Do you like Electric Vehicles? Are you as excited as I am that more and more automakers are adding EVs to their fleets? If you aren’t, oh well… You don’t have to be!
As an investor, there isn’t much room for interpretation; the transition is underway. EVs will see great longevity, and before too long—how long exactly is difficult to say—they’ll be the only cars on the road.
If that’s the case, wouldn’t it be a good idea to invest in EVs now? Analysts say absolutely…
ON Semiconductor Corp (ON)
ON Semiconductor (ON) is a promising choice for EV investors with its focus on silicon carbide (SiC) chips, offering superior capabilities. ON’s ambitious growth plans include an annual growth rate target of 10–12% through 2027 and boosted profit margin targets. SiC semiconductors are ON‘s fastest-growing product line, projected to achieve a remarkable annual growth rate of 70% through 2027, aiming for a market share of 35–40% by 2027, up from the current 14%. ON‘s advantage lies in controlling the entire SiC device manufacturing process, making it a strong contender for those seeking a promising EV stock.
ON stock is up year-to-date by 56.02%, has a positive 20/200 SMA (simple moving average), a high ROE (return on equity), a 1.63x PEG (price/earnings/growth) ratio, and a 20.19% TTM (trailing twelve-month) asset growth measure. At its last earnings call, ON reported EPS of $1.19 per share vs. $1.08 (+9.75%) per share as expected by analysts, and revenue of $1.96 billion vs. $1.93 billion as predicted. ON is projected to report $2 billion in sales at $1.21 per share, with a 3-5 year EPS growth rate of 33.1%. Having a free cash flow of $1.1 billion and a 10-day average volume of 5.65 million shares, ON has a median price target of $99, with a high of $120 and a low of $80; this represents the potential for a 23% jump or higher from its current pricing. ON has 21 buy ratings and 10 hold ratings.
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Allegro Microsystems Inc (ALGM)
Allegro (ALGM) is a fast-growing company specializing in magnetic sensing and power management chips. Notably, 69% of its sales come from the automotive market. As vehicles continue to adopt electrification and advanced safety features, ALGM‘s chip content in automobiles has grown and continues to grow significantly. ALGM CEO Vineet Nargolwala predicts a significant content, or volumetric, if you will, opportunity in EVs, nearly double that of internal combustion engine-driven vehicles, which could reach approximately $100 per vehicle. This positive trend drives robust earnings and sales growth for the company, making ALGM an attractive option among chipmakers.
ALGM’s stock is up year-to-date by 65.46%. At its most recent earnings call, it beat analysts on both EPS and revenue projections, reporting $0.37 per share vs. $0.36 per share (+2.73%) as expected, and $269.44 million vs. $265.02 million (+1.67%). ALGM is predicted to report $275.9 million in sales at $0.37 per share for the current quarter and has also shown year-over-year growth in revenue (+34.53%), net income (+141.95%), EPS (+146.15%), and net profit margin (+79.83%). With a 10-day average trading volume of 1.69 million shares, ALGM has an average price target of $54, with a high of $60 and a low of $52, representing an upside potential of over 20%. ALGM has 6 buy ratings and 1 hold rating.
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Li Auto Inc (LI)
Recent China-based start-up Li Auto (LI) shines in the EV market, outperforming rivals Nio and XPeng after a successful 2022. Focused on premium electric SUVs, LI‘s forte lies in “extended range” EVs, utilizing a small gasoline engine for extended driving time. LI‘s new L7 SUV shows promising early results, and they are set to release their first all-electric unit by year-end. Remarkably, unlike many EV start-ups, LI is profitable, albeit with some fluctuations. Lately, though, the positive factors have combined powerfully.
LI is up remarkably by 83.77% year-to-date, shows trailing asset growth of 31.49%, and a volatility-safe beta score of 0.79. LI, for the current quarter, is predicted to show $25.9 billion in sales at $1.72 per share. For its most recent earnings report, it surpassed Wall Street analysts’ expectations on both EPS and revenue; it most notably reported EPS of $0.19 per share vs. $0.09 per share as expected (+114.78%). LI also shows year-over-year growth in key areas such as revenue (+96.48%), net income (+8,655.75%), EPS (+4,550%), and net profit margin (+4,600%). LI has a free cash flow of $11.63 billion and a 10-day average volume of 6.41 million shares. LI has a median price target of $39.27, with a high of $64.64 and a low of $26.82, suggesting a potential price jump of over 72%. LI has 7 buy ratings and 1 hold rating.
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