Canadian Electric Vehicle Makers: 2 Stocks Charging Ahead

Electric vehicle stocks now have plenty of government support, so I would consider these two stocks if you’re ready to dive in.

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Electric vehicles are one of the few areas of the market that continues to see the potential for strong gains. What’s more, there have been significant gains already. With more on the way, as Canada continues to support the growth of electric vehicles, these are the stocks I would consider on the TSX today.

Lion Electric

If you’re considering investing in electric vehicles, then go straight to a Canadian creator of electric vehicles. The Lion Electric Company (TSX:LEV) creates medium- and heavy-duty urban electric vehicles. It also provides parts for trucks and buses as well as accessories. While it generates revenue mainly from Canada, it also has a set up in the United States as well.

Yet shares of Lion Electric stock are down about 60% in the last year, though just 4% year to date. The recent performance may have to do with earnings that beat out analyst estimates. Even so, analysts have been careful about the company’s future, though positive about its long-term performance.

The company continues to see a “buy” and “outperform” recommendation pretty much across the board, with several analysts providing price targets that could see shares double within the year. As its capacity continues to expand, the company is positioned to see even more growth in the years to come — especially with the government now on board.

Magna stock

After falling and falling, it looks like Magna International (TSX:MG) may finally be on the recovering — at least for now. Magna stock has seen supply-chain disruptions weigh heavily on its share price. However, there has been some more positive reaction in the market, as Magna stock came out with solid earnings and guidance that impressed analysts.

Magna stock also proposed the purchase of Veoneer’s active safety division for US$1.5 billion. This should close in mid-2023, and management now plans to provide a new 2023 outlook that would include this transaction. While this will likely mean lower numbers in 2023, there are likely to be higher estimates for the years following.

Shares climbed 6% from the news after reporting these strong results. Revenue was up 11% year over year, with earnings per share falling 13%, though still beating estimates. Magna stock continues to seek out opportunities both in Canada and in Europe, with even more growth on the way.

The recent move with an acquisition, along with increased guidance led analysts to up their price target. It now has a consensus price target at $88.27 as of writing, giving today’s investor a potential upside of about 23% as of writing. And that certainly could climb higher once projections and outlook are set up with this acquisition taken into consideration.

Bottom line

There are a lot of investments to consider out there in the electric vehicle stock field. However, these two deal directly with electric vehicles themselves. Magna stock still offers production of internal combustion vehicles, but even these have many electric components. The company is making a shift that supports the eventual takeover of electric vehicles.

As for Lion Electric, the company may be small, but it’s certainly undervalued. It remains a buy that could easily double in the next year for investors who are willing to even make a small stake. So, consider these two electric vehicle stocks for your clean energy portfolio.

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 recommends Magna International. The Motley Fool has a disclosure policy.

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