These are the 3 Best EV (electric vehicle) stocks to buy in May 2024, as per Wall Street analysts. According to the International Energy Agency (IEA), EV sales in the first quarter of 2024 remained robust, growing 25% year-over-year to cross 3 million. Interestingly, China was the major contributor to the growth, with 1.9 million EV car sales. Meanwhile, EV sales grew 15% and 5% in the U.S. and Europe, respectively. Based on this growing momentum, the IEA projects EV auto sales in 2024 to reach 17 million units, growing by over 20% compared to 2023.
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We scanned three major EV manufacturers other than Tesla (NASDAQ:TSLA), which have won analysts’ favor and could offer high upside potential in the coming months. Let’s dive right into them.
#1 Li Auto (NASDAQ:LI)
Chinese EV maker Li Auto engages in the design and manufacturing of premium smart electric SUVs with extended-range technology. Li is a dominant player in China’s new energy vehicle (NEV) market, having launched mostly plug-in hybrid electric models so far. Li Auto boasts one of the highest volume deliveries, attractive margins, and cash-generating capacity among Chinese EV players.
In April, Li delivered 25,787 units, up 0.4% year-over-year and down 11% sequentially. As of April 30, 2024, the company’s cumulative deliveries reached 739,551. On April 21, Li announced a series of price cuts on its NEVs and plug-in hybrids amid the ongoing fierce price war in EVs.
Importantly, Li Auto launched its new mid-size SUV L6 in mid-April, its first model under RMB300,000 but loaded with the latest technology. The company expects to commence large-scale deliveries of Li L6 in May. Moreover, Li Auto is releasing its OTA (over-the-air) version 5.2, with more advanced and safer autonomous driving, automated parking, and active safety features. All these factors are expected to boost Li Auto’s sales in May and beyond.
Is LI a Good Stock to Buy?
Following the EV price cuts, a few analysts lowered their price targets on Li Auto stock but remain bullish. On TipRanks, LI stock has a Strong Buy consensus rating based on 11 Buys and one Hold rating. The average Li Auto price target of $49.43 implies 87.6% upside potential from current levels. LI shares have lost 23.8% so far in 2024.
#2 Canoo (NASDAQ:GOEV)
California-based Canoo is a relatively new player in the EV market, with a line-up of electric vans, multipurpose vans (MPVs), and pickup trucks. The company just entered its revenue generation phase in Q3 FY23 and started commercial deliveries of its EVs in Q4. Canoo announced a 1-for-23 reverse stock split (effective March 8, 2024) to comply with Nasdaq’s listing rules.
In FY23, Canoo’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss improved to $224.37 million from a loss of $408.64 million in the previous year. Also, net loss narrowed to $302.62 million from the $487.69 million reported in FY22.
Canoo is expected to benefit from a ramp in its vehicle deliveries. The company is expanding heavily in Saudi Arabia and has struck a deal with Jazeera Paints to deliver 20 EVs initially. Further, Jazeera will have the option to buy an additional 160 Canoo vehicles. In another favorable development, Canoo’s EVs will be used for a pilot program by Red Sea Global for travel between the airport and its resorts.
Is GOEV Stock a Good Buy?
With five Buys versus one Hold recommendation, GOEV stock has a Strong Buy consensus rating. The average Canoo price target of $5.10 implies 82.8% upside potential from current levels. GOEV shares have lost 47.3% of their value so far this year.
#3 BYD Co. (OTCMKTS:BYDDF)
BYD has proven to be the undisputable leader in EV sales in China. Yet, challenges persist for the company as subdued auto sales and the heated price war are weighing on its profits.
In Q1 FY24, BYD sold 626,263 NEVs, up 13.4% year-over-year, but down 33.7% sequentially owing to seasonality effects and the Chinese New Year holiday. Moreover, its net profits rose 10.6% compared to Q1 FY23, but declined 47.3% compared to Q4 FY23. Also, BYD’s quarterly revenue rose nearly 4% year-over-year, but fell 30.6% compared to Q4 FY23.
Meanwhile, BYD is launching ultra-premium EV models to recoup the losses from price cuts in China. The company has not lowered the prices of its autos in international markets, adding a bit of cushion to declining earnings from Chinese sales.
Overall, the March quarter witnessed a turnaround in vehicle demand in China, as per the China Passenger Car Association (CPCA), pushing up hopes for higher sales in the coming months.
Is BYD Stock Good to Buy?
On TipRanks, BYDDF stock has a Strong Buy consensus rating, backed by ten Buys, one Hold, and one Sell rating. The average BYD Co. price target of $33.63 implies 21.8% upside potential from current levels. BYDDF shares have gained 2.6% so far in 2024.
Key Takeaways
The global EV sector is showing signs of a comeback in 2024, after witnessing sluggish sales and declining demand due to macro headwinds last year. Although the price war has hit the earnings of EV makers, analysts remain optimistic about the aforementioned three EV stocks. Investors could consider these stocks after thorough research, as they pose considerable share price appreciation potential in the next twelve months.
