2 Top Electric Vehicle (EV) Stocks to Buy in December

Electric vehicle stocks such as NFI Group and XPeng are positioned to deliver outsized gains to shareholders in 2025 and beyond.

| More on:
Car, EV, electric vehicle

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors with a sizeable risk appetite may consider investing in growth stocks that are part of the electric vehicle (EV) segment to potentially generate market-beating returns. The transition towards battery-powered vehicles is inevitable, making companies such as XPeng (NYSE:XPEV) and NFI Group (TSX:NFI) top investment options right now. Let’s see why.

Created with Highcharts 11.4.3XPeng + NFI Group PriceZoom1M3M6MYTD1Y5Y10YALL15 Dec 202313 Dec 2024Zoom ▾Jan '24Mar '24May '24Jul '24Sep '24Nov '240www.fool.ca

Is NFI a good EV stock to buy?

Valued at a market cap of $1.6 billion, NFI Group manufactures and sells buses in North America, Europe, and the Asia Pacific. It offers heavy-duty transit buses as well as after-market services. The company’s product portfolio includes zero-emission vehicles, motor coaches, hydrogen fuel-cell buses, and electric trolleys.

In the last 12 months, NFI Group has reported revenue of $3.07 billion, up from $1.45 billion in 2024. Unlike several other electric vehicle manufacturers, NFI reports an operating profit, ending the third quarter (Q3) with an operating margin of 3.7%.

In the September quarter, NFI Group increased its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 375% year over year. It reported a gross margin of 12.2%, the highest in almost four years, while new orders grew by 8.2% to 1,050 equivalent units. NFI ended Q3 with a strong book-to-bill ratio of 115%, while its backlog stood at a record $12 billion.

NFI emphasized that it is seeing reduced competition in transit bids in North America and is often the sole bidder in many cases, providing it with pricing power. For instance, since 2021, heavy bus prices have increased by 62%, while coach prices have risen by 27%. It claimed North American public transit slots for 2025 have already been sold out.

In 2025, NFI expected adjusted EBITDA to grow over $350 million. A focus on profit margins should enable the company to improve the return on invested capital to over 12% next year.

Analysts tracking the TSX stock expect sales to grow to $3.8 billion in 2025, up from $2.68 billion in 2023. Comparatively, its earnings are forecast to improve to $0.71 per share in 2025 from a loss per share of $1.27 in 2023.

So, priced at 19.4 times forward earnings, NFI stock trades at a 50% discount to consensus price target estimates in December 2024.

XPeng stock

Valued at a market cap of $11.6 billion, XPeng designs, develops, manufactures, and markets EVs in China. In the September quarter, XPeng delivered 46,533 units, an increase of 16% year over year, while sales rose by 18.4% to $1.39 billion. Importantly, its gross margins improved to a quarterly record of 15.3%.

XPeng expects to generate a positive free cash flow in the second half of 2024, enabling it to end the year with $5.5 billion in cash, up from $4.91 billion in Q3.

XPeng is banking on the strong performance of its P7+ vehicle, which has already secured more than 30,000 orders.

The expansion of its manufacturing capabilities should help XPeng benefit from economies of scale and end 2026 with a free cash flow of almost $700 million, according to consensus estimates.

So, priced at 16.6 times forward free cash flow, XPeng is positioned to outpace its EV peers if it can achieve Bay Street’s projections. Currently, the EV stock trades at a discount of 18% to average analyst price target estimates.

Should you invest $1,000 in Allied Properties Real Estate Investment Trust right now?

Before you buy stock in Allied Properties Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Allied Properties Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends NFI Group. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

The Only 2 AI Stocks You’ll Need for Long-Term Growth

Here are two top Canadian tech stocks that could help you benefit from surging demand for AI technology and infrastructure.

Read more »

calculate and analyze stock
Tech Stocks

The Canadian Stock I’d Buy Every Time it Takes a Dip

The tariff wars have created a buy-the-dip opportunity for value investors. Here is a Canadian stock that is a buy…

Read more »