Next Tesla! This 1 Top Canadian EV Stock Is My Top Value Stock Pick!

Tesla, Inc. (NASDAQ:TSLA) is a great stock — no question — but I’d pick this value stock any day given its fundamentals and growth path.

| More on:
Car, EV, electric vehicle

Image source: Getty Images

Electric vehicles (EV) continue to be in huge demand here and around the world. Canada isn’t the only country providing incentives to start picking up these green cars. In fact, the incentives get enormous for companies that produce these cars. That includes American EV maker Tesla (NASDAQ:TSLA).

Investors have been all ears since the stock popped up 743% during 2020 alone. Yet it seems to only be the beginning, with President Joe Biden promising billions from his administration for clean energy projects, including EVs.

But with a share price so high, isn’t there another option?

Tesla is still solid

If you’re still considering Tesla stock, I’m not going to say don’t buy it — especially now, since the tech and EV pullback. The company reached sky-high prices of US$900 but has since sunk down by about 30% as of writing. That’s a perfect jumping-in opportunity if you’re willing to pay the share price.

After all, Tesla stock is diversifying. Elon Musk recently invested over a billion dollars in Bitcoin, stating Tesla would be accepting it as payment. And while other car companies are starting to increase their EVs, many announcing a full EV fleet by 2040, Tesla does seem to be the most innovative.

But the problem is that Tesla simply won’t be the only EV maker. In fact, it hasn’t been for a while. In China, there is the world’s largest car market, and that includes for EVs. The country continues to put billions into the EV market, leaving the rest of the world — including Tesla — playing catchup.

Another option?

It’s a safe bet to bet on EVs, but you don’t have to simply choose a car company and keep your fingers crossed. You can choose a diversified company that provides the parts for a slew of car companies. That’s what you get from Magna International (TSX:MG)(NYSE:MGA).

The company is one of the largest and most diversified auto parts suppliers in the world. Its this diversified strategy that has created higher margins and returns on investment. That includes from the recent partnership with LG Electronics, where the joint venture will help develop the e-motors, inverters, and on-board chargers that come with e-drive systems in the shift towards vehicle electrification.

But while other suppliers seem to focus in on a product or two, Magna could practically design, develop, supply, and assemble these vehicles alone! While some analysts argue the company needs more focus, the revenue speaks for itself. Magna will continue to benefit from the EV shift and has the healthy balance sheet to support its operations even during the pandemic.

And even with share prices up about 150% in the last year, the company still has a price-to-sales ratio of 0.8, and a price-to-book ratio of 2.3, making it relatively cheap. You can also snatch up a solid little 2.04% dividend yield. And with a slight pullback from the EV sell-off, investors who put $10,000 into this stock could see it easily rise back to $10,585 at all-time highs.

Foolish takeaway

You can’t exactly go wrong by investing in Tesla stock, but the same can be said for Magna stock. The company has a solid growth path through both organic and acquisition growth. The company still has a valuable share price that investors can snatch up, and dividends to boot! So, I would choose this value stock any day of the week over Tesla stock.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends Magna Int’l.

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »