The DIY EV Portfolio: 7 Stocks From Ground to Garage
You may not realize it based on mainstream market reporting the past few years, but EV stocks are more than a handful of high-risk speculative plays riding Tesla’s (NASDAQ:TSLA) coattails. Instead, if you’re bullish on the EV industry – as you should be, despite broader economic effects putting pressure on EV stocks – you should take a step back and consider the entire EV value chain.
In short, a value chain describes each piece involved in putting EV cars in consumers hands. Many companies have their hands in the pot in an industry as tech-dense and equipment-intensive as EV manufacturing. EV stocks along that value chain include mining firms, electric grid and charging companies, parts suppliers, and more. And, of course, EV manufacturers themselves. Stay tuned, though, because my top EV stock for this side of the value chain might surprise you!
If you want to diversify your EV stocks and capture multiple market upsides, don’t stake it all on a speculative play. Instead, these EV stocks spread your capital across diverse sectors with their own upside potential in the EV arena and beyond.
Albemarle (ALB)
Albemarle (NYSE:ALB) is the world’s largest lithium producer, both in terms of market capitalization and sheer lithium output. The firm, alongside other mining stocks, took a hit last week, making today’s pricing a perfect entry point for those bullish on EV stocks. BofA analysts downgraded Albemarle and the lithium industry as a whole based on simple economics.
In short, BofA’s team and other analysts predict that, as supply chains stabilize, current supply sitting on docks ready to ship will outpace demand. Likewise, one analyst points to current Chinese lithium buyers sitting on a surplus as they work through their own downstream demand effects. Both these factors combine to make Albemarle’s short-term prospects shaky.
But you’re in it for the long haul if you’re an EV investor. And Albemarle is the top mining stock for EV enthusiasts. As recently as June, lithium producers forecast a net lithium global undersupply. Their collective forecast wasn’t built based on short-term supply chain fluctuations. Instead, lithium producers like Albemarle are concerned that demand will outstrip supply by more than 500,000 tons by 2030 due to exploding EV demand projections.
Despite recent bumpiness, Albemarle is the best raw material vertical in the EV value chain. If anything, the stock’s recent 10% nosedive presents a perfect entry point for buy-and-hold investors hunting for EV stocks to buy.
EV Stocks to Buy: Infineon (IFNNY)
Investing in Infineon (OTCMKTS:IFNNY) captures today’s hot markets: semiconductor stocks and EV stocks. This European company manufactures semiconductors that, among other uses, power vehicle internals like information/entertainment (infotainment), dashboards, and more. Likewise, Infineon’s chips are integral to less exciting EV features like anti-lock brake systems, airbag deployment mechanisms, and air conditioning. In Infineon’s case, the bottom line is that, as EVs become increasingly high-end, chip demand will soar. And Infineon is one of the few chipmakers perfectly poised to capture that upside.
Beyond safety feature integration that will benefit Infinion as broad EV demand skyrockets, EV infotainment trajectories are particularly enticing. One research report indicates that EV infotainment demand will grow that market segment by 38% annually through 2030. As vehicle internals become increasingly complex, so too will semiconductor demand. Infineon’s position in that small section of the value chain is unique and a compelling prospect among EV stocks.
Sensata (ST)
Like Infineon, Sensata (NYSE:ST) products comprise a small part of an overall EV. But Sensata’s slew of in-vehicle sensors and electrification systems are key among EV stocks as those vehicles become increasingly integrated.
Sensata products include in-bumper sensors like collision detection systems. Sensata’s many sensors alone make it an attractive EV prospect as manufacturers increasingly integrate warning and safety systems. That’s a fact without even mentioning sensor demand skyrocketing as self-driving tech evolves. Switching costs are steep since Sensata sensors are deeply embedded (literally) in EVs. So, once Sensata signs a strategic partnership with a manufacturer, they unlock years of revenue for production and repairs.
And, as their recent Investor Day presentation unveiled, Sensata is also going all-in on electrification. Sensata’s planned electrification portfolio, designed to capture EV enthusiasm specifically, includes EV-specific sensors, electric motor components, and junction box components for third-party hardware installation or EV conversion. Ultimately, the pivot towards electrification is a smart move for Sensata. Electrification efforts position it high on the list of EV stocks to buy, considering its niche (yet necessary) product.
