When we discuss electrical automobiles (EVs) and their place within the auto market, it’s all too straightforward to concentrate on their drawbacks, on the the explanation why the interior combustion engine isn’t going away. It would do us good to keep in mind that the identical factor was mentioned of the horse and carriage greater than a century in the past – and right here we’re.
EV expertise isn’t new. The distinction now’s one in all diploma; the expertise has improved in order that EVs can match the efficiency of gasoline-powered automobiles, and there may be an elevated political will to push electrical automobiles over the options. These primary details are supporting the sector as we head into 2022.
Wedbush’s expertise professional Daniel Ives has taken a deep dive into the EV market, with a specific emphasis on its prospects. Ives writes, “In our opinion, with auto stalwarts such as GM, Ford, and VW now laser focused on the EV revolution, we will see an unprecedented conversion to EVs as more consumers are attracted to the innovative designs, improved battery technology, lower price points, and environmental backdrop of buying an EV. To this point, while EVs represent only 3% of autos globally today we believe by the end of 2022 that over 5% of vehicles will be EVs and 10% by 2025.”
A segment expansion of that magnitude cannot be filled solely by the giant legacy companies. They are being followed by scores of innovative companies that are bringing new designs and new ideas to the EV universe. We’ve used the TipRanks database to pull up the details on two such stocks. Both earn Moderate or Strong Buy consensus ratings from the analyst community, and boast double-digit upside potential. Let’s take a closer look.
Canoo (GOEV)
We’ll start with Canoo, a California-based EV designer and manufacturer. Canoo is working on an EV design with a distinctly non-traditional approach, creating a multi-purpose EV platform with capacity to be built up into a wide range of finished vehicles. Designs include a pickup truck and a delivery van, along with the flagship ‘lifestyle’ vehicle.
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Canoo’s vehicle chassis, the base for all of its models, features independent electric motors on each wheel and an electrically powered ‘drive-by-wire’ steering system. The dashboard is streamlined to allow an improved forward field of vision, and the steering column can shift between the vehicle’s left and right sides. The vehicle – all models – will include wireless connectivity and compatibility with smartphone apps, permitting the driver to monitor vehicle systems from most standard smartphones and tablets.
The Canoo vehicle has prototypes on the road, but is not yet in regular production. The company is aiming to begin such production in the US before 4Q22. Canoo has chosen Fayetteville, Arkansas as the location of its US headquarters, and is developing both manufacturing and R&D facilities in Arkansas and Oklahoma. At the end of 3Q21, the company reported having $414.9 million in liquid assets, and had used $280.7 million in operating and investment activities in the first 9 months of 2021. The company does not yet have a revenue stream.
Analyst Craig Irwin, looking at this stock for Roth Capital, sees the current testing vehicles as the key to Canoo’s success next year, writing: “We expect evidence of the success with gamma vehicle testing to yield material trading catalysts, and these units should start rolling in early 2022. The gamma units delivered to ADAS partners will be of particular interest, as these can show the early benefits of the Canoo technology architecture that has been designed for forward compatibility.”
Irwin offers the inventory a Buy score, and his $14 value goal implies a 12-month upside potential of 73%. Irwin’s forecast displays “quickly enhancing visibility, the place the early buyer response to the Canoo Lifestyle Vehicle suggests administration might nonetheless be conservative in its 2022 outlook.” (To watch Irwin’s monitor report, click on right here)
Overall, whereas Canoo has solely 3 latest analyst opinions, all of them agree that this speculative inventory is one to purchase – making for a unanimous Strong Buy consensus score. GOEV shares are buying and selling for $8.10 and their $16.67 common value goal signifies potential for ~106% development by the top of subsequent 12 months. (See Canoo’s inventory evaluation on TipRanks)
Sono Group (SEV)
The second inventory we’ll have a look at, like Canoo above, is a extremely speculative EV designer and maker nonetheless within the pre-production phases. Sono, based mostly in Germany, is engaged on a solar-powered EV for the mass markets. The automobile, referred to as the Sion, goals to resolve drivers’ anxiousness over vary. Most EVs have to recharge after some 250 miles, considerably lower than the standard 400 mile vary of a gasoline powered automotive. By working on a mixture of photo voltaic and battery energy, Sono is growing the Sion to resolve this challenge.
The firm has put collectively a photo voltaic panel system for automobile use. The expertise is predicated on 248 separate cells built-in collectively into a versatile photovoltaic panel. It’s estimated that the panel can add 70 miles to a automotive’s battery every week. It’s essential to notice, nevertheless, that it will nonetheless end in a automotive with a lot much less vary than a gasoline engine. The Sion may have lower than 300 miles vary, between the battery and photo voltaic panels collectively.
The photo voltaic panel is a proprietary expertise, and Sono is seeking to capitalize on it past its preliminary use as a supplemental energy supply for EVs. There are plans for Sono to license the panel system to different EV makers, a transfer that may open up extra income streams.
While not in manufacturing but, Sono’s design has picked up a following. The firm reviews having greater than 16,000 advance orders for the automobile, which is barely scheduled to succeed in common manufacturing in 2023. To elevate capital because it strikes ahead and prepares for normal manufacturing, Sono held its IPO earlier this 12 months. The SEV ticker began buying and selling on the NASDAQ on November 17, with 10 million shares made accessible. Initial pricing was $15 per share, and the inventory closed its first day above $38. The firm raised over $172 million within the IPO.
Since then, nevertheless, Sono’s inventory has fallen 71%. Yet, at the very least one analyst sees the present low share value as an opportunity to purchase in.
Berenberg analyst Mike Filatov offers SEV shares a Buy score, and units a $21 value goal that signifies room for a formidable 109% upside potential. (To watch Filatov’s monitor report, click on right here)
“We believe the most exciting aspect is Sono Solar, which will sell and license a solar solution to other OEMs and fleet owners across industries to potentially reduce total cost of ownership and boost ESG credentials. At 0.7x 2024E sales (vs. ~2.0x peer average) we find Sono’s upside potential compelling,” Filatov opined.
Regarding Sono’s automotive, Filatov is sanguine in regards to the prospects. He says of the Sion, “We believe its low cost, highly competitive range, and ESG-friendly mission will help to drive sales of ~43k vehicles per year…” Sales on this scale ought to result in 1.2 billion Euros in income.
Sono has slipped underneath most analysts’ radar; the inventory’s Moderate Buy consensus is predicated on simply two latest rankings. With shares buying and selling at $10.05, the $22 common value goal suggests room for ~119% upside. (See SEV inventory evaluation on TipRanks)
To discover good concepts for EV shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a newly launched software that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is essential to do your individual evaluation earlier than making any funding.