you can go directly to see the 5 Cheap EV Stocks To Buy.
The electric vehicle (EV) sector and the related battery manufacturing industry have been dominated by China for years. We have reported before that China produced about 75% of all electric vehicle battery cells as of 2023. In 2022, a Chinese EV manufacturer BYD Company Limited (OTC:BYDDF) overtook Tesla, Inc. (NASDAQ:TSLA) as the world's largest EV maker with 1.87 million deliveries of EVs in that year, compared to the latter's 1.3 million deliveries. This development alone is enough to bear witness to the fact that China is continuing to retain its monopoly over the EV sector while the US continues to fight its dominance. Companies like Fisker Inc. (NYSE:FSR) have joined Tesla, Inc. (NASDAQ:TSLA) in this fight. At Cowen's 15th Annual Global Transportation and Sustainable Mobility Conference, Fisker Inc.'s (NYSE:FSR) Chairman and CEO, Henrik Fisker, mentioned that he foresaw the company expanding to be able to produce a million electric vehicles in a year in 2027. As such, the company is among the fastest growing EV companies in the US today.
The US has been attempting to counter the Chinese dominance over the EV sector for almost three years now. In 2021, President Biden first signed the Bipartisan Infrastructure Law, also known as the Infrastructure and Investment and Jobs Act. This move signified increased funding for EV charging stations through the National Electric Vehicle Infrastructure Formula Program and the Discretionary Grant Program for Charging and Fueling Infrastructure. These programs contributed about $5 billion and $2.5 billion, respectively, to the US government's plans to uplift its local EV and EV charging companies. Later, in 2022, the Biden-Harris administration also awarded a $2.8 billion grant to 20 companies. This grant also draws on the funds from the Bipartisan Infrastructure Law of 2021 and is meant to support the creation of battery-grade materials such as lithium, graphite, and nickel.
Such consistent efforts to support the American EV sector may be why a number of traditional automotive companies such as Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) have been foraging into the EV space. According to a Reuters article published in October, Ford Motor Company (NYSE:F) continued to increase its spending on new EVs throughout 2022 and had spent about $50 billion by October. The company aims to produce about 3 million battery electric models (BEVs) in 2030, an ambitious goal that shows the car maker's dedication to the EV sector.
In general, the world's top automakers are planning to spend about $1.2 trillion through 2030 on the development and production of millions of EVs and their batteries and raw materials. As a result, the EV sector continues to expand, making investments in this space a relatively attractive opportunity for investors today. In many ways, several EV stocks are considered cheap investment options since analysts consider many of these stocks to be deeply undervalued. As such, we have compiled a list of the cheapest EV stocks below. Stellar companies like Fisker Inc. (NYSE:FSR) and Tesla, Inc. (NASDAQ:TSLA), among more, were excluded from the list for the sole reason that their valuation, based on their enterprise-value to revenue metric, could not be considered 'cheap' for the purposes of this article.
Let's now take a look at the 11 cheap EV stocks to buy.
To compile our list of cheap EV stocks, we shortlisted EV companies on the basis of their enterprise value-to-revenue (TTM) ratios. This metric compares the total value of the company to its sales and is an decent indicator of the valuation of the company. We have selected companies with EV/Revenue ratios below three and have ranked these stocks on the basis of this metric, from the highest to the lowest ratio. We have also used Insider Monkey's hedge fund data for the fourth quarter, when 943 hedge funds were tracked, to show the popularity of these stocks among elite hedge funds today.
Cheap EV Stocks To Buy
11. Li Auto Inc. (NASDAQ:LI)
Enterprise Value to Revenue Ratio as of March 5: 2.76
Number of Hedge Fund Holders: 25
Li Auto Inc. (NASDAQ:LI) is a developer of new energy vehicles in China. The company provides the Li ONE, a six-seat smart electric sport utility vehicle.
Yuqian Ding at HSBC holds a Buy rating on Li Auto Inc. (NASDAQ:LI) shares as of March 3.
As of March 5, Li Auto Inc. (NASDAQ:LI) shares were trading at just over $25. In contrast, the average price target on the shares is $33.26, with a high forecast of $51.50.
Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 25 funds were long Li Auto Inc. (NASDAQ:LI). Their total stake value was $693 million. Viking Global was the largest shareholder in the company, holding 9.1 million shares.
10. ABB Ltd. (NYSE:ABB)
Enterprise Value to Revenue Ratio as of March 5: 2.28
Number of Hedge Fund Holders: 16
ABB Ltd. (NYSE:ABB) is an electrical components and equipment company based in Zurich, Switzerland. The company manufactures and sells electrification, automation, robotics, and motion products. Its Electrification segment provides EV charging infrastructure, renewable power solutions, and more.
William Mackie at Kepler Cheuvreux upgraded ABB Ltd. (NYSE:ABB) shares from Hold to Buy on February 7.
Consensus forecasts predict a 0.7% increase in ABB Ltd.'s (NYSE:ABB) revenues for 2023 and a 3.3% increase in revenues for 2024. The company's EPS for 2023 and 2024 is expected to increase by 13.2% and 7.2% in 2023 and 2024, respectively. With steady growth expected over the next couple of years, and a low EV/Revenue ratio, ABB Ltd. (NYSE:ABB) is among the most reliable cheap EV stocks on the market today.
ABB Ltd. (NYSE:ABB) was found among the 13F holdings of 16 hedge funds in the fourth quarter, with a total stake value of $701 million.
