Over the past few years, tech stocks have been some of the biggest gainers. Within tech, though, there have been a select few subsectors that have gained major momentum. One of those industries is electric vehicles (EVs). EV stocks have been and continue to be some of the best growth stocks you can buy.
Electric vehicles are increasingly becoming an important part of the fight against climate change. Transportation is one of the biggest contributors to greenhouse gasses. Ford even just announced that by 2030, its entire fleet in Europe will be electric.
Depending on what estimates you look at, transportation makes up between 15% to 20% of all greenhouse gasses. So, it’s an industry that needs big disruption to help stop climate change.
This is giving EV stocks a huge runway for growth, which is why it’s a top place to find your next investment. However, with these stocks being so popular, it’s crucial we also make sure we aren’t overpaying.
Canadian EV stocks
There aren’t any Canadian car manufacturers that are building electric vehicles. However, there are several companies that will have an impact on the rapidly growing sector.
BlackBerry (TSX:BB)(NYSE:BB) is often cited as one of the top EV stocks in Canada due to its technology necessary for self-driving cars. This will give BlackBerry a tonne of opportunities in the long run. However, this growth is already well priced into the stock.
BlackBerry has been overbought recently with the major speculation from Reddit investors. There are no analysts with a buy rating, and the average target price is more than 20% below today’s market price. So, for now, I would avoid BlackBerry.
Facedrive (TSXV:FD) is another Canadian stock that’s seen major momentum in the EV stock rally.
Facedrive is a ride-sharing company that customers can use to deliver people, packages, food, and medication. It’s become highly popular due to its socially responsible business model.
This has helped the company to rally significantly as EV stocks get a huge boost. The reality is, though, Facedrive is considerably overvalued, too.
As of the end of the third quarter in 2020, the company was on pace to do roughly $1 million in sales for the year. Compare that to its $4.2 billion market cap, Facedrive is considerably overvalued.
If it was the only company in its industry and growth was incredible, a massive valuation like that might be another story. But competing against the likes of Uber and Lyft, and with less than 100% growth year over year, the stock is worth nowhere near $4.2 billion today.
Canadian hydrogen stock
Although Facedrive and BlackBerry happen to be well overvalued, one stock that’s been getting increasingly attractive the last few weeks is Xebec Adsorption (TSX:XBC).
Xebec Adsorption isn’t an automaker either. However, it’s a rapidly growing clean technology company that’s a great substitute to EV stocks. The business specializes in air purification capturing raw gasses and transforming them into hydrogen or renewable natural gas.
Xebec has been making a tonne of acquisitions as of late, building out its technological capabilities. It’s also been making a tonne of new sales, as businesses are increasingly looking for ways to reduce their carbon footprint.
One of its most promising sales is to an American fuel cell company. Xebec will supply an adsorption system that will be used to purify hydrogen, which will then be used for Toyota’s new line of Fuel Cell Electric Vehicles. This is a big step and just one of many showing how revolutionary Xebec’s clean technology is.
In addition to the incredible potential Xebec has, the stock is also extremely attractive. Over the past month, shares have declined over 20% offering incredible value today. And when you consider most other EV stocks are trading at significant price multiples, Xebec looks much more appealing.
I wouldn’t wait too long to gain exposure, though. As we saw throughout 2020, Xebec has the potential to skyrocket at any moment.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa owns shares of XBC. The Motley Fool recommends BlackBerry, BlackBerry, and Uber Technologies.