Tesla (NASDAQ:TSLA) has been one of the world’s most traded stocks for some time now. But today, we’re here to allow our contract writers to put forward a few other companies for investors to consider buying instead…
Li Auto
What it does: Li Auto is a Beijing-based carmaker specializing in extended-range electric vehicles (EREVs).
By James Fox. Li Auto (NASDAQ:LI) surged in the early months of 2024 but has since plummeted. The selloff can be traced to the unsuccessful launch of its first full-battery electric vehicle (EV) and poor Q1 deliveries.
The failure of the Li Mega (the first full-battery EV) is a cause for concern, and the company has seemingly shelved some of its EV plans.
However, with its focus on EREVs – essentially hybrids with very long range – the company continues to deliver impressive volume growth, up 38.4% year to date.
It also boasts the strongest margins in China’s new energy vehicle (NEV) market, trumping much larger peers like Tesla and BYD.
Interestingly for investors, its stock is much cheaper than Tesla and modestly cheaper than BYD. The company trades at 16.8 times forward earnings, but forecasts suggest earnings will double over the next two years.
Li is also less likely to be impacted by tariffs and trade wars. The Beijing firm appears to be set on entering the MENA market as it starts to export.
James Fox owns shares in Li Auto.
Nvidia
What it does: Develops and manufactures GPUs and chip systems for use in data centres, gaming, AI, and robotics.
By Mark David Hartley. The recent move into building its own AI computer chips means Tesla could soon be competing with Nvidia (NASDAQ: NVDA). While both companies have enjoyed impressive growth in the past five years, I think Nvidia will outpace Tesla in the next five. As Tesla’s car business faces competition, it appears to be branching into other sectors. The lack of focus on a single sector could cost its bottom line.
Nvidia remains a market leader in its niche and its closest competitors, Broadcom and AMD, lag behind the company growth-wise. Moreover, Nvidia is the supplier of choice for tech giants like Meta and Microsoft. Tesla may find a limited market for its AI chips beyond its own automated products.
Both are overvalued but Nvidia’s price-to-earnings growth (PEG) ratio of 2.5 is lower than Tesla’s 3.6. It’s also forecast to grow at a rate of 22% per year, compared to Tesla’s 16%.
Mark David Hartley owns shares in AMD.
Smith & Nephew
What it does: Smith & Nephewis listed on the FTSE 100 and is a provider of medical technologies and treatments.
By Royston Wild. As sales of his Tesla electric vehicles stall, chief executive Elon Musk is doubling down on robotics to get the top line moving again. He hopes his Optimus humanoid robots will begin rolling off the production lines next year.
This isn’t tempting me to buy Tesla shares, though. Not only do troubles at its core carmaking division seem to be intensifying. Musk’s robot dreams have already suffered some setbacks (they were originally scheduled to be in Tesla’s factories by the end of 2024).
I think Smith & Nephew (LSE:SN.) could be a better stock to buy today. It’s primarily known for its joint replacement systems and work in wound care and sports medicine. However, it’s also investing heavily in robotics, and its CORI surgical system (used for knee operations) is a market leader.
CORI sales hit record highs in the second quarter as new product lines and capabilities were added to the platform. This could be a significant source of earnings growth as demand for medical robotics systems takes off.
Analysts at Grand View Research think this tech segment will rise at a compound annual growth rate of 16.6% between now and 2030. Smith & Nephew could be a top stock to capitalise on this.
Royston Wild does not own shares in Smith & Nephew or Tesla.