Artisan Partners, an investment management company, mentioned ABB Ltd. (NYSE:ABB) in its second-quarter 2022 investor letter. Here's what the firm said:
“ABB Ltd (NYSE:ABB) is a Swiss-based industrial conglomerate that manufactures electronic products and equipment. There is no new significant fundamental news on the company. We believe the share price decline relates to negative sentiment associated with industrial companies.”
9. BYD Company Limited (OTC:BYDDF)
Enterprise Value to Revenue Ratio as of March 5: 2.08
Number of Hedge Fund Holders: 2
BYD Company Limited (OTC:BYDDF) is another Chinese EV company. It operates through its Secondary and Rechargeable Batteries and Photovoltaic, Automobiles, Automobile-Related Products, and Other Products segments.
The EV/Revenue ratio for BYD Company Limited (OTC:BYDDF) shows that it is currently one of the most undervalued EV stocks on the market. In 2022, the company overtook Tesla as the world's largest EV maker, with about 1.87 million deliveries that year, compared to Tesla's 1.3 million deliveries. The company has immense growth potential in light of these developments.
Two hedge funds were long BYD Company Limited (OTC:BYDDF) in the fourth quarter, with a total stake value of $14.5 million.
8. Rivian Automotive Inc. (NASDAQ:RIVN)
Enterprise Value to Revenue Ratio as of March 5: 2.03
Number of Hedge Fund Holders: 29
Rivian Automotive Inc. (NASDAQ:RIVN) is an EV manufacturer based in Irvine, California. The company offers five-passenger pickup trucks and seven-passenger sports utility vehicles, alongside operating the Rivian Commercial Vehicle platform.
An Overweight rating was reiterated on Rivian Automotive Inc. (NASDAQ:RIVN) shares on March 2 by Morgan Stanley.
Analysts see an upside potential of 71.04% on Rivian Automotive Inc. (NASDAQ:RIVN) shares, indicating that the stock is currently undervalued. The average price target on the shares is $28.94, with a high forecast of $50. As of March 5, Rivian Automotive Inc. (NASDAQ:RIVN) shares were trading at $16.92.
At the end of the fourth quarter, 29 hedge funds were long Rivian Automotive Inc. (NASDAQ:RIVN), with a total stake value of $945 million.
Baron Funds, an investment management company, mentioned Rivian Automotive Inc. (NASDAQ:RIVN) in its fourth-quarter 2022 investor letter. Here's what the firm said:
“Consumer Discretionary investments along with the lack of exposure to the strong performing Energy sector offset a portion of the above-mentioned gains. Within Consumer Discretionary, the underperformance of electric vehicle (EV) manufacturer Rivian Automotive, Inc. (NASDAQ:RIVN) coupled with lower exposure to this better performing sector hampered relative results. Rivian’s shares fell as investors fretted over the company’s unit economics and how macroeconomic uncertainty is impacting the EV industry.
Rivian Automotive, Inc. is an EV manufacturer producing vehicles for the consumer and corporate delivery van markets. Its shares were under pressure during the quarter. Investors remained focused on the company’s execution challenges, the implied unit economics for its vehicles, and near-term headwinds for the automotive industry stemming from a weaker global economy. Despite these headwinds, we are comfortable with Rivian’s liquidity position and its competitive position within the EV industry, which we believe will continue to grow at impressive rates. Rivian should also benefit from its positive product reviews, its integrated technology approach, and its industry partnerships.”
Rivian Automotive Inc. (NASDAQ:RIVN), like Tesla, Inc. (NASDAQ:TSLA), Ford Motor Company (NYSE:F), and General Motors Company (NYSE:GM), is an automotive stock many elite hedge funds are piling into today.
7. NIO Inc. (NYSE:NIO)
Enterprise Value to Revenue Ratio as of March 5: 1.98
Number of Hedge Fund Holders: 25
NIO Inc. (NYSE:NIO) is a manufacturer of EVs based in China. It offers electric SUVs with five, six and seven-seater options, among more.
Vijay Rakesh holds a Buy rating on NIO Inc. (NYSE:NIO) shares as of March 2.
Analysts have an average price target of $15.64 on NIO Inc. (NYSE:NIO) shares, with a high forecast of $25. This represents an upside potential of 63.43% when compared to the stock's current price of $9.57 as of March 5. As a result, analysts see the shares as being significantly undervalued at present, with the potential to exponentially grow.
NIO Inc. (NYSE:NIO) was found among the 13F holdings of 25 funds in the fourth quarter. Their total stake value was $379 million. Soros Fund Management was the largest shareholder in the company, holding 6.9 million shares.
6. Proterra Inc (NASDAQ:PTRA)
Enterprise Value to Revenue Ratio as of March 5: 1.92
Number of Hedge Fund Holders: 7
Proterra Inc. (NASDAQ:PTRA) is a provider of commercial vehicles in the US, EU, Canada, Australia, and Japan. Some of its EVs include electric transit buses, while it also offers electrification solutions for other vehicles.
In 2022, Proterra Inc. (NASDAQ:PTRA) reported shipments of about 292 units of battery systems, which represented an increase of 275% year-over-year, and highlighted the company's ability to grow its profits heading into 2023.
Our hedge fund data show seven funds long Proterra Inc. (NASDAQ:PTRA) in the fourth quarter, with a total stake value of $33.6 million.
Proterra Inc. (NASDAQ:PTRA), like Tesla, Inc. (NASDAQ:TSLA), Ford Motor Company (NYSE:F), and General Motors Company (NYSE:GM), is a company revolutionizing the electric vehicle sector today.
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Disclosure: None. 11 Cheap EV Stocks To Buy is originally published on Insider Monkey.