Up 22.81%: Is NFI Stock a Buy in June?

With share prices rising considerably higher this year, NFI (TSX:NFI) stock might be a screaming buy for investors this month.

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Until Tesla came along, a realistic move for the world away from internal combustion engine (ICE) vehicles was little more than a pipe dream. The rise of electric vehicles (EVs) and continuous improvements in the industry are making it more realistic to transition from fossil fuel-guzzling cars to cleaner modes of transportation.

Governments worldwide are increasingly focusing on phasing out fossil fuels for cleaner alternatives. Renewable and nuclear energy are considered better ways to produce energy, and EVs offer a way to reduce carbon emissions.

As the EV demand increases, Canadian stock market investors can use it as an opportunity to benefit from the industry’s growth in the coming years. Investing in Tesla might be expensive, considering how high its share prices are now. However, there are several Canadian EV stocks you can invest in.

This is why we will look at NFI Group (TSX:NFI) stock, a Canadian EV company that can be an excellent investment for this purpose.

Market-leading EV stock

NFI stock is not a household name when it comes to EVs, mainly because it does not produce sedans, SUVs, and other exciting EVs. However, it is a leader in its area of the EV industry, supplying buses and coaches for public transit, private companies, and government agencies, all powered by electricity.

NFI has been providing alternative and electric-powered vehicles for years. Growing demand and the company’s leading position in the industry indicate a strong potential for significant long-term growth. The company’s earnings reflect the solid demand and a strong financial performance for NFI Group.

In its first-quarter report for fiscal 2024, NFI stock reported earnings that blew past its estimates. In the quarter, it saw a 38% growth in its year-over-year revenue. The growth shows that the company has the ability to dominate the market and increase its sales.

The company also boasts a US$11.7 billion backlog, ensuring that it will continue enjoying considerable cash flows for several quarters to come. The massive backlog also indicates the potential for greater demand in the coming years.

Despite a US$9 million net loss in the quarter, the company’s financial metrics improved significantly. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was US$34 million. Its aftermarket segment saw it post a record quarterly performance with US$160 million in revenue and US$38 million in adjusted EBITDA.

Foolish takeaway

The backlog it boasts is one of the biggest positives for NFI Group in the coming years. However, it is the growth in the coming years that makes it a truly attractive investment to consider. The company’s management has maintained its financial guidance for fiscal 2024, reaffirming its confidence in the company to achieve its financial targets.

The company’s management also anticipates strong growth in its EBITDA and free cash flow in the next 12 to 24 months. The solid demand for its buses and favorable market conditions indicate that there is plenty more growth to come for years. As of this writing, NFI stock trades for $16.53 per share, up by 22.81% year to date.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends NFI Group and Tesla. The Motley Fool has a disclosure policy.

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