Over the past year and a half, the Biden Administration has shown a consistent policy bent toward the promotion of electric vehicles (EVs). This has given EV manufacturers openings for new contracts with Federal, state, and local level government agencies. More importantly, the Administration has publicly backed Federal funding for a massive build-out of EV charging infrastructure. This provides a real opening for investors.
The modern EV industry is young, and provides investors with an array of public companies to choose from. These range from Musk’s Tesla to smaller firms focused on new designs that have not yet left the drawing board to specialized companies building everything from vehicle chargers to battery management tech to drive vehicle components.
Against this backdrop, we used TipRanks’ database to find two compelling EV stocks, according to Wall Street analysts. Both tickers are priced affordably, under $10 each, and boast a Moderate or Strong Buy consensus rating. And best of all, these stocks could climb over 60% higher in the year ahead.
ADS-TEC Energy (ADSE)
We’ll start with ADS-TEC Energy, a B2B company with global reach. The firm is heavily involved in renewable energy, especially the use of electrical infrastructure to link various sectors of the energy industry. At its heart, ADS-TEC works on the development, manufacture, and servicing of intelligent battery buffer systems to ease the transition out of today’s energy ecosystem. The company’s technology and products are invaluable in battery management, and from there the link to electric vehicles is clear.
One of ADS-TEC’s key technologies is ‘ultra-fast-charging,’ a mode of high-power, high-end battery charging capable of delivering up to 320 kilowatts within minutes instead of hours. The battery-integrated high-power system in an integral part of ADS-TEC’s ChargeBox, ChargePost, and ChargeTrailer products, a family of EV charging units designed to make EV usage as easy and convenient as gasoline-powered cars are today. The charging line can be retrofitted to existing EV models.
ADS-TEC entered the US public markets in December, after completing a SPAC merger with European Sustainable Growth Acquisition Corporation. The company realized some $152 million in new capital from the transaction, and the ADSE ticker started trading just before the Christmas holiday. Since closing its first day’s trading, ADSE has fallen 38%, and is now trading around $6.
Berenberg analyst Michael Filatov doesn’t flinch from ADS-TEC’s recent share price losses. In fact, he rates the stock a Buy, along with a $10 price target. The figure implies shares will be valued ~66% higher in a year’s time. (To watch Filatov’s track record, click here)
Getting into some greater detail, Filatov writes: “We believe ADSE is currently undervalued due to: a) the illiquidity of the stock, and b) investors may be failing to distinguish between ADSE’s position as a hardware supplier and utility-like charging operators. ADSE is a white labeled charger supplier that creates a network-agnostic opportunity for investors to gain exposure to the EV charging industry. We prefer a differentiated “pick and shovel” play versus attempting to pick the leader amongst the growing number of charging network operators.”
“We believe ADS-TEC can meet or exceed our sales growth expectations based on its existing customer base. This includes blue chip customer, Porsche Engineering, Ionity (a subsidiary of Volkswagen), Smart City Capital, and an undisclosed customer with a large pending order,” the analyst added.
Other analysts don’t beg to differ. With 4 Buy ratings and no Holds or Sells, the word on the Street is that ADSE is a Strong Buy. The shares have an average price target of $14.25, suggesting a 12-month upside of ~137% from current levels. (See ADSE stock forecast on TipRanks)
Lightning eMotors (ZEV)
Lightning eMotors approaches the EV market from two separate directions, each of which offers its own set of differentiated attributes. On the vehicle side, Lightning eMotors builds electric drive systems that can be retrofitted to existing vehicles for gas-to-electric conversions or can be factory-built into existing chassis designs to shorten the lead-time for EV production. The company also builds and installs charging solutions for EVs, under the Lightning Energy brand, and aimed in large part at the vehicle fleet market.
Vehicle fleets are the main focus of Lightning eMotors’ approach. The company’s electric powertrains, chassis, and vehicles are designed to fill the urban commercial vehicle and bus niches. Lightning eMotors has several models based on existing Ford E-450 and E-550 designs, these include shuttle buses, school buses, step vans, and box trucks. In addition, Lightning eMotors is one of the few EV companies to offer Class 6 cargo trucks and all-electric motorcoaches, and the only firm to offer all-electric conversions of urban transit buses.
Finally, Lightning eMotors offers a service that few competitors can match. Leveraging modern network connectivity, the company has made an analytic service available to customers, permitting real time deep data analysis of fleet vehicles. This deep use of data permits a high level of optimization in fleet operations, from route selection to vehicle charging schedules.
Analyst Abhishek Sinha, from Northland Securities, sums up what all of this mean for Lightning eMotors: “In our view, there is no ambiguity that the world is about to witness a very strong wave of transition to electric vehicles and what we are seeing right now is barely the beginning. Within the electric vehicle space, the commercial zero-emission vehicle (ZEV) segment is at an inflection point with strong trends of supportive regulation, corporate mandates and government incentives to accelerate the transition to ZEVs globally. Lightening Motors estimates total addressable market (TAM) for this to be around $191B.”
“We believe Lightening offers a compelling entry point for investors looking for exposure to a small cap electric vehicle manufacturer and/or electrification solutions provider,” the analyst summed up.
With a market that size, and several paths open and leading into it, it’s no wonder that Sinha rates ZEV shares an Outperform (i.e. Buy). His $6.50 price target suggests a solid 66% upside potential for the stock. (To watch Sinha’s track record, click here)
Overall, 5 of Wall Street’s analysts have weighed in on ZEV shares, giving the stock 4 Buys and 1 Sell, for a Moderate Buy consensus rating. The stock has an average price target of $9.5, suggesting ~142% upside from the current $3.92 trading price. (See ZEV stock forecast on TipRanks)
To find good ideas for EV stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
