Electric vehicle (EV) stocks continue to be all the rage. Though this rage seems to come in starts and stops. New companies will continue to soar before almost immediately going through a market correction. And yet, Motley Fool investors can still find an EV stock that provides a strong long-term opportunity.
Why buy an EV stock?
A lot of investors want to find the next big thing, and that could be by buying an EV stock. However, here at the Motley Fool, we support long-term investment. Don’t buy something for 10 minutes if you won’t consider it for 10 years, as Warren Buffett says. Luckily, buying the right EV stock can set you up with at least a decade of returns.
So, today, we’re going to dive into Martinrea International (TSX:MRE), a solid EV stock for long-term buyers on the TSX today. While not the most obvious EV stock to buy, Martinrea provides car parts to automotive companies. In the next decade, the biggest brands of car manufacturers have committed to either a full fleet of EVs, or a mixture of EV and hybrid cars. That is a huge opportunity for a company like Martinrea.
Moving on strong
The pandemic was hard on car parts manufacturers, and that included Martinrea. Luckily, the company has production back up and running and the last quarterly report proves it. The EV stock company reported net income of $23.9 million compared to a loss of $146.9 million the same quarter last year. It now remains positive for the long-term future, as strong demand increases from low inventory for vehicles in general.
In response to this, Martinrea management stated it expects strong future sales growth, creating strong launch programs to address and remove “bottlenecks” in supply. Once the pandemic is well and truly over, there doesn’t seem to be anything in this company’s way.
This will all be helped by the $4 million co-investment into electric vehicle parts with NanoXplore, announced earlier this year. Not only could the focus shifting towards EV parts like batteries and metal parts provide a sustainable, cheaper move forward, it could also provide further opportunities for the company. It’s not just EVs that need batteries and metal parts, of course. On top of that, Martinrea is now producing the first graphene-enhanced brake lines in the world. So, with this diverse portfolio, it’s now ahead of the game in the world of EV stocks.
In fact, Martinrea is an EV stock that is downright valuable. The company currently trades at an astounding 6.35 P/E ratio and an EV/EBITDA of just 4.79! Shares trade at just $12.20 — up 24% in the last year. Those shares have been relatively stable in the last month, likely because the quarterly report wasn’t exactly exciting. But that makes it an excellent time to buy up this stock. Meanwhile, you’ll get the dividend yield of 1.61% at the very least. But analysts predict an average potential upside of 51% in the next year, as of writing.
There are a lot of EV stocks to consider, but this EV stock is a top choice for investors looking for something cheap. Motley Fool investors get a strong company with a diverse portfolio moving into the future. Really, with shares so low, everyone can afford to take even a small stake and wait to see how it does.
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. The Motley Fool has no position in any of the stocks mentioned.