Autopilot & Faster Charging Options Lifted Nio Stock; But Is There Room For More Growth?
Electric vehicle stocks are still hot. The action in top electric vehicle stocks has certainly been epic, to say the least. Nio (NIO Stock Report), for instance, is up about 460% year-to-date. It seems to me that NIO stock isn’t even considered speculative by the standards of this sector. The company’s shares have broken above the $20 mark yesterday. That’s following positive commentary from Deutsche Bank analyst, Edison Yu, who gave Nio a “Buy” rating with a $24 price target. The target implies around 20% potential upside from Tuesday’s closing price.
As Edison Yu puts it: Nio could become “the next iconic auto brand,” For one, sales are trending higher. The team projected record third- and fourth-quarter deliveries and raised its estimates for full-year sales and earnings.
With the growing excitement among investors about the EV space, demand for NIO’s products is increasing exponentially. As adoption of its battery-powered electric vehicles increases, consumers slowly begin to appreciate the value proposition and quality of Nio’s products and services. This statement is supported by the carmaker’s higher customer-referral odds in the country than Tesla, BMW, and Mercedes-Benz. Now that Nio’s standing in the Chinese market is translating into more sales, how much upside to NIO stock can investors expect?
Charge Up Your Portfolio With EV Stocks
EVs are undoubtedly the future of the automotive industry. This came after Tesla (TSLA Stock Report) became the most valuable automaker in the world. And with this new milestone, there is suddenly a renewed enthusiasm for funding EV startups. As a result, fresh money has been rushing into the likes of Workhorse and Fisker, just to name a few. Here’s the question though. Would the same tailwinds that started the EV revolution in the 2010s be sustainable? Would it accelerate further?
Some investors have been questioning whether there are other opportunities in the electric vehicle space. This growth runway is far from over. If the 2010s were the decade when the EV revolution got started, could the 2020s be the decade in which EVs go mainstream? Many experts believe that there is tremendous growth in the EV industry. With all that in mind, would these three EV stocks be the best stocks to buy and hold for the long term?
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Top EV Stocks To Watch In October 2020: Li Auto
Shares of Li Auto (LI Stock Report) surged more than 7.7% this week. There hasn’t been any specific news that triggered the surge this week. But the surge in LI stock could simply be the spill-over effect from Nio’s bullish sentiment. If you have been following the company’s development closely, you would know that LI stocks have had a roller coaster ride since it went public in late July. The company reached a high of $23.38 on August 26 before the pull-back with the broader market in September. Or perhaps it was just a cooling down of the IPO hype.
Unlike in the US where few pure electric vehicle manufacturers exist to supply the market demand, China’s industry is a different story. It is the largest electric vehicle market in the world. Local companies have been capitalizing on the country’s wealth and those keen to make an environmental statement. Li Auto entered the EV space with the backing of none other than Bytedance (the owner of TikTok).
With a strong focus on “premium” electric vehicles, the company could hit the sweet spot in the world’s largest electric vehicle market. With that in mind, would LI stock be attractive enough for growth investors who want to enjoy the growth of the industry but paying only a fraction of TSLA stock price? Now that LI stock is on the move again, I would be lying if I say I’m not tempted.
Top EV Stocks To Watch In October 2020: Diamond Peak Holdings
Next up, shares of DiamondPeak Holdings (DPHC Stock Report) have plunged 12.5% from its 52-week high. While the recent slide might scare some investors away, seasoned investors could see this is an opportunity to buy DiamondPeak stock at a bargain. If you haven’t heard of DiamondPeak, do not fret. This is a special purpose acquisition company (SPAC). And the best part is, it has already inked a deal to merge with electric vehicle maker Lordstown Motors. Electric truck start-up Nikola (NKLA Stock Report) used a similar technique when it went public earlier this year.
Perhaps you are cautious because you have seen some less than positive news about Nikola. Lordstown Motors is different. It has a manufacturing facility. This was the former General Motors plant in Lordstown, Ohio, which closed in 2019. Lordstown’s Endurance is a pickup with an “in-wheel” drive system. That means it has four electric motors, one in each wheel. But here’s the catch, the company hasn’t produced a single vehicle into the market yet. Technically, DiamondPeak and Lordstown have not merged yet. The transaction would only materialize later this year if it goes through successfully.
Lordstown’s Endurance would likely capitalize on its more conventional form factor. Besides, it also looks to attract customers on the pricing front. These could make it a formidable rival to Tesla in the electric truck market. Reports estimated the global electric pickup market at only $422.5 million last year, but it could grow to $1.9 billion by 2027. That’s a substantial increase indeed. With such prospects ahead, would you consider DPHC stock as a high risk, high reward opportunity?
Top EV Stocks To Watch In October 2020: Workhorse Group
Last on the list, Workhorse Group (WKHS Stock Report) doesn’t catch investors’ attention the way Tesla and Nio do. However, its niche has the potential to be extremely lucrative. As you may or may not know, the company owns 10% of Lordstown Motors, the company that is in the process of merging with SPAC Diamond Peak Holdings as mentioned above.
The company’s shares were moving higher this week along with industry rivals. That’s following a sell-off last week. Many SPACs fell sharply last week after the SEC’s scrutiny. This is in response to allegations that Nikola misled investors. It seems that investors have reassessed the situation. Perhaps last week’s sell-off was overdone.
Workhorse is one of three finalists bidding for a contract with the United States Postal Service. The USPS wants to replace its aging fleet of 180,000 delivery vans. This contract could be worth more than $6 billion. Any positive development on this possible contract can send the stock skyrocketing. And with its recent deal with Hitachi (HTHIF Stock Report) to ramp up production for the new packaged delivery vans, things are beginning to look more hopeful for the company. Could WKHS be a safer bet among young EV stocks?
