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When you talk about electric vehicles or EVs, you will undoubtedly hear a wide range of opinions. One thing is clear: the market for EVs is growing fast. The tailwind includes both political and social pressures, but the industry itself is also driving the expansion. New models are coming out, battery technology – and range – is improving, and charging networks are expanding and becoming more efficient.
Every major economic and technological evolution opens up investment opportunities, and EV stocks are no exception. With the EV market expected to sell more than 17 million units annually by 2028, this is a wide open field for risk-minded investors. The choices aren’t limited to automaker stocks; investors can also buy into charging network providers, battery manufacturers and technology companies. They all have their hands in the EV pot.
One analyst, George Gianarikas of Canaccord Genuity, is particularly impressed with the potential inherent in the EV industry, and his recent pick includes two EV-related stocks that he sees rising 60% or better in the coming months. Do other analysts agree with Gianarikas? We used the TipRanks database to find out. Let’s take a closer look at that.
Rivian Automotive (RIVN)
We start with Rivian Automotive, an electric car manufacturer that has taken an innovative approach to vehicle design. Rivian has developed a ‘skateboard’ platform, a wheeled chassis powered by four electric motors – one at each wheel. This versatile chassis includes pre-installed parts for different battery systems and is suitable for different body styles and functions. The result is a modular EV that offers maximum flexibility and can be easily adapted to a range of vehicle types. Rivian’s platform has been designed from the ground up to provide maximum flexibility.
We should note a number of issues that have caused investors to worry about Rivian’s performance as an automaker. The company has yet to turn a profit and has a reputation for burning money. However, there are indications that this could change quickly. In the fourth quarter of last year, the company reported record production and delivery numbers, with 10,020 battery EVs coming off the production line and more than 8,000 delivered to customers. These numbers mark a significant increase from the 1,003 produced and 909 delivered in the fourth quarter of the previous year. Although the production and delivery figures for the first quarter of this year were slightly lower, with 9,395 vehicles built and 7,946 delivered, they still show strong performance.
The year-over-year increase in production reflects the increase in activity at the company’s plant in Normal, Illinois. That increase led to a surge in production for 2Q23, with Rivian reporting 13,992 vehicles produced and 12,640 delivered in the second quarter. In the production update, Rivian reiterated its goal of reaching annual production of 50,000 vehicles.
The company will report its second quarter 2023 financial results on August 8, but we can look back at the first quarter to see where Rivian is now. The company reported $661 million in sales revenue, missing expectations by $9.2 million. On the upside, the company’s net loss, a non-GAAP EPS of $1.25, was 34 cents better than forecast and showed an improvement of 12.5% year over year.
According to Gianarikas, the increased production numbers bode well for Rivian, demonstrating that the company is maturing. The analyst clearly explains his view and explains why he believes Rivian will continue to outperform expectations: “The road to recovery continues. Production/deliveries 2Q23 positively surprised. Rivian’s team has turned a corner operationally as the company escapes the post-IPO operational quagmire. We expect a continued message of stabilization and optimism when Rivian reports full earnings as supply chain and operational bottlenecks ease and the R2 is ready for unveiling early next year.
“We continue to believe that Rivian is on track to capture its share of the EV market over time through a solid, thorough vertically integrated strategy that should lead to a desirable customer experience and strong profitability over time. the time,” Gianarikas added.
Gianarikas then rates RIVN stock as a buy, and his $40 price target implies the stock will gain ~63% over the next 12 months. (To view Gianarikas track record, click here)
Overall, Rivian has a moderate buy rating by analyst consensus, based on 16 analyst ratings, including 10 buy, 5 hold, and 1 sell. However, the combination of the $24.73 sell price and the $23.50 average price target suggests a modest one-year downtrend of ~5%. It will be interesting to see if the analysts update their models or change their RIVN ratings any time soon. (To see RIVN stock forecast)
Wallbox NV (WBX)
Next up is Wallbox, the Spain-based company building a strong presence in the electric vehicle charging niche. This is a niche with great growth potential, as the rapid expansion of EV adoption promoted – and sometimes mandated – by governments at the national and local level cannot be achieved without simultaneously building out the charging network. Wallbox, which has developed lines of charging ports and stations for both commercial and residential use, is compatible with most EV brands, including market leaders such as Tesla and BYD.
In addition to charging your EV, Wallbox has value-added capabilities built into its product lines. The company offers chargers that work with both Type 1 and Type 2 vehicle charging ports and operate bi-directionally, allowing users to discharge a fully powered electric car at home, for instant power consumption or even on the local grid.
All of this has given Wallbox a certain amount of cachet in the industry and led to higher revenues for the company. Wallbox reported revenue of €35.1 million in 1Q23, up 24% year-over-year. In dollar terms, sales were $38.6 million; this figure missed the forecast by $2.8 million. The company’s gross margins were 36.8%, an increase of 90 basis points or 0.9% from the previous quarter, and successful cost-cutting measures enabled Wallbox to save more than €10 million compared to spending in 4Q22. Also during the first quarter, Wallbox entered the Japanese electric vehicle charging market, opening an important avenue to expand its business.
Since reporting its Q1 results, Wallbox has made two major announcements of particular interest to investors. The first is the publication in June of an agreement with chain retailer Costco. The agreement makes Wallbox’s best-selling EV charger, the Pulsar Plus, available at Costco stores in the US starting this month.
Second, there was the July 6 announcement that
the company had reached a milestone in sales of its Supernova DC fast chargers. Wallbox has sold 1,000 times the product, a market leader in quality, to more than 80 customers in 30 countries. Last year the Supernova DC fast charger was introduced.
All this, but especially the company’s burgeoning network of partnerships, caught the attention of analyst George Gianarikas, who sees Wallbox in a position to continue its expansion. He writes about Wallbox’s prospects: “Enabled by its vendor status and technology focus, Wallbox has built a strong ecosystem to date in the US – with companies like Uber, Lyft, Fisker, Nissan and now Costco. We expect this trend to continue. Long-term Wallbox shareholders should be rewarded. Yes, current data points on total electric vehicle sales (ex-Tesla) remain lukewarm and the National Electric Vehicle Infrastructure Program (NEVI) is sluggish. However, demand could turn around in 2024, particularly in commercial/DC charging.”
“The company’s vertically integrated strategy should continue to lead to a technically superior and high-quality product portfolio. This focus on quality should also result in growth rates greater than the market for Wallbox – as the reliability demands of both the domestic and public markets affect its rivals’ ability to compete,” the analyst added.
In line with this stance, Gianarikas gives WBX a Buy rating, and his $10 price target implies a potential gain of ~149% on the one-year horizon.
Wallbox has attracted the bulls, as evidenced by the unanimous Strong Buy consensus rating, based on 5 recent positive stock reviews. The stock is trading at $4 per share and its average price target of 8.20 indicates room for ~104% growth over the next year. (To see WBX stock forecast)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that brings together all of TipRanks’ stock insights.
disclaimer: The opinions expressed in this article are solely those of the named analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.
