The 10 best electric vehicle stocks of 2022 – Forbes Advisor
Besides some bold names — Tesla, for example — the electric vehicle public equity universe is filled with rambling growth stocks that are only years or even months after the IPO. Some of them are years away from profitability.
For these reasons, our list of the best electric vehicle stocks is built primarily by looking at sales growth and financial health. In addition, the shares must be listed on a North American stock exchange and meet the following requirements:
- TTM income. To avoid highly speculative companies with little revenue, all companies on the list had at least $25 million in sales in the previous 12 months (TTM).
- Revenue growth next year. Every company should increase its revenue by at least 10% next year. All stocks on the list predict sales growth of 40% or more.
- Annual revenue growth. All companies have increased their sales in the current year by at least 10% year over year. There are two exceptions to this rule: RIVN and WBX, both of which have very short history of revenue data.
- Financial health thresholds. All companies have an Altman Z score above 1.8, with the lowest on the list being 2.2. For comparison, these scores correspond to a Morningstar Financial Health Rating of B or C. The Altman Z-Score model is a measure used to predict a company’s chances of failing over the next two years.
The methodology aims to identify electric vehicle companies whose revenues are growing aggressively year-over-year, which ultimately has the potential to translate into profits. Good financial health and rising sales indicate companies that are likely to survive until they are profitable, compared to companies with stagnant sales or in poor health.
Investors buy these companies because of their growth potential. The lifeblood of these companies continues to increase the number of sales. Beware if these companies show declining sales for more than two quarters, as this will likely have a negative effect on the stock price.
Please note that an experienced financial analyst has selected the stocks above, but they may not be suitable for your portfolio. Before buying any of these stocks, do plenty of research to make sure they match your financial goals and risk tolerance.