Many electric vehicle (EV) stocks slumped last year as the market cooled and rising interest rates depressed their valuations. But according to Precedence Research, the global electric vehicle market could still grow at a compound annual growth rate (CAGR) of 23.4% from 2024 to 2032 as electric vehicles gradually replace gas-powered vehicles.
Therefore, the recent selloff in EV stocks could represent a golden buying opportunity for value-oriented investors who can look past the near-term headwinds. Today I’ll take a deeper look at three beaten-down EV stocks – Rivian Automotive (NASDAQ:RIVN), Nio (NYSE:NIO)And ChargePoint Holdings (NYSE:CHPT) – and explain why they could reap huge profits over the next few years with a modest $1,000 investment.
1. Rivian Automotive
Rivian produces electric pickups, SUVs and a customized electric delivery van (EDV) for its top investor. Amazon. The company produced 24,337 vehicles in 2022 despite struggling with supply chain constraints. The company then doubled its production to 57,232 vehicles in 2023 and sales rose 167% to $4.43 billion last year.
Despite this accelerating growth, Rivian’s shares are trading nearly 90% below their initial public offering (IPO) price, and many investors remain bearish on Rivian for two reasons. First, the company expects to produce only 57,000 vehicles this year as it faces stronger macroeconomic headwinds and is temporarily closing its main plant in Illinois for a few weeks to streamline its production and integrate new technologies. Second, the company posted a staggering net loss of $5.43 billion in 2023.
However, Rivian stock looks cheap right now at less than 2 times this year’s sales. At the end of 2023, the company still had total liquidity of $10.5 billion, and its low debt-to-equity ratio of 0.8 still gives it some room to raise fresh cash. The company is also committed to delivering 100,000 computers to Amazon by 2030. So if you believe Rivian can increase its production and fulfill all of those orders over the next few years, it might be a good time to buy its beaten-down stock.
2. Nio
Nio is a Chinese electric vehicle manufacturer that sells a wide range of sedans and SUVs. What sets it apart from the competition is its replaceable batteries, which can be quickly replaced with fully charged ones via its network of swapping stations.
Nio delivered 122,486 vehicles in 2022 and its deliveries rose 31% to 160,038 vehicles in 2023. But in 2023, its revenue only rose 13% to 55.6 billion yuan ($7.8 billion), as The price war for electric vehicles in China forced the company to reduce prices.
As a result, Nio’s vehicle margin fell from 13.7% in 2022 to 9.5% in 2023 and its net loss increased from 14.4 billion yuan to 20.7 billion yuan ($2.92 billion). In addition, expenses for expanding the battery swap network were further increased. Slowing sales growth and red numbers caused Nio shares to fall more than 30% below their IPO price.
However, for 2024, analysts expect Nio’s revenue to rise 18% to 65.8 billion yuan ($9.1 billion), while its net loss narrows to 16.2 billion yuan ($2.2 billion). Its high debt-to-equity ratio of 3.4 could limit its ability to raise more capital, but the company had 57.3 billion yuan ($8.1 billion) in cash and equivalents at the end of 2023.
Nio is still a speculative company, but trades at less than 1x this year’s sales – so any positive news about China or the electric vehicle market could push the stock higher.
3. ChargePoint
ChargePoint is the largest manufacturer of electric vehicle charging stations in North America and Europe. Revenue increased 65% in fiscal 2022 (ended in January 2022) and another 94% in fiscal 2023. However, in fiscal 2024, revenue rose just 8% to $507 million as net loss widened to $458 million from $345 million.
This slowdown was caused by a slowdown in the electric vehicle market, competition from other electric vehicle infrastructure companies, and macroeconomic headwinds that forced many companies to limit their spending on new electric vehicle charging stations. As a result, ChargePoint now trades at about $1 – nearly 97% below its opening price of $30.11 after the company went public three years ago by merging with a special purpose acquisition company (SPAC). .
That may seem like a bleak situation for a company that ended fiscal 2024 with just $358 million in liquidity and an elevated debt-to-equity ratio of 2.4. However, the company still hasn’t drawn down cash on its $150 million revolving credit facility, and the debt doesn’t mature until 2028. Therefore, ChargePoint could still turn things around when the electric vehicle market heats up again.
For fiscal 2025, analysts expect revenue to rise 9% to $553 million, while net loss narrows to $264 million. Based on these estimates, ChargePoint appears to be an extremely cheap company at less than 1x this year’s sales.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions at Amazon. The Motley Fool has positions in and recommends Amazon and Nio. The Motley Fool has a disclosure policy.
“3 Easy EV Stocks to Buy Right Now for $1,000” was originally published by The Motley Fool