1 Sneaky Canadian EV Stock to Buy Right Now

Here’s why investors looking for a top Canadian EV stock may want to look at overlooked Martinrea (TSX:MRE) right now.

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Among the areas of growth many investors are choosing to focus on right now is the electric vehicle (EV) segment. Of course, there are some fantastic options available in the U.S. and global marketplaces. However, finding a Canadian EV stock worth buying … that can be a bit more difficult.

The Canadian economy is one that’s tilted toward commodities, and fossil fuel, production. Accordingly, Canada has lagged somewhat in the development of the EV market.

However, there are some companies that are big players in the burgeoning EV space. One such top Canadian EV-related stock I like right now is Martinrea (TSX:MRE)(NYSE:MRE).

Here’s why.

A Canadian EV stock with the same catalysts and headwinds as the industry

First, it’s important to start off with the fact that Martinrea is a top provider of automotive parts. The company’s aluminum parts help to lightweight vehicles, providing better performance. While the company serves both internal combustion engine and EV markets, the company has recently been making moves in the EV space.

Indeed, I think this stock has received almost zero consideration regarding its ownership in Voltxplore and Nanoxplore, which exposes it to graphene and EV battery components. Company insiders have also been active buyers of MRE stock lately. This is another endorsement of the attractive growth and valuation.

Along with the entire auto industry, MRE has faced an impact from the worldwide chip shortage. Martinrea’s auto production has also been affected by this chip crisis. That said, the growth drivers of the auto space are also the same, making MRE stock one to consider right now.

Big backlog, and big results, could boost Martinrea stock

Besides being hurt by chip shortage, Martinrea has also had EPS forecasts trimmed by analysts. That said, there’s reason to believe this stock could outperform over the medium to long term.

Much of this view is due to the company’s backlog. Martinrea has seen impressive growth in its backlog, mainly due to supply chain issues. For those who think this short-term scenario simply pulls demand forward, there’s nothing to worry about.

Indeed, though Martinrea’s Q2 earnings were affected by the global semiconductor shortage, its total sales went up 92.1% year over year lately. The organization continues to have a solid balance sheet and a new business pouring in an additional $40 million in sales. Analysts are of the view that MRE stock features deep value. This especially holds true for long-term investors looking beyond the near-term supply chain issues. 

Bottom line

The upcoming decade will see the biggest car manufacturers committing to either a full EV fleet or a combination of hybrid cars and EVs. This looks to be a potential opportunity for an organization like Martinrea.

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Chris MacDonald has no position in any of the stocks mentioned.

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