Electric vehicle (EV) stocks have been all the rage in recent years. Over a five-year period, Tesla (NASDAQ:TSLA) stock is up 1,451%, easily beating the market. This year, it has encountered some resistance and is actually down about 8% year to date. Nevertheless, the stock’s long-term gains have been incredible, and the company grew revenue by 75% in the most recent quarter.
Which stock could be the next big EV winner? With Tesla experiencing quality-control issues and trading at a nosebleed valuation, its future returns will probably not compare to past ones. That doesn’t mean you can’t still make it in EV stocks though. Less well-known players in the space may deliver returns similar to Tesla in its early days. In this article, I’ll explore three Canadian EV stocks that have some potential.
Magna International (TSX:MG)(NYSE:MGA) is a traditional auto-parts company that just recently entered the EV industry. It did so through a partnership with cell phone maker LG Electronics. When Magna and LG announced their partnership in December, it caused MG stock to pop 13.24% in just two days. The stock has continued to post strong gains and is up 23% since its December rally.
The thesis for investing in Magna depends heavily on its EV ventures being successful. The stock’s annualized earnings-growth rate over the last five years is negative, and North American auto manufacturing isn’t doing well. Based on its previous business activities, this stock would not be a buy. But the EV deal with LG is promising, which makes the stock at least worth researching. I’ll stop short of outright recommending it for now, though.
BlackBerry (TSX:BB)(NYSE:BB) is a Canadian tech company that has become a huge player in the global auto industry. Its QNX software runs on 175 million cars, including some EVs. Just recently, BlackBerry inked a deal with China’s WM Motor, an upstart EV company. The potential growth from this deal can’t be understated. China’s EV sales grew at 97% in the most recent quarter and are expected to keep growing over the long term. If WM Motor becomes a major player in the industry and stays with BB for its operating system, the revenue gains will be significant.
GreenPower Motor Company (TSXV:GPV) is a Canadian electric bus company that has occasionally been mentioned as a “next Tesla” candidate. Certainly, cars aren’t the only EVs out there, and electric public transportation seems like a good bet for an era where governments are taking climate change more and more seriously.
With that said, GPV has not been doing well financially. In its most recent quarter, it posted the following:
- $2.3 million in revenue — down from $4.9 million.
- $909,000 in gross profit — down from $1.4 million.
- A $2.4 million net loss — “up” from a $1 million net loss.
- $2.6 million in operating cash outflows.
That’s certainly not a good-looking list of financial data. On the whole, GPV is probably not a stock you’d buy if fundamentals were important to you. But its unique industry niche makes it at least worth researching and learning about.
Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends BlackBerry and Magna Int’l.