3 EV Pick-And-Shovel Stocks To Watch In 2021
Electric vehicle stocks have been one of the best sectors to find growth in the stock market this year. The momentum we saw among the top electric vehicle stocks has certainly been epic, to say the least. Tesla Inc. (TSLA Stock Report), for instance, has gained almost 655% year-to-date. Recalling the red-hot rally from Tesla during its run-up to its stock splits, and then towards the inclusion to the S&P 500. Many were skeptical that the “bubble” would burst. While it may seem absurd to have a rally of this magnitude this year, the subsequent deliveries report and the quarterly updates brought much relief to investors.
With the coronavirus pandemic continuing to rage on like a forest fire, it is understandable that investors may have doubts about cyclical industries. And EV stocks fall into this category. Although many chose to believe that the broader automotive industry will take a huge hit because of the pandemic, the electric vehicle industry proves otherwise. The industry surprised investors with its strong deliveries and improving operating margins despite the headwinds caused by the pandemic.
Considering the fact that we have vaccines from Pfizer (PFE Stock Report) and Moderna (MRNA Stock Report) that are currently rolling out, the hope for a strong recovery in the economy couldn’t be more pronounced. And this is expected to bode well for electric vehicle manufacturers when consumers have more disposable income to spend. But choosing winners from losers among EV manufacturers isn’t that straightforward. With this in mind, why not look for something that all these EV manufacturers would rely on? Therefore, investors have been on the look-out for such pick-and-shovel plays to tap into the EV megatrend. That said, are these the best stocks to buy amid the EV boom?
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Best Stocks To Buy Amid The EV Boom #1 QuantumScape
QuantumScape (QS Stock Report) has been grabbing headlines on Wall Street in recent weeks. For starters, the company is looking to disrupt the world of batteries and all things electric. With such impressive technology, it is not surprising why this company has garnered investments from several impressive backers. These include Bill Gates, General Motors (GM Stock Report), Ford (F Stock Report), and Volkswagen (VWAGY Stock Report). Since the start of December, QS stocks have risen by a monumental 168%.
The company is working on solid-state batteries. Some see technology as a holy grail in the EV business. And they could be right. The technology could potentially make batteries that are cheaper, quicker to charge, and provide a longer range to electric vehicles. The caveat is that nobody has actually made a complete solid-state battery at a reasonable cost yet. Of course, if QuantumScape’s batteries work as promised, EV automakers would be lining up to purchase the batteries. And when that happens, QS stock would be going to the moon.
While the technology from QuantumScape holds promise, investors have reasons to be cautious when dealing with this one. And to be specific, the timeline is a factor to watch closely. This is because it has a potential rival company in Toyota (TM Stock Report). Earlier this month, Toyota announced plans to unveil its own solid-state battery-powered electric vehicle in 2021. Could QuantumScape leverage its existing assets and resources to pull ahead of the competition? Your guess is as good as mine. Regardless, QS stock could be a top auto stock to watch in 2021.
Another stock to ride on the EV boom is Blink Charging (BLNK Stock Report). The company has deployed over 15,000 electric vehicle charging stations. With the rise in adoption of EVs, it is no surprise that the company has been benefiting. In its third-quarter earnings report, Blink saw product sales rising 74% from the same quarter a year ago. Hence, it should come as no surprise that BLNK stock has been on a monstrous rally this year, rising nearly 1,890% year-to-date.
The company’s stock has been volatile, like many EV stocks. We saw how BLNK stock dropped more than 30% towards the end of November. The sell-off came after the report from short-seller Citron Research, who is famous for strong criticisms of young companies. So, when there’s a comment from Citron regarding stocks in your portfolio, brace for impact. That is not to say they are always right. In some cases, they could be wrong too.
Earlier this month, the company signed a deal expanding its charging network for electric vehicles. The five year deal with Illinois’ Blessing Health System will see Blink deploy 20 of its IQ200 EV chargers at four healthcare facilities. That’s on top of the deal to supply 26 charging stations at Burger King locations at the beginning of this month. Unlike most of the other EV stocks, with Blink, you don’t have to bet on brand names or consumer taste. After all, EV users need charging stations whichever make and model they drive. With that in mind, is BLNK stock the best bet on the secular EV trend?
Best Stocks To Buy Amid The EV Boom #3 Velodyne Lidar
Yes, Velodyne Lidar (VLDR Stock Report) isn’t an EV stock. As the name suggests, it is a company that focuses on light detection and ranging (LiDAR) technology for self-driving cars. The company’s stocks posted another 23% gain as we start the week, and including the gains on Monday, we saw VLDR stock soared more than 138% in one month. The pre-market trading also suggests that VLDR stock will continue its rally today.
On December 16, Velodyne announced a sales agreement for its sensors with AV tech pioneer May Mobility. May Mobility CEO Edwin Olson said, “Velodyne Lidar is a valued partner and we’ve chosen their long-range, surround-view LiDAR sensors because they integrate well with our AV systems. This will allow us to continue to improve the overall operation and safety of our shuttles and expand the capabilities of our vehicles into a wider range of operational design domains.” As May Mobility seems to vouch for Velodyne’s AV tech, others could be inclined to do the same. Regardless, this is a great deal for the company.
From the company’s third-quarter fiscal report, Velodyne saw a 137% jump in total revenue year-over-year. On top of that, it ended the quarter with $298 million in cash on hand. With solid financials and impressive tech offerings, the company seems to be firing on all cylinders. Could this mark the beginning of VLDR stock’s rise in 2021?