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3 Electric Vehicle Stocks Poised for Growth 3 Electric Vehicle Stocks Poised for Growth

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The recent downturn in EV stocks has left many investors feeling gloomy about the future of electric vehicles. With high interest rates, inflation and insurance costs dampening customer demand, EV sales have hit the skids. Several once high-flying EV makers have seen their stocks nosedive in recent months as a result.

However, I believe the weakness in EV stocks presents a golden buying opportunity. Yes, headwinds persist in the form of high rates and production bottlenecks. But let’s not lose sight of the long-term trend β€” governments worldwide are heavily promoting EVs, and sales are projected to surge over the coming decade. EV penetration still hovers around just 1% globally, meaning almost all of the growth is still ahead. Here are three stocks to look into to buy into that future growth:

Aehr Test Systems (AEHR)

a close up image of a semiconductor

Source: Shutterstock

I believe Aehr Test Systems (NASDAQ:AEHR) presents an intriguing opportunity at current levels. This California-based company provides critical testing equipment for semiconductor manufacturers. Now, you may wonder why a semiconductor testing business fits into a discussion about EV stocks. Here’s why I think Aehr should be on investors’ radars:

Though not a pure-play EV stock, Aehr counts several major EV chipmakers among its key customers. Its technology is used to test and validate the chips that enable many sophisticated features in the EVs we see today. So, while Aehr does not manufacture EV components, its fortunes are tied closely to the booming demand for silicon used in electric vehicles.

That demand took a hit last year when Tesla (NASDAQ:TSLA) announced plans to reduce its reliance on silicon carbide chips by 75%. The broader EV market slowed down as rising interest rates pressured consumer spending. Understandably, Aehr’s stock pulled back in response. Revenue growth expectations have been scaled back for the near term.

However, I believe these headwinds obscure Aehr’s long-term growth potential. EV sales will reaccelerate once rates peak and economic stability returns. Non-Tesla EV brands are increasing market share. Thus, more chips will be needed to power these vehicles.

trading at just 22x forward earnings, Aehr looks attractively valued relative to its projected 30% annual EPS growth. Renewed EV demand and new customer wins could catalyze upside.

Luminar Technologies (LAZR)

Luminar (LAZR stock) sign with greenery around it

Source: JHVEPhoto/shutterstock.com

I cannot deny that Luminar Technologies (NASDAQ:LAZR) has been a frustrating stock at times. This lidar sensor startup rode enthusiasm around driverless cars to dizzying heights in late 2020. However, with EV demand growth slowing over the past year, LAZR has struggled. Despite improving sales, analysts have scaled back expectations. The stock sits nearly 94% below all-time highs.

Yet, with LAZR hovering around $2, I believe much of the downside risk appears priced in at current levels. Make no mistake β€” Luminar remains a risky play. Volatility will persist. But for investors with risk tolerance, LAZR offers explosive upside potential on any renewal in EV demand trends.

Here is why I am warming up to LAZR’s long-term prospects: lidar costs are falling rapidly, making the sensors more viable for integration. Analysts expect the company to turn EPS-positive in 2026, with triple-digit annual earnings (on average) growth after that. Put 2027’s expected profits into the equation, and LAZR trades at just 3x forward earnings β€” dirt cheap for a hypergrowth tech disruptor.

As economic stability returns and interest rates drop, consumers will resume purchasing higher-end vehicles packed with new technologies like lidar. Luminar’s deep ties with marquee automakers position it to ride this rebound.

Li Auto (LI)

The Rise of Li Auto: A Hidden Gem in the EV Industry

Li Auto electric car in store. Li Auto Also known as Li Xiang, is a Chinese electric vehicle (EV) company

Source: Robert Way / Shutterstock.com

While the spotlight often shines on Tesla in the EV industry, Li Auto (NASDAQ:LI) has quietly emerged as a formidable force in the growing premium EV segment in China. The company’s impressive delivery figures of 376,030 vehicles in the past year, representing a year-over-year growth of 182%, speak volumes about its surging presence. Notably, December marked a historic high in monthly total deliveries, surpassing 50,000 units.

Thriving Profitability Amidst Growth

Unlike numerous pre-revenue EV startups experiencing rapid top-line growth, Li Auto has established itself as a solidly profitable company. The third quarter saw net income surge by over 272% alongside a 271% rise in revenue. In recognition of this outstanding performance, the management has been generously rewarding employees with bonuses equivalent to up to 8 months’ salary.

Undervalued Potential: An Opportunity for Investors

Despite its strong financial performance and exponential growth, Li Auto is currently trading at merely 27 times forward earnings and 2 times sales – valuations cheaper than any of its U.S.-based counterparts. This undervaluation in the face of accelerating Chinese EV penetration throughout the 2020s grossly underestimates Li Auto’s true potential and staying power.

Promising Future Amid Global Expansion

Looking ahead, will Li Auto continue to outpace its rivals domestically while solidifying its presence in foreign markets? With a strategic focus on delivering cutting-edge technology at reasonable prices for a premium brand, Li Auto is poised to leverage multiple consumer trends favoring EVs in the coming decade. As the company maintains a balanced tactical approach, it is well-positioned to capitalize on the surging demand for electric vehicles.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comΒ Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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