3 Crazy EV Stock Ideas That Might Work Well

It has been an incredible year for electric vehicle (EV) stocks as investors bid shares of a number of companies higher on expectations that the auto industry will switch to electric.

You’re here drove the load up, up nearly 500% for the year, but investors today have a large and growing number of stocks to choose from when it comes to EVs.

These are the early days, and the sudden surge makes it look like it could be a bubble. Some of these companies will certainly not keep their promises. But the potential for EVs is real, and while the market is a little foamy right now, strong, long-term companies tend to emerge from a bubble. The question is: how do you separate the survivors from the suitors?

As the title suggests, these stocks are by no means guaranteed winners. Investors should limit any exposure to these stocks to a small portion of a diversified portfolio. But for those who want to take a high-risk, high-potential reward flyer on a next-gen EV fleet, here’s why we think Nikola (NASDAQ: NKLA), NIO (NYSE: NIO), and XPeng (NYSE: XPEV) deserves your consideration.

Don’t count Nikola yet

Lou whiteman (Nikola): My dumb colleague Danny Vena, one of the smartest investors I know, says he wouldn’t hit Nikola stock with a 10ft post. Given the controversies that surrounded the company during its brief period as a state-owned enterprise, its caution is understandable.

Nikola faces accusations he overestimated his products and technologies during investor protests, and founder and former executive chairman Trevor Milton has left the company under a dark cloud. An agreement with which the company has entered into a partnership General Motors (NYSE: GM) is in doubt.

The charges against Nikola boil down to skepticism about the strength of his technology. Nikola no doubt admitted this in his attempt to partner with GM and use the technology of the biggest automaker.

It all sounds terrible. But it is also in the past. If Nikola can make a deal with General Motors beyond the finish line, I think there’s a decent chance that the core business can still turn into something.

Nikola is under new management, including Steve Girsky, former GM vice president, on the board. Additionally, prior to the controversy, the company was very interested in consumers for its Badger electric pickup and had already taken 14,000 pre-order reservations for a line of heavy trucks.

Ultimately, Nikola just needs to deliver a product that lives up to the hype. Customers won’t care whether it’s technology developed in-house or acquired by GM that powers their trucks if the trucks perform as promised.

I’m cautiously optimistic that Nikola, with GM’s help, can make it happen. And while the stock still isn’t a bargain, it’s down over 65% from its June highs.

The risk is real and the caution is understandable. But despite Nikola’s miserable run in recent months, there is still a chance for a happy ending for this electric truck company.

This stock is up in 2020, but it could be just the start

John Rosevear (NIO): NIO’s stock has already far exceeded anyone’s expectations in 2020. Even those who expected big things for the Chinese electric vehicle maker would not have predicted a gain of more than 1700% since April 1.

But here’s the thing: there may be more to come.

As the example of Tesla has shown us, sometimes the exciting potential of a business is greater than traditional green eye protection assessment metrics. Maybe that’s what is happening with NIO, which has become a leader in the burgeoning Chinese electric vehicle market.

While it’s not impossible for NIO’s stock to retreat after such a run, it’s also not hard to see catalysts for future growth in the coming quarters. Consider:

• NIO recently increased its production capacity to 5,000 vehicles per month and sells all the vehicles it can manufacture. He said this week he was working on another increase, to around 7,500 per month, which would take effect early next year.
• NIO also plans to launch two new models in 2021. Both will be sedans, which continue to sell well in China, and both will be based on a new version of its electric vehicle platform. With its three current SUV models, this portfolio of five models will cover a large part of the premium vehicle market.
• NIO is expanding and upgrading its network of automated battery replacement stations, which enable three-minute “recharge” for a package or subscription. There are already more than 150 stations in service; NIO says most of its owners currently live within two miles of a resort.
• NIO’s battery-as-a-service (BaaS) business is growing rapidly. The idea is that consumers can buy a vehicle without a battery (at a lower initial price) and subscribe to the company’s battery swap service. This increases sales by making NIO vehicles more accessible and creates a continuous source of income.
• NIO recently released a 100 kilowatt-hour (kWh) battery as an upgrade to the standard 70 kWh pack. NIO owners with the 70 kWh pack can choose to upgrade to a 100 kWh pack for a fee (another source of income!), And BaaS subscribers who choose the default 70 kWh option can temporarily upgrade to 100 kWh battery packs if necessary (before a road trip, for example).

NIO is also investing part of the proceeds from its recent secondary offering in its advanced research assistance and autonomous driving, for which it has partnered with world leaders in technology, notably IntelMobileye subsidiary of. This is yet another area where technology and smart thinking could create recurring income streams.

Long story short: yes, NIO’s stock is expensive. But Tesla’s stock seemed expensive at $ 200 a share, and look what happened. If you feel like you’ve missed that rocket, here’s another one that might explode in time as well.

This Chinese EV maker is growing like a weed

Rich smith (XPeng Inc.): Let me precede my idea of ​​stocks today with a caveat: I don’t invest in stocks that I can’t hang for a valuation. Complete stop.

If a company has no earnings or free cash flow, it’s not a stock that I want to buy, no matter how fast its income grows. That being said, I have to admit that I find Chinese electric car maker XPeng intriguing – and I’m apparently not alone.

I mean, how can you do not be fascinated by a company that has grown from just $ 1 million in sales two years ago to over half a billion dollars in sales in the last 12 months? Last week, XPeng reported that in the third quarter alone, it increased sales 365% year-over-year, achieving gross profitability under generally accepted accounting principles (GAAP) for the very first time. (gross profit margins: 4.6%).

Granted, operating costs and the like meant XPeng ended up losing money, with a net loss of $ 169 million in bottom line. But even so, the company significantly exceeded Wall Street expectations for the quarter. In fact, analysts at JP Morgan called the results a “clear top-down beat.”

XPeng is simply growing like a weed, forecasting fourth quarter unit sales to increase 17% sequentially. Assuming the company can maintain this pace, the stock could even grow faster than the Chinese market for “new energy vehicles” (ie, electric vehicles, plug-in hybrids and battery-powered cars. fuel) as a whole – which is incredible, considering analysts predict that sales of these “NEVs” will increase by 43% per year over the next five years.

I’m not sure when – or if – all of this tremendous sales growth will translate into real GAAP profitability for XPeng, but it’s definitely fun to watch.