Despite optimism for a Biden infrastructure bill that supports electric vehicles, many automakers have seen their stock prices struggling in recent times. Traditional car manufacturers, including Toyota, DG, and luxury brands like Lamborghini and Porsche have unveiled bold plans to incorporate zero-emission vehicles into their ranges.
Whether it’s automakers, parts suppliers, basic materials companies, or other businesses, investing in the electric vehicle industry can be difficult and confusing. Three actions that stand out are Ford (NYSE: F), Lucid group (NASDAQ: LCID), and Charging points (NYSE: CHPT). Here’s what makes everyone a great buy now.
The value game
Ford’s stock market performance epitomizes how a company can go from a disadvantage to a favor and then back down in the blink of an eye.
Its history has followed a similar path to that of its peers like GM. Both capital-intensive companies have high pension obligations. Increased competition from arguably more efficient companies like Toyota has resulted in years of market underperformance. The shift from petroleum-powered vehicles to electric vehicles was just another headwind weighing on the investment thesis. That is, until Ford dropped an absolute bombshell with the release of the F-150 Lightning electric pickup.
At one point in late May, stocks have risen nearly 70% year-to-date, compared to a 10% loss in You’re here Stock. Ford stock has cooled since then, but the new optimism for what has been a sharply underperforming stock over the past decade is encouraging.
According to Ford’s July 2021 sales report, reservations for the Ford F-150 Lightning now exceed 120,000 units. But it’s not just the outlook for the Lightning that makes Ford a good buy now. Ford electric vehicle sales accounted for about 8% of its July sales, leading the Mustang Mach-E SUV and the F-150 PowerBoost Hybrid. The company shows that it can compete in the SUV and electric truck market.
The automaker has its problems, but its reputation should give it a huge advantage as it seeks to take a leadership position in the electric truck industry.
The growth game
Lucid Group, commonly known as Lucid Motors, made waves targeting Tesla, Daimler‘s (OTC: DDAI.F) the Mercedes-Benz brand and other market leaders for a share of the coveted luxury electric vehicle market. Despite more than 11,000 reservations in the four trim offerings of the company’s luxury sedan, the Lucid Air, serial production and delivery remain questionable. The initial target date for this milestone was the second half of 2021. Now, in mid-September, time is running out for Lucid to keep his promise.
Since its merger with specialist acquisition firm Churchill Capital IV in late July, Lucid has seen its share price drop due to production uncertainty. Setting a precedent of barely meeting or missing deadlines altogether would be a bad start as a public enterprise.
Investors are right to raise a red flag since the company has not provided an updated timeline in any of its recent presentations. But praise for Lucid’s technology and its ability to hold up in a fiercely competitive space has only grown in recent months.
The company has built an impressive car, but it will have to prove that it can scale up and support its sedan and other models like the Gravity SUV to earn its high valuation. Considering the potential mixed with many question marks, Lucid is a battleground growth stock that may well fit the profile of a risk tolerant investor.
The balanced game
Ford and Lucid have some exciting electric vehicles aimed at disrupting their respective markets. Even with their advantages, competition is expected to continue to intensify as the electric vehicle industry matures.
The ChargePoint action provides a way to invest in increased adoption of electric vehicles in North America and Europe without having to claim your right from a particular automaker.
The company has a charging network of 118,000 active ports and added more than 65 new ports per day in its last quarter. It will also integrate around 40,000 new ports in Europe after finalizing the acquisition of has · to · be E-mobility, an electric vehicle charging company with a leading position in Germany, Austria and Switzerland.
ChargePoint typically generates more than two-thirds of its revenue from its business segment, which tends to be companies looking to offer top-ups to their employees or customers. ChargePoint does not actually make any money on the electricity used in its ports. Rather, he earns money by providing the equipment and maintenance of these stations through support and subscriptions. For now, hardware represents the majority of turnover (73% in the second quarter of 2022). However, subscriptions to various ChargePoint services are expected to deliver a higher percentage of revenue over time. ChargePoint has expanded its service offerings, which it calls its cloud service solutions. In reality, it’s basically just extra features like power management software, price control, valet features, etc. which can increase the revenue generated per charging station.
With a market cap of around $ 7 billion and forecasted sales of $ 230 million for fiscal 2022, ChargePoint has a massive forward price / sales ratio of 30, giving it an extremely high valuation for a business. unprofitable. But there is reason to believe that it may grow in value over time as the adoption of electric vehicles grows in North America and Europe. ChargePoint could be a growth stock worth the risk for investors looking for a catch-all way to invest in EV infrastructure
A seductive trio
Ford, Lucid, and ChargePoint all have their strengths and weaknesses. Buying all three would help mitigate risk while exposing an investor to different aspects of the EV industry. That being said, there’s nothing wrong with waiting to see if the Ford Lightning lives up to the hype, if Lucid can get on the right track with its production rollout, and if ChargePoint can continue to grow at. a pace that justifies its valuation.
Just adding these companies to a watch list and taking a wait-and-see approach might be the best course of action for many investors. But for some, buying equal shares of all three stocks is the skin of the game for an exciting industry that is only just beginning.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.