Due to the drop in lithium spot prices in China, some undervalued EV stocks could be for investors to tap into this year. Keep in mind that the EV revolution has just started. These companies are currently not fairly valued when considering how disruptive this transition could be.
The companies discussed in this article reflect names Wall Street and usual retail traders have turned their backs on. But when one examines their fundamentals, I believe investors could have a huge upside.
So here are three of the most undervalued EV stocks for February.
NIO (NYSE:NIO) has been making significant strides in the electric vehicle market, especially in China, the world’s largest EV market. The company continues to innovate with its product line’s battery swap technology expansion.
Wall Street agrees it could be undervalued, too. Its share price is expected to rise 116.61% over the next 12 months and is rated as a “Buy.”
NIO is entering 2024 with momentum in vehicle deliveries, showing a significant increase in delivery volumes starting in the third quarter of 2023. NIO has also made notable strides in improving its delivery metrics and margins.
The company’s EPS is expected to end negative at -$5.86 this year, but that’s significantly above the -$10.30 negative EPS it ended last year.
Li Auto (LI)
Li Auto (NASDAQ:LI) focuses on plug-in hybrid vehicles. The company’s focus on technology and expanding its sales network in China make for attractive drawcards for investors.
There are big plans on the horizon for LI stock. The company aims to establish 800 retail stores and over 500 Li Auto-authorized body and paint shops by the end of 2024. This will reportedly help establish it as a dominant brand in Asia, aiming to deliver 800,000 vehicles annually.
So far, things have been looking up for LI stock, and I’m bullish that its momentum can continue. The company delivered 31,165 vehicles in January 2024, a significant 105.8% year-over-year increase.
Wall Street is extremely bullish on LI stock for this year. Its full-year revenue and EPS projections look great and are poised to increase 64.06% and 62.03%, respectively. What’s better is that these numbers are forecast to keep growing, with its EPS surging from $4.18 in 2023 to $16.28 in 2026.
If these numbers hold, then the upside for LI stock could be enormous. Indeed, this year alone, its stock price is anticipated to climb 74.95%, possibly just the tip of the iceberg.
Xpeng (NYSE:XPEV) is another Chinese EV maker aggressively investing in technology, including autonomous driving.
Underlining that Chinese EV stocks have been leading the charge over other makes, XPEV also reported strong delivery growth recently.
The company reported delivering 8,250 vehicles in January 2024, marking a 58% year-over-year increase. Its X9 Ultra Smart Large Seven-seater MPV launch, with the X9 and its Max trim spearheaded this growth.
XPEV also has big plans for the future. Namely, it plans to introduce its G9 SUV, P7 sedan, and the most recent G6 model to the new markets of Norway, the Netherlands, Sweden, and Denmark.
Although XPEV is still anticipated to have a negative EPS in FY2024, its top line is forecasted to grow 87.51%. Its EPS is also predicted to improve from -$12.03 to -$7.65.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.