The electric vehicles market is revving up with the global fleet of such vehicles expanding significantly over the last decade, supported by favorable government policies and technological advances. The sales of EVs are expected to hit 5.4 million in 2023, accounting for 7% of global vehicle sales, according to Bloomberg New Energy Finance. This growth will be driven by the launch of new models by automakers in China, North America, and other emerging economies.
Some of the best EV stocks skyrocketed last year, powering many investors’ portfolios to new heights. And the industry is well-positioned for growth this year also. President-elect Joe Biden’s goal of achieving a U.S. 100% clean-energy economy, in particular, should help the electric vehicle thrive this year and beyond.
As the tectonic shift from traditional internal combustion engines to electric engines continues this year, some prominent EV players such as Nio Limited (NIO), Tesla, Inc. (TSLA), and Niu Technologies (NIU) have already gained more than 20% year-to-date. We think these stocks should continue to see solid gains in the upcoming months as well.
NIO Limited (NIO)
Founded in 2014, NIO is a designer, manufacturer, and seller of electric vehicles offering five-, six and seven-seater electric SUVs in the People’s Republic of China. The company also manufactures e-powertrains, battery packs, charging solutions, and battery swapping services.
On January 3, NIO provided its fourth quarter 2020 and full-year 2020 delivery results. The company set a monthly record in delivering 7,007 vehicles in December. Moreover, its cumulative deliveries of its ES8, ES6 and EC6 models hit 75,641 vehicles, representing its growing brand recognition, and expanding sales network.
In mid-December, the company announced the completion of an offering of 68 million American depositary shares at $39.00 per ADS. The company plans to use the offering’s proceeds for research and development of new products, service network expansion and for general corporate purposes.
NIO’s revenue increased 146.4% year-over-year to $666.60 million in the third quarter ended September 30, 2020. Its gross profit rose 87.1% sequentially to $86.30 million, while its gross margin increased 452 basis points sequentially to 12.9%. NIO’s vehicle sales grew 146.1% from the year-ago value to $628.40 million over this period.
The consensus EPS estimate for the next quarter ending March 31, 2021 represents a 43.5% improvement from the year-ago value. Moreover, NIO has an impressive earnings surprise history; the company has beaten consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $721.39 million for the next quarter represents a 268.4% increase over the same period last year. The stock has gained 20.9% year-to-date.
How does NIO stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating.
The stock is also ranked #6 of 122 stocks in the China industry.
Tesla, Inc. (TSLA)
Founded in 2003, the world’s best-selling plug-in and battery electric passenger car manufacturer, TSLA, certainly needs no introduction. The company operates internationally, through two segments – Automotive and Energy Generation, and Storage. Despite the impact of the coronavirus pandemic in 2020, the company surpassed the half a million mark in electric cars produced and delivered. Moreover, the company’s Model Y production in Shanghai has commenced , with deliveries expected to begin shortly.
TSLA plans to roll out Tesla Cybertruck, Semi, and Roadster this year. Its electric pickup truck factory, the Gigafactory, is currently under construction and could be ready to build vehicles as soon as May this year. Moreover, last month TSLA was finally added to the S&P 500 Index after five consecutive quarters of profit.
TSLA’s revenue increased 45.3% sequentially to $8.77 billion in the third quarter ended September 30, 2020. Its non-GAAP net income increased 155.5% year-over-year to $874 million, while its EPS rose 105.4% from the year-ago value to $0.76. Its gross margin rose 253 basis points sequentially to 23.5% in the third quarter, and its free cash flow rose 276% from the year-ago value to $1.40 billion over this period.
The consensus EPS estimate of $0.92 for the current quarter ending December 30, 2020 represents a 124.4% improvement year-over-year. Moreover, TSLA beat the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $10.16 billion for the current quarter represents a 37.6% growth from the same period last year. The stock has gained 24.7% year-to-date.
TSLA is rated a “Strong Buy” in our POWR Ratings. It holds a straight “A” in Trade Grade, Peer Grade, Buy & Hold Grade, and Industry Rank. It is ranked #1 of 53 stocks in the Auto & Vehicle Manufacturers industry.
Niu Technologies (NIU)
Based in the People’s Republic of China, NIU is engaged in designing, manufacturing, and selling smart electric-scooters, scooter accessories, lifestyle accessories, and performance upgrade components such as wheels and brakes. The company offers RQi and TQi series urban commuter electric motorcycles, professional mountain, and road bicycles.
Last week , NIU provided its e-scooter sales volume results for the fourth quarter of 2020. It sold 149,705 e-scooters, representing a 40.9% year-over-year growth. The number of e-scooters sold in the international markets totaled 12,119, representing an increase of 179.6% compared versus the fourth quarter last year. The growth was driven primarily by a recovery in demand and retail network expansion.
In December, NIU entered a partnership with Aurora Mobile Limited to improve efficiency so as to optimize the user experience for its customers. This collaboration will help NIU gain more insight into its users’ needs and hopefully help it maximize value creation.
NIU’s revenue increased 36.7% year-over-year to RMB 894.5 million in the third quarter ended September 30, 2020. The company’s e-scooter sales revenues from international markets were RMB 59.6 million, an increase of 35.2%, and represented 7.4% of total e-scooter revenues globally. Gross profit rose 28.8% from the year-ago value to RMB 145.23 million over this period.
The consensus EPS estimate of $0.06 for the next quarter ending March 31, 2021, indicates a 250% improvement year-over-year. The consensus revenue estimate of $79.14 million for the next quarter represents a 137.8% increase year-over-year. The stock has gained 26.3% year-to-date.
It is no surprise that NIU is rated “Buy” in our POWR Ratings system. It has an “A” for Buy & Hold Grade and Industry Rank, and a “B” for Trade Grade. Among Technology – Hardware stocks, it is ranked 23rd out of 54.
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NIO shares were trading at $63.86 per share on Monday afternoon, up $4.94 (+8.38%). Year-to-date, NIO has gained 31.02%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More…
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