Once the crown jewel of Wall Street, electric vehicle stocks nosedived from their golden perch as investor interest diminished amid soaring interest rates and declining consumer sentiment. No longer basking in the limelight, EV stocks have found solace on Wall Street’s backburner.
Yet, the burning question lingers: When will the EV stocks reclaim their lost glory? Speculators view this market as a cyclical creature, hinting at a possible rebound only when the Federal Reserve rolls out interest rate cuts. Until then, for those bullish on EVs for the long haul, the current scenario presents a lucrative opportunity to delve into the crevices of Wall Street’s favored EV stocks. Here are three compelling candidates for May, adorned with strong buy ratings from the discerning scrutiny of analysts.
Leading the Charge: Tesla (TSLA)
Undeniably, Tesla (NASDAQ:TSLA) stands as the world’s preeminent automaker by market capitalization, boasting a diverse portfolio of five popular EV models globally. Despite Tesla weathering stormy seas this year, Wall Street analysts remain steadfast in their optimism towards the company’s future. In April alone, the stock garnered over 12 buy ratings from analysts, with Cantor Fitzgerald flagging it as “Overweight” and setting a price target of $230.
The resilience of bulls towards this stock and the company itself shines through as Tesla gears up to unravel its CyberCab initiative in August, showcasing the much-anticipated Full Self Driving technology. Recent buzz surrounding the Chinese trials of Tesla’s latest autonomous driving software and the company’s strategic layoffs paint a picture of cost-cutting measures and innovative strides. The deflation of Tesla’s once dizzying price multiples, a historical bearish concern, now positions its shares at a modest 6.2x sales with a remarkable ten-year revenue Compounded Annual Growth Rate (CAGR) of 47%, amplifying its appeal to new investors.
The Trailblazer: General Motors (GM)
Perceived as a traditional automaker, General Motors (NYSE:GM) has swiftly penetrated the EV domain with a suite of eight fully electric vehicle offerings. Analysts, reflective of this shift, advocate for GM’s inclusion on investors’ radars, with 20 out of 28 analysts in April endorsing GM’s stock with Buy or Strong Buy ratings.
GM’s recent milestone of delivering 441,000 vehicles to the Chinese market in the first quarter echoes the upward trajectory of its EV sales, which spiked by 42.6% compared to the previous year, constituting around 30% of GM’s total vehicle sales in China. Looking ahead, GM’s pipeline promises a slew of new EV offerings in China, headlined by the Cadillac Optiq EV and an EV variant of Buick’s GL8 minivan. Despite lagging sales growth compared to peers like Tesla, GM shines with its robust 4% CAGR over the last five years and alluring price multiples, trading at just 0.34x sales and 4.79x forward earnings.
The Lithium Luminary: Lithium Americas Argentina Corp (LAAC)
Lithium Americas Argentina Corp (NYSE:LAAC) emerges as a venerated American lithium supplier dedicated to fueling the EV and clean energy ecosystem. Amid April’s analyst buzz, six out of nine recommendations hailed LAAC with Buy or Strong Buy distinctions, envisioning an average price target of $9.48, which eclipses the current stock price twofold.
Operating as a prominent lithium producer in Argentina, Lithium Americas enjoys a robust partnership with General Motors, underpinned by significant equity investments forecasting a surge in production for both the EV and tech hardware realms. Financially, though weathering recent segment splits coupled with CEO turbulence, Lithium Americas bears a lofty 89x sales ratio and 15.8x forward earnings. Despite the gamble, risk-takers eyeing long-term gains might find this juncture opportune to dip their toes into one of the lithium market’s stalwarts.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are solely those of the writer, in accordance with the InvestorPlace.com Publishing Guidelines.