EV Stocks to Buy: General Motors (GM)
This might surprise you, but General Motors (NYSE:GM) is my top EV stock on the end-item manufacturing side. Yes, like Albemarle, negative news is putting a damper on the stock price. But, like Albemarle, GM’s ongoing labor strikes are a temporary hurdle as they negotiate to give workers well-deserved compensation package expansions. GM stands to benefit most from increased EV demand. Today’s stock suppression creates another perfect buying opportunity within EV stocks.
Car buyers balance two imperatives in today’s economy: saving money and buying an EV. We’ve already seen Tesla slash EV pricing after household budget cuts slashed consumer demand. Today’s EV buyer is looking for a quality EV for a reasonable price – picture a standard suburban family looking to upgrade their legacy grocery-getter SUV. That customer segment is where GM stands apart.
GM’s small EV SUV, the Equinox, starts at just $30,000. The EV also has a 300-mile range and enough room for short family road trips. Ultimately, GM knows what consumers want as EV demand shifts from high-end/high-cost products to wealthier customers. Those models were necessary as they offset high-tech development costs. Still, the future is affordable, and GM is the best EV stock positioned to capture that growing middle-market demand.
Edison International (EIX)
Edison International (NYSE:EIX) is a utility stock, and that sector’s been hit hard this year. The broad sector is down nearly 7% this year, and EIX fared only slightly better at -2% since January. But, like other EV stocks, this represents a perfect buying opportunity.
Edison’s operations are centered around Californian markets, and California represents the largest EV market in America by far. To that end, EIX’s electric grid innovations center around serving that component and, at the same time, positioning it as a growth leader in global net-zero efforts. Growth and utilities aren’t usually part of the same sentence, highlighting EIX’s long-term potential.
But California’s greenhouse gas reduction and carbon goals mean that more than three-fourths of cars in the state must be electric by 2045. And EIX’s suite of consumer chargers and trucking initiatives, alongside bigger-picture plans, make this stock perfect for EV investors and those with an eye towards sustainability. In the short term, meeting California’s strict regulatory guidance while expanding infrastructure is expensive. Thus far, it cost the company a ton of up-front capital (one reason for suppressed share pricing). But, beyond maintenance, these one-time expenses will generate high-multiple revenue and serve as a bedrock for national sustainable grid expansion.
EV Stocks to Buy: ChargePoint (CHPT)
Of course, EV drivers in all areas need to refuel on the road. ChargePoint (NYSE:CHPT) is the best EV stock capturing that market, serving as one of the few electric “gas station” providers for drivers. In fact, ChargePoint holds more than 70% of the global market share, with more than 15,000 charging locations across the world. Furthermore, ChargePoint’s bottom line isn’t threatened by expanded fast-charging networks, as much of their core operational revenue comes from fleet services – a cash cow and one ChargePoint isn’t positioned to lose soon.
CHPT shares took a hit this month as the firm raised capital by issuing equity, which was never a popular move for shareholders as it dilutes existing investors. But debt today is costly, and issuing equity was the right move. The fundraiser brought the firm enough capital to fuel their “stated goal of adjusted EBITDA profitability in the fourth fiscal quarter of next year,” according to ChargePoint’s chief financial officer. ChargePoint isn’t yet in the black. But it does have a robust market share, growing EV demand across enterprise and commercial segments, and a clear path to profitability. These three points make it one of the best EV stocks in a supporting role.
Mister Car Wash (MCW)
Mister Car Wash (NYSE:MCW) isn’t an EV-pure stock, but it stands to gain from increased interest in the industry. The basic premise is simple. Consumers shelling out cash for a shiny new EV want to keep it shiny with little effort. They also want assurance that their EV will be treated delicately and carefully. Mister Car Wash covers each point, but its upside potential spans beyond that capacity.
In its most recent filing, the company reported 40 new locations compared to 2022 and an equivalent 5% revenue runup. The company is also debt-free. That’s notable in light of its aggressive expansion and the high capital costs of building new facilities. The fact that MCW can expand using cash reserves without relying on debt points to prudent financial management that will serve the stock well as the economy remains shaky.
And MCW’s long-term prospects are solid, considering its membership-based business model. Per their filing, monthly memberships “contribute a significant portion of our net revenue and provide recurring revenue through their monthly membership fees.” Capturing a huge chunk of recurring revenue from subscription-based memberships is the Holy Grail for a company like MCW. Priced low enough not to be disruptive to family budgets, monthly memberships of this type aren’t ones quickly canceled in a recession. That holds doubly true for consumers interested in maintaining their sparkling new EVs.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
