Shares of Tesla (TSLA) stock are up 58% over the past year — twice the gain of the S&P 500. Clearly, Tesla has momentum, and is “winning” the electric car race.
On the other hand, Chinese electric car leader Nio (NIO) stock is down 34% over the past year — and lagging the S&P 500 by more than 60 percentage points. Would-be Tesla-killer Rivian Automotive (RIVN) is in positive territory for the past year, but with only a 2% gain, it’s also lagging the S&P 500 — by 26 percentage points.
And yet, regardless of which stocks are winning or losing right now, Mizuho’s 5-star analyst Vijay Rakesh thinks you should buy them all. Why is that?
Rakesh argues that each of Tesla, Nio, and Rivian are “well-positioned” electric car companies “with secular growth drivers,” competing against “legacy Auto OEMs [that] struggle to balance [their] ICE/EV portfolios. In this contest between new electric technology and old automotive dinosaurs struggling to evolve in the new era, Rakesh is putting his money firmly on the side of the new kids on the block — and he assigns “buy” ratings across the board to Tesla (with a just-increased price target of $1,300), Nio (price target: $65), and Rivian, too (price target: $145). (To watch Rakesh’s track record, click here)
With Tesla, the bull case is obvious. Tesla just announced 71% year over year growth in EV deliveries in its fiscal fourth quarter, and even greater sales strength among its newest models, the Model 3 sedan and Model Y crossover, sales of which grew 84%. Sales growth for the full year was pretty impressive as well — up 87% — as Tesla approached 1 million units in annual sales. And the analyst predicts that Tesla’s sales performance will remain “strong into 2022E with Texas/Berlin ramps and continue[d] strong EV demand.”
According to Rakesh, investors can anticipate Tesla will grow its sales another 36% this year, and 31% more in 2023 — or perhaps even better than that, given that overall EV sales worldwide are expected to climb 30% annually through 2030, and that Tesla is the leader in this market. (See Tesla stock analysis on TipRanks)
The case for investing in Nio is a bit less clear, as profitability continues to elude the Chinese car-maker. Nevertheless, Rakesh is impressed with Nio’s 44% sales growth in December, and 109% increase in sales for the year as a whole. ES8 and EC6 electric SUVs are selling like hotcakes in China, “pointing to a strong F22E/F23E, with estimates up 71%/65%” year over year. (See NIO stock analysis on TipRanks)
And as for Rivian, true, on the one hand this electric upstart lacks not only profits but even any appreciable number of sales as of yet. On the other hand, the analyst believes Rivian is “accelerating production to fulfill strong demand,” as represented by the company’s 71,000 preorders for R1T electric trucks and R1S electric SUVs — and 100,000 electric delivery vans for Amazon.
Long-term, Rivian “remains well positioned to address the SUV/pickup truck EV market” and to capitalize on that 30% compound annual growth rate in EV sales mentioned above, argues Rakesh. Ultimately, the analyst sees Rivian selling as many as 600,000 EVs annually — and taking its place in the EV winners circle alongside Tesla and Nio. (See RIVN stock analysis on TipRanks)
To find good ideas for EV stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
