3 Reasons NFI Stock Looks Like a Screaming Buy

NFI (TSX:NFI) stock has seen shares rise higher and higher, most recently after first-quarter earnings that saw its backlog swell.

| More on:
edit Colleagues chat over ketchup chips

Image credit: Photo by CIRA/.CA.

When it comes to future investments, electric vehicles (EVs) are certainly one area where there continues to be interest. However, it can look like that investment should be made further in the future. But that’s not the case if you’re interested in EV producer NFI Group (TSX:NFI).

NFI stock has seen shares absolutely surge in the last few months — especially after its most recent earnings. So, let’s look at what’s been going on with the stock, and what investors still have to look forward to.

Market leader

NFI stock has been a leader in its industry, supplying a wide range of buses and coaches for public transit, private companies, and government agencies. Its market leadership position can indicate stability and potential for long-term growth.

From this, the company has historically produced a strong track record of financial performance. And this hasn’t changed over the last few months.

Now, companies and indeed countries are demanding more alternative and electrically fuelled vehicles, not just for their own personal use but also for public transit and urban mobility. NFI stock has been doing this for years, and as demonstrated in earnings, demand is still high.

Recent earnings

NFI stock recently reported earnings that climbed beyond estimates. In the first quarter (Q1) of 2024, NFI Group reported a revenue of US$723 million, marking a significant increase of 38% compared to the same period in the previous year. This substantial revenue growth indicates the company’s ability to capture market share and generate increased sales.

Furthermore, NFI stock achieved a record-high backlog of 14,783 equivalent units (EUs) valued at US$11.7 billion! This backlog provides visibility into future revenue streams and suggests strong demand for NFI’s products, positioning the company for continued growth.

Yet despite reporting a net loss of US$9 million in Q1 2024, NFI Group demonstrated positive improvement in various financial metrics such as adjusted earnings before interest, taxes, depreciation, and amortization (EBTIDA) of US$34 million and record quarterly performance in the aftermarket segment with US$160 million of revenue and US$38 million of adjusted EBITDA. These positive financial indicators suggest the company’s resilience and potential for future profitability.

Looking ahead

The backlog is one thing, but there is even more growth that the company predicts. NFI Group reaffirmed its financial guidance for Fiscal 2024, including an adjusted EBITDA range of US$240 to US$280 million and a target of greater than US$350 million for 2025 adjusted EBITDA. This reaffirmation signals management’s confidence in the company’s ability to achieve its financial targets and indicates a clear path for growth.

What’s more, management anticipates continued positive improvements in revenue, gross profit, adjusted EBITDA, and free cash flow over the next 12 to 24 months. Strong demand for NFI’s buses, coaches, parts, and Infrastructure Solutions services, as evidenced by record new quarterly orders and a robust backlog, suggests favourable market conditions and growth opportunities.

Overall, NFI stock looks well-positioned for future growth and profitability, making its stock on the TSX a strong buy candidate for investors seeking exposure to the transportation and electric mobility sectors. Yet, as always, it’s essential for investors to conduct their own research and consider their risk tolerance before making any investment decisions.

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. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Target. Stand out from the crowd
Stocks for Beginners

2 No-Brainer Stocks to Buy With $7,000

Got some cash to fill up your TFSA? Here are two stocks that look like good buys on the recent…

Read more »

top TSX stocks to buy
Stocks for Beginners

3 Stocks That Can Help You to Get Richer in 2024

These three stocks have already proven their worth this year, but are set to continue climbing in 2024 and even…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Kinaxis: The AI Stock Investors Are Missing Out On

Kinaxis stock (TSX:KXS) is one AI stock you don't want to miss, with proven results and long-term contracts leading to…

Read more »

telehealth stocks
Tech Stocks

Forget Shopify Stock: 1 Tech Stock to Buy Instead

Shopify stock (TSX:SHOP) plunged by over 20% after earnings guidance for the second quarter came in lower, but this other…

Read more »

A golden egg in a nest
Dividend Stocks

How to Build a Monthly Passive-Income Portfolio in Retirement With Just $7,000

This monthly paying dividend stock is one of the best ways to create a passive income portfolio in retirement. It's…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Stocks for Beginners

3 Soaring Stocks You Can Buy Right Now Before They Surge Even Higher

These three soaring stocks have continued to climb in 2024 but have so much more to give investors moving forward.

Read more »

Economic Turbulence
Stocks for Beginners

Down but Far From Out: 3 TSX Stocks to Buy and Hold Forever

Here are some market leaders that are going through difficult times. They are stocks worth buying and holding.

Read more »

Car, EV, electric vehicle
Stocks for Beginners

The Ultimate EV Stock to Buy With $1,000 Right Now

If you're investing long-term in EV stocks, this company is already seeing massive growth and expects more to come in…

Read more »