Growth and tech stocks aren’t in vogue right now. Investors have sought the relative safety of value stocks amid soaring inflation and higher interest rates.
Despite the recent market volatility, I’ve been fairly fortunate. I had become sceptical about the valuations of some tech stocks and had minimal exposure to them within my portfolio. But having seen tech stocks plummet over the past six months, means some are starting to look a lot more attractive. The electric vehicle (EV) sector is one area I’ve been looking at more closely, as I see the industry’s growth as inevitable. So here are four EV-related growth stocks I’m considering for my portfolio.
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NIO (NYSE:NIO) has a market cap of $20bn. Now that might sound like a lot, especially when you realise its three times larger than British engineering giant Rolls-Royce. But it’s only a fraction of the valuation afforded to Tesla (NASDAQ:TSLA), which surpassed a $1trn valuation last year before its recent fall. The Shanghai-based firm has demonstrated impressive revenue growth, moving from $719m in revenue in 2018, to $5,6bn in 2021. Over the period, car sales rose from 8,101 to 91,429.
From watching endless car review videos, it seems that NIO has a very competitive offering in the sector. It also employs an ingenious system that allows car owners to quickly swap batteries at NIO stations — in three minutes — rather than the conventional recharging method. I think NIO could be a big winner. However, the current Chinese lockdowns are likely to stunt growth in 2022.
Li Auto (NASDAQ:LI) is another Chinese EV company that could be set to boom. The firm has boosted R&D spending this year, using up 42% of its budget in the first quarter alone. Li Auto is expected to deliver its L9 model in the third quarter of 2022. The long-awaited PHEV SUV could turbocharge the brand’s fortunes in an increasingly competitive environment. Li Auto performed in line with expectation in Q1, delivering nearly 32,000 Li Ones — its first vehicle. However, April deliveries fell to less than 5,000 as lockdowns hit China. Therefore the Q2 forecast of 21,000-24,000 may be a little optimistic. In general, I’d favour NIO over Li Auto.
Blink Charging (NASDAQ:BLNK) operates over 30,000 EV charging stations in 16 countries, although primarily across the US. The firm recently announced positive results, with losses narrowing and revenue growing substantially. Revenue grew 339% to $9.8m in Q1 versus the same period last year. The firm has demonstrated impressive growth over the past two years and the number of Blink Charging stations has more than doubled over the last 12 months. I think it could well be a big winner, although as a relatively small company, its share price could be swayed by large trades and market volatility in the near term.
I’ve been looking at Tesla again after its share price collapsed in April. However, I’m still not convinced. It’s the world’s most valuable car company but that’s based on massive growth projections. Tesla reported revenues of just $53.8bn in its record-breaking 2021, with adjusted EBITDA of $11.6bn and net income of $5.5bn. I’m concerned about competition, not only from companies like NIO, but established brands as they enhance their EV offerings. I’m still passing on Tesla.