EV stocks - 3 EV Stocks to Buy for 100% Returns

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Tesla (NASDAQ:TSLA) stock was trading at $108 at the beginning of the year. In just over a month, TSLA stock delivered 100% returns. For fundamentally strong stories, the rally from oversold levels can be quick. This performance can be replicated in several EV stocks. Some EV stocks can surge by 100% in the next 6 to 12 months, if not in one month.

The global markets face multiple uncertainties in the form of banking sector challenges, inflation, and a potential recession. EV sales will likely be impacted on a relative basis. However, there are two important points to note. First, the deep correction in EV stocks has largely discounted the concerns.

Furthermore, EVs constituted only 15% of global passenger vehicle sales as of Q3 2022. There is ample headroom for penetration in the coming decade. It’s expected that by 2030, EVs will represent more than 60% of vehicles sold globally.

Therefore, it’s a good time to buy EV stocks for the medium and long term. Let’s discuss three EV stocks that look poised for a sharp reversal rally.

Solid Power (SLDP)

Solid Power (NASDAQ:SLDP) stock looks attractive among EV stocks for 100% returns quickly. The company is working towards the commercialization of solid-state batteries. Business developments have been positive, and I expect SLDP stock to surge higher.

Last month, Solid Power announced Q4 2022 results. The company’s electrolyte production facility is on track to be commissioned in Q1 2023. Further, the company expects to deliver EV cells to automotive partners during the year. A positive result from validation testing is a major stock upside catalyst.

Solid Power closed 2022 with total liquidity of $496 million. With Ford (NYSE:F) and BMW (OTCMKTS:BMWYY) being automotive partners, financial research and development is unlikely to be a concern.

It’s worth noting that the company has signed an agreement with BMW to license the cell design and manufacturing process. This will allow for parallel R&D activities. Overall, Solid Power seems to be the best bet in the solid-state battery segment, which has a promising future.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) stock has been depressed, with a downside of almost 50% in the last six months. I believe the stock is undervalued and poised for a strong reversal rally.

A strong performance by Polestar backs this view. Last year, the company registered 80% year-on-year growth in vehicle deliveries to 51,491 vehicles. The company has also guided for 60% year-on-year growth in deliveries for the current year.

Vehicle deliveries will remain robust, with a product portfolio of three cars and a pipeline of another three through 2026. The aggressive geographical expansion will also contribute to growth. Polestar is already present in 27 markets globally.

From a financial perspective, Polestar reported a widening of EBITDA level losses in 2022. That was expected because the company is in an early-growth stage. With operating leverage, EBITDA losses are likely to narrow in 2023. Polestar ended 2022 with a cash buffer of $974 million. Financing growth through equity dilution or debt is unlikely to be a challenge.

Nio (NIO)

Nio (NYSE:NIO) stock has also disappointed investors in the last six months with a plunge of 60%. I see the downside capped with meaningful upside potential from current levels of $8. In my view, it would not be a surprise if NIO stock trades at $20 in the next 12 months.

Nio reported a 37.2% growth in revenue on a year-on-year basis for 2022. However, the vehicle margin contracted by 640 basis points to 13.7%. Vehicle deliveries and margins will likely remain subdued in 2023. For Q1 2023, Nio expects year-on-year delivery growth from 20.3% to 28.1%. However, this factor is discounted in the stock.

Regarding positives, Nio ended last year with cash and equivalents of $6.6 billion. The company has flexibility for investing in international expansion and product development. It’s worth noting that the company aims to launch five new models in 2023. Further, aggressive expansion in Europe is on the cards.

On the date of publication, Faisal Humayun 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.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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