When an average person thinks of Electric Vehicle (EV) stocks, Tesla (NASDAQ:TSLA) is naturally the first name that comes to mind. For many, it might be the only name they can pinpoint since the company has set the benchmark for the global EV industry with how it has innovated the space.
Early investors who believed in what seemed to be a pipedream when the company started have benefitted greatly from its massive rise over the years.
TSLA share prices have surged over 13,400% since its initial public offering (IPO) in 2010. Before its decline in the latter part of 2021, its share price was around 30,000% higher than its IPO price. If there were one growth stock to invest in to become a millionaire at the time, Tesla stock would have been it.
Investing in it right now might no longer deliver the same returns in the next 10 years. However, there are other lesser-known EV stocks you can consider to capture some upside in the coming years.
Today, I will talk about Magna International Inc. (TSX:MG). If you are familiar with Magna International, it is a company that you might not associate with the EV industry. However, this stock might be an excellent bet to consider for capturing the momentum of the EV industry for meaningful long-term wealth growth.
Solid long-term growth potential
Magna International is a $20.4 billion market capitalization parts manufacturer for automakers. Its reputation for providing parts and service to other automotive companies such as internal combustion engine makers might make you think it is far removed from the EV industry. However, it is playing a big role in the EV industry, and that makes it a stock to have on your radar.
Magna stock has seen its revenue grow impressively in recent years, reporting double-digit growth in 2021 and 2022. Its growth has accelerated in recent quarters. Magna’s third quarter of fiscal 2023 saw its revenue growth rate soar by 15% year over year. Its net income and gross profit margins have also grown due to increased production in Magna’s core markets.
Magna’s diversification gives it a great appeal since it can provide key parts and materials for companies making internal combustion engines and EVs. The ability to shift focus depending on which market proliferates increases its chances of success however the broader automotive industry grows. With pure-play EV companies, the lack of diversification becomes a risk.
Foolish takeaway
Magna International enjoys a much lower market beta than Tesla, suggesting that it is far less volatile than the biggest player in the EV industry. Tesla stock’s rapid decline since November 2021 also proves that it is far more volatile than Magna International.
As of this writing, Magna International stock trades for $71.09 per share. As the world slowly moves away from traditional internal combustion vehicles to EVs, Magna remains a top growth stock that can benefit from the performance of both automotive markets.
