As the world grapples with a multitude of challenges, including pandemic-induced uncertainties, inflationary pressures, and supply chain disruptions, the electric vehicle (EV) sector has had its fair share of hurdles to overcome. The poster child of the EV realm, Tesla (NASDAQ:TSLA), has not been immune to the turmoil, experiencing a decline of over 20% YTD, in stark contrast to the 5% rise in the S&P 500 index during the same period.
DRIV: A Gateway to the Future
Despite the current turbulence, the prospects for EV sales are compelling, with projections indicating that EVs could constitute 35% of all new car sales globally by 2030. In this vein, the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) emerges as a beacon for investors looking to dip their toes into the world of EV stocks.
This ETF is a treasure trove containing not only EV manufacturers but also vital components like autonomous vehicle technology, lithium batteries, and essential materials. With a diverse portfolio comprising 75 holdings, DRIV’s top sectors include consumer discretionary, information technology, industrials, and materials. The geographical distribution spans across the United States, Japan, and South Korea, offering exposure to a wide array of tech stocks beyond the EV realm.
Among the notable names in DRIV are tech giants like Nvidia (NASDAQ:NVDA), Toyota (NYSE:TM), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Apple (NASDAQ:AAPL), underlining the fund’s tech-heavy composition to navigate near-term cyclical challenges in the EV landscape.
While the fund has experienced a modest decline YTD and currently trades below its late 2021 peak, investors should note the annual expense ratio of 0.68%, providing a cost-effective entry point into the future-forward world of EV investing.
Li Auto: Powering the Future of Mobility
Over in China, Li Auto (NASDAQ:LI) is carving a niche for itself in the EV arena by strategically catering to both hybrid and premium segments. By offering hybrid engines, Li Auto addresses range anxiety, empowering customers to embark on lengthy journeys with ease throughout China.
The company’s stellar third-quarter performance, marked by a revenue surge of 271% YoY to $4.75 billion and a record high of 50,000 vehicle orders in December, underscores its momentum in the competitive EV landscape. The company has set an ambitious target of delivering 800,000 vehicles in 2024, with the launch of its groundbreaking EV multipurpose vehicle, the “Li Mega,” poised to revolutionize the Chinese EV market’s premium category.
Driving Down Wall Street: A Look into ON Semiconductor (ON)
Weathering the Storm
In an era where the market sentiment for Chinese stocks has been flagging, ON Semiconductor (NASDAQ: ON) stands out as a beacon of resilience. Despite facing headwinds, this leading provider of power and analog semiconductors and sensors has navigated choppy waters with deft skill.
Powering Through Challenges
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Despite a 6% decrease in stock value year-to-date, ON Semiconductor has stood its ground, proving its mettle in the face of adversity. Management’s strategic approach and commitment to innovation were evident in the company’s recent earnings report, where fourth-quarter revenue hit $2.02 billion. This figure, showing a modest 1% year-over-year decline, mirrors the broad-based challenges across various end markets.
Notably, 2023 saw a remarkable 29% year-over-year increase in automotive revenue, underscoring ON Semiconductor’s prowess in a competitive landscape. The company has solidified its position by securing a 25% market share in SiC chips, a critical component for electric vehicles (EVs). Its state-of-the-art SiC production facility in South Korea has the capacity to produce over 1 million wafers per year when operating at full tilt.
Looking Ahead
As investors eye the prospects of ON stock, they are met with a valuation of 18.7 times forward earnings and 4.3 times trailing sales. The 12-month median price forecast for ON Semiconductor stands at a promising $90.00, hinting at a potential 16% upside. This forecast injects a sense of optimism into the market, signaling that brighter days may be on the horizon for ON Semiconductor.
With a resilient spirit and an eye towards growth, ON Semiconductor continues to chart its course with a blend of tenacity and innovation. As market dynamics evolve, the company remains steadfast in its commitment to delivering value to shareholders and stakeholders alike.
On the date of publication, Tezcan Gecgil did not have (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.com Publishing Guidelines.
