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Tesla’s first-quarter delivery numbers settled the question of whether demand for electric vehicles would strengthen and reach critical mass. It has.
Now the question for investors is how best to ride the long-term wave.
Shares of Tesla Inc.
TSLA,
soared last year, but during 2021, volatility has been painful for shorter-term investors whose timing has been less than ideal. Here’s a price chart from the end of 2019:
(FactSet)
That is an eye-pleasing chart, especially if you have been in the stock the whole time. But Tesla’s shares fell 27% through April 1 from its intraday high Jan. 25. Then on April 5, the shares soared as much as 7% following the company’s report that it had delivered 184,800 electric vehicles during the first quarter.
Tesla is an expensive stock. The shares trade for 147.5 times the consensus earnings estimate for the next 12 months, among analysts polled by FactSet. Among those 35 analysts, less than a third rate Tesla a “buy” or the equivalent, and their consensus 12-month price target of $658.26 is slightly below where the shares closed April 1.
Tesla’s biggest competitors in the EV space in the U.S. seem likely to be General Motors Co.
GM,
and Volkswagen AG
VWAGY,
based on the companies’ announced plans.
But there are many other ways to play this long-term secular trend. Semiconductor manufacturers will continue to benefit from the growth of EVs and makers of all sorts of components. Here’s a recent screen of semiconductor stocks.
To come up with a broader list of EV and related stock plays that might have significant upside, we began by putting together a list of stocks held by one or more of these ETFs:
We looked at the holdings of three ETFs:
-
SPDR S&P Kensho Smart Mobility ETF
HAIL,
+0.33%
— 59 stocks, largest holding: AgEagle Ariel Systems Inc.
UAVS,
-8.07%
(5.6%). -
Global X Autonomous & Electric Vehicles ETF
DRIV,
+1.56%
— 77 stocks, largest holding: Alphabet Inc.
GOOGL,
+4.24%
(3.6%). -
iShares Self-driving EV & Tech ETF
IDRV,
+2.00%
—101 stocks, largest holding: Intel Corp.
INTC,
+2.70%
(4.5%).
Adding the three portfolios and removing duplicates produced a list of 175 stocks, with 76 listed in the U.S.
Among those 175 stocks, 111 are covered by at least 10 analysts. It is good to have a large number of opinions factored-in — if a company isn’t widely covered by the brokerage industry, it might be overlooked by institutional investors (or paid by the few analysts who do cover it).
Among the pared list of 111 stocks, here are the 20 with more than two-thirds “buy” or equivalent ratings, with the most implied upside potential for the next 12 months:
FactSet
Share prices and price targets in the table are in local currencies where the stocks or American depositary receipts are listed.
As always, this type of list is only a start — you should do your own research before investing in anything. For more information about a company, including business profiles, charts, price ratios, financials and news coverage, do a ticker search on the top-right of the MarketWatch page.
Plug Power Inc.
PLUG,
is the stock with the most aggressive price target, with analysts expecting a 75% gain over the next 12 months. The company provides hydrogen fuel-cell services.
Second on the list is Baidu Inc.
BIDU,
with analysts expecting a 59% gain. The company is partnering with Geely Automobile Holdings Ltd.
GELYY,
of Hong Kong to develop electric vehicles.
