The electric vehicle (EV) sector is widely anticipated to generate substantial returns, standing out as one of the few industries with this potential. Compared to various other sectors, its relative newness contributes to this optimism.
However, despite the optimistic prospects for the electric vehicle industry, 2023 has proven to be a challenging year for the sector. The period has been characterized by elevated inflation and high interest rates, generally unfavorable for industries aiming for high growth.
With the potential of rate cuts in 2024 by the FED and an optimistic outlook for the stock market, Finbold has compiled a list of 3 EV stocks with the biggest potential.
Picks for you
Tesla, Inc. (NASDAQ: TSLA)
The largest EV manufacturer is first for a reason in this list. Tesla (NASDAQ: TSLA) has experienced a lucrative year for its stock, where its value more than doubled by 133.62% year-to-date, and the outlook for 2024 looks promising, too.
A vital aspect of the argument hinges on a growing market, albeit with some current volatility. The market is expanding, and Tesla is strategically positioned to gain market share from other electric vehicle manufacturers due to its design and technology leadership.
Another factor contributing to this is the Cybertruck. It’s important to clarify that Cybertruck sales will not significantly impact Tesla’s income statement in 2024.
But, it represents a sizable and lucrative segment for automobile manufacturers. In 2022, trucks were three of the top five best-selling vehicles in the United States. If the Cybertruck successfully taps into this truck market, Tesla could emerge as a dominant player in the electric vehicle market.
If the key factors work in TSLA’s favor, we might look at another year where its stock experiences substantial growth and returns to its investors.
General Motors Company (NYSE: GM)
Despite being a traditional auto manufacturer, General Motors (NYSE: GM) will experience significant earnings and revenue growth in the next two decades, driven by the global shift towards battery-powered vehicles and autonomous cars.
General Motors is investing substantially to establish a presence in the electric vehicle market. Nevertheless, its expansion has faced delays amid a challenging macro environment and a slowdown in EV sales.
Despite these challenges, GM remains an attractive buy at the current price point, given its core business continues to generate substantial profits.
Another positive update is that the automaker declared in late November its intention to increase the quarterly dividend to shareholders by 33%, reaching 12 cents per share, effective from 2024.
The company also revealed plans to repurchase $10 billion of its stock in the coming year. The recent stock buyback, coupled with the dividend increase, has successfully achieved its intended effect. GM stock has experienced a surge of approximately 25% since the announcement of these shareholder rewards and has the potential to go even further in 2024.
Ford Motor Company (NYSE: F)
Despite suffering through past years, where Ford Motor Company (NYSE: F) stock took hits due to the pandemic, low demand, and economic downturn, it still holds a lot more value than its current stock price says.
Ford’s strategic advantage lies in its diversified portfolio, including internal combustion engines (ICEs) and hybrids. Despite the slower-than-expected growth in electric vehicle (EV) demand compared to the increasing supply, Ford has adapted by doubling down on hybrids. Considering the solid demand for this category, this strategic emphasis on hybrids may prove to be a wise move.
Hybrids are resonating with a specific set of buyers who harbor concerns about battery electric cars, ranging from high initial purchase prices to range anxiety. As EV sales navigate a more measured trajectory, Ford’s commitment to a varied product range positions the company well to cater to different consumer preferences and capitalize on the evolving automotive landscape.
This diversification, combined with the undervalued status of this stock and further expansion of the EV market, spell out a prosperous 2024 for the automotive giants, with an economic climate shifting towards green and renewable power sources.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
