Forget Tesla: This EV Stock Is Poised to Zoom

Tesla (NASDAQ:TSLA) stock has been the one to beat in EV stocks, but now that might be changing with more competition on the market.

| More on:
Car, EV, electric vehicle

Image source: Getty Images

If you even think of electric vehicles (EV), it’s likely the first word that pops into your mind is Tesla (NASDAQ:TSLA). I can’t blame you. Tesla stock has soared thanks to its investment in EVs, but it’s also experienced volatility from the investment as well.

Just recently, shares plunged over 11% this week (yes, as in Monday and Tuesday), as the company reported a shipments slump, as we see new price cuts in China.

Why you may want to reconsider Tesla stock

Look, I’m not going to lie. Tesla stock does look like a strong long-term investment when it comes to EV stock. However, that depends entirely on the valuation. And when it comes to Tesla stock, it is high in terms of share price.

Tesla stock currently trades at a significant premium compared to other automakers and even other EV stocks. And in a rapidly expanding EV market, this is likely to continue to drop. Established automakers are now in the space, as well as new startups — not to mention competition overseas.

What’s more, Tesla stock’s profit margins have come under pressure from rising costs and price cuts simply to maintain its competition. This has raised concerns about future profitability.

Finally, there’s Elon Musk. The company is so tied to the public image of Musk that his actions as chief executive officer can affect the stock price — positively, but certainly negatively as well. In fact, shares are nearing their 52-week low. And I would continue to hold off until there is some positive news about EV stocks and Tesla stock as well before jumping back in even at those levels.

Still, stick to EV stocks!

That all being said, there are other EV stocks that I would still consider. After all, there is a reason Tesla stock has done so well. And that’s because more competition means more interest in EV stocks and EVs in general.

There is high-growth potential in the space, driven by factors like environmental concerns, decreasing battery costs, and increasing consumer demand. It’s now seen as a disruptive technology with the potential to revolutionize the transportation industry. This comes from continued innovation and diversification in the field. And more companies mean there is less risk being invested.

And honestly, don’t downplay the environmental impact. This also goes in hand with government investment as well. This can benefit you as a consumer as well as an investor.

One stock to consider

As for another investment, if I’m getting into EV stocks, I’m going a touch off the radar. Instead of Tesla stock, I’d consider a company such as NFI Group (TSX:NFI). NFI stock is far cheaper, trading at just $11.50 as of writing. Yet it’s highly valuable, trading at 11.12 times earnings over the last year.

However, during fourth-quarter earnings and 2023 results, the company reported a net loss for both. This has raised concerns about future profitability, with a lot of competition of course from other EV stocks. Even so, there are some benefits to be had.

For instance, NFI stock announced that the battery they use is has been found to be the most efficient electric battery for its double-decker busses in the United Kingdom. Further, it ordered 12 more double-decker buses to climb on deck. It’s now a leader in the electric and low-floor bus market around the world. Its diversified products and focus on innovation have also led to strong performance in the past. Again, you can’t ignore that value.

So, with shares actually up a whopping 25% in the last year and more to come, NFI stock looks like a great option — especially when compared to a risky company like 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. The Motley Fool recommends NFI Group and Tesla. The Motley Fool has a disclosure policy.

More on Tech Stocks

Tech Stocks

3 Magnificent Stocks That Have Created Many Millionaires, and Will Continue to Make More

Shopify stock is an example of a millionaire-maker stock that is likely to continue to thrive in the long run.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

Why Hut 8 Stock is Up 44% in the Last Week

Hut 8 stock (TSX:HUT) has surged in the last week, and even more year to date. But if you think…

Read more »

Coworkers standing near a wall
Tech Stocks

Why Nvidia Stock Fell 10% Last Week

Nvidia stock (NASDAQ:NVDA) fell by 10% last week after its competitor announced an earnings date, but without preliminary results.

Read more »

Businessman holding AI cloud
Tech Stocks

3 Artificial Intelligence (AI) Stocks to Buy With $500 and Hold Forever

Canadian AI stocks like Open Text Corp (TSX:OTEX) are changing the game.

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify While it’s Below $100?

Here's why Shopify (TSX:SHOP) remains a top long-term growth stock investors should consider buying below the key $100 level.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Should Investors Buy Lightspeed Stock Ahead of Earnings?

Lightspeed (TSX:LSPD) stock has served a period of drama for investors in the last few months, so what can investors…

Read more »

Tech Stocks

TFSA Investors: 1 Top Tech Stock to Buy With $500

TFSA investors can consider owning quality tech stocks such as Datadog to benefit from outsized gains in 2024 and beyond.

Read more »

Dots over the earth connecting the world
Tech Stocks

Hot Takeaway: Concentration in 1 Stock Can Be Just Fine

Concentration in one stock can be alright under the right circumstances, and far better than buying a bunch of poor-performing…

Read more »