In this article, we discuss 10 best EV materials stocks to buy now. If you want to read about some more EV materials stocks to buy now, go directly to 5 Best EV Materials Stocks to Buy Now.
The electric vehicle industry has been battling with multiple challenges in the past few months. A post-pandemic rise in EV demand led to a semiconductor chip shortage around the world in 2021, resulting in a dramatic rise in chip prices and causing massive delays in production at even established EV manufacturers. The supply chain issues that led to the chip shortage also triggered soaring inflation, forcing the Fed to hike interest rates, creating an environment where recessionary fears hit the EV market just as production numbers were rising again.
Prominent EV materials stocks like Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX) faced the brunt of this crisis, registering a 22%, 28%, and 26% year-to-date drop in the share price as of August 15, respectively. However, the tide is beginning to turn again. Inflation numbers are peaking just as steel and chip prices go down. The Russian war in Ukraine has resulted in a jump in fossil fuel prices, accelerating the shift towards electric vehicles.
S&P Global forecasts that electric vehicle sales in 2022 will nearly triple compared to 2020 numbers. This rise is forecast despite the fact that the prices of lithium, one of the most critical components of EV batteries, have increased seven times in the period between May 2021 and May 2022. The prices of nickel, another important EV component, have also increased due to the Ukraine war since Russia controls 20% of the global supply of the metal. The successful passage of the recent climate change bill in the US will also benefit EV stocks.
Our Methodology
The companies that operate in the EV materials sector were selected for the list. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
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Best EV Materials Stocks to Buy
10. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 15
QuantumScape Corporation (NYSE:QS) makes and sells solid-state lithium batteries. In the past few months, German media has reported that the company is working with carmaker Volkswagen to integrate the batteries it makes into the Porsche cars of the latter. QuantumScape has been working on the development of batteries that deliver a combination of high energy density, or driving range, as well as fast charging capabilities, a feat that is difficult to achieve with conventional lithium-ion battery chemistries.
On July 14, Morgan Stanley analyst Adam Jonas maintained an Equal Weight rating on QuantumScape Corporation (NYSE:QS) stock and lowered the price target to $12 from $30, noting that slow growth and credit headwinds were hitting the auto industry.
At the end of the first quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $117 million in QuantumScape Corporation (NYSE:QS), compared to 26 in the preceding quarter worth $157 million.
Just like Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX), QuantumScape Corporation (NYSE:QS) is one of the EV stocks on the radar of elite investors.
9. Altair Engineering Inc. (NASDAQ:ALTR)
Number of Hedge Fund Holders: 18
Altair Engineering Inc. (NASDAQ:ALTR) provides software and cloud solutions. The software solutions provided by the firm are used by automakers around the world to accelerate a push into the digital world. The company also markets simulation and AI technology that electric vehicle manufacturers use for eMobility design and autonomous driving solutions. The data on efficiency, temperature, weight, and compactness gathered by the Altair software can help improve the range of EVs as well.
On July 26, Oppenheimer analyst Ken Wong initiated coverage of Altair Engineering Inc. (NASDAQ:ALTR) stock with an Outperform rating and a price target of $60, noting that the firm was finally on the right path to close the profitability gap to industry peers.
Among the hedge funds being tracked by Insider Monkey, Waltham-based investment firm Matrix Capital Management is a leading shareholder in Altair Engineering Inc. (NASDAQ:ALTR), with 8.6 million shares worth more than $553 million.
In its Q4 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Altair Engineering Inc. (NASDAQ:ALTR) was one of them. Here is what the fund said:
“Michigan-based Altair Engineering Inc. (NASDAQ:ALTR) was founded in 1985 to provide structural simulation and modeling to the automotive industry, beginning with software that simulated the effects of a car crash. Now, Altair’s HyperWorks suite of software is used extensively by automakers throughout the design and engineering process, including for elimination of noise and vibration, understanding fluid dynamics, and thermal management. Carmakers use the software to design components that are lighter and more aerodynamic to respond to tightening regulatory standards for gas mileage and carbon emissions, and in electric vehicle (EV) design where lighter-weight parts are even more critical (for extending battery range) and noise reduction is even more of an issue (in the absence of engine noise to mask sounds). HyperWorks users can compare the performance level of different design features and identify the most optimal. It also offers a toolset for durability analysis including an embedded materials library to predict fatigue life under a range of conditions. Similar types of engineering challenges occur in other industries, and Altair Engineering Inc. (NASDAQ:ALTR) works with many of them, including aerospace, heavy equipment, industrial machinery, rail, and marine companies.” (Click here to see full text)
8. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) makes and sells smart electric vehicles. On August 1, the company announced that it had delivered 10,052 vehicles in the month of July, up more than 26% compared to the deliveries for July 2021 but down 22% compared to June 2022. Premium smart electric SUVs dominated the deliveries, with electric sedans following close behind. So far in 2022, the company has delivered 60,879 vehicles, up 22% compared to the deliveries over the same period in 2021.
On August 1, Morgan Stanley analyst Tim Hsiao maintained an Overweight rating on NIO Inc. (NYSE:NIO) stock with a price target of $31, backing the firm to achieve 50% quarter-over-quarter volume growth in the coming months.
At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $716 million in NIO Inc. (NYSE:NIO), compared to 30 in the preceding quarter worth $813 million.
7. Garmin Ltd. (NASDAQ:GRMN)
Number of Hedge Fund Holders: 30
Garmin Ltd. (NASDAQ:GRMN) makes and sells electronic components and devices. On July 27, the company posted earnings for the second quarter of 2022, reporting earnings per share of $1.44, beating market estimates by $0.04. The revenue over the period was $1.24 billion, down close to 7% compared to the revenue over the same period last year and missing market estimates by $130 million. The firm also disclosed that gross and operating margins were 58.7% and 23.6% respectively during the period.
On August 5, Tigress Financial analyst Ivan Feinseth maintained a Strong Buy rating on Garmin Ltd. (NASDAQ:GRMN) stock and lowered the price target to $165 from $208, noting that the firm had an industry-leading and diversified product portfolio.
At the end of the first quarter of 2022, 30 hedge funds in the database of Insider Monkey held stakes worth $486 million in Garmin Ltd. (NASDAQ:GRMN), compared to 34 in the previous quarter worth $579 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Garmin Ltd. (NASDAQ:GRMN), with 987,042 shares worth more than $117 million.
6. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 40
Amphenol Corporation (NYSE:APH) markets electrical components and fiber connectors. The firm has one of the most reliable dividend histories in the EV sector. It has consistently paid a dividend to shareholders over the past sixteen years. In the past decade, these payouts have registered consecutive growth as well. On August 4, the firm declared a quarterly dividend of $0.20 per share, in line with previous. The forward yield was 1.04%. The dividend is payable to shareholders by the end of September and early October.
On July 28, Baird analyst Luke Junk maintained an Outperform rating on Amphenol Corporation (NYSE:APH) stock and raised the price target to $81 from $76, appreciating the second quarter earnings results of the firm.
At the end of the first quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $939 million in Amphenol Corporation (NYSE:APH), compared to 28 in the previous quarter worth $1 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Amphenol Corporation (NYSE:APH), with 6 million shares worth more than $455 million.
Along with Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX), Amphenol Corporation (NYSE:APH) is one of the EV stocks that hedge funds are buying.
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Disclosure. None. 10 Best EV Materials Stocks to Buy Now is originally published on Insider Monkey.