Electric vehicle (EV) stocks sure paid the price during the 2022 bear market. However, this group has been performing much better during the 2023 bull market. Investors are now looking for the best EV stocks to buy before the breakout.
Tesla (NASDAQ:TSLA) has been the undisputed leader of the move — which is not surprising — but just a few quarters ago, there were massive doubts this would be the case. That’s as CEO Elon Musk was buying Twitter, while Tesla stock was in free-fall. Tesla ultimately lost three-quarters of its value from its all-time high down to the low in January.
However, others have been picking up the slack lately. Domestic legacy automakers have been doing much better, while Chinese EV stocks caught a wave of buying earlier this week.
Could this mark a turning point for EV stocks or are they about to run out of momentum? Let’s look at a few of the best EV stocks to buy now.
EV Stocks for High Returns: Nio (NIO)
As recently as June, Nio (NYSE:NIO) shares were trading near new lows. That really puts in perspective how well the stock has been doing lately. At the July 25 high, the stock was up more than 80% from the June low, while it works on its seventh weekly gain in the last eight weeks.
Nio has been part of a two-pronged issue. First, EV stocks in general had been struggling, but more specifically Chinese EV stocks were under pressure. That brings up the second issue, which is the Chinese economy.
While China churned out 6.3% GDP growth last quarter, it was below economists’ expectations. The unemployment rate for its young workers hit a new record high in June, at 21.3%. Clearly, there are economic issues in the country. As a result, the government is looking at ways to stimulate the economy.
So on the one hand, the country isn’t growing as fast as some had hoped. On the other hand, it is taking stimulative measures, which should be a net positive for companies like Nio.
As for the charts, let’s see that Nio stock holds the $10 level. That will keep it above most of its key moving averages, as well as the second-quarter high. If it can reset without breakout down, perhaps it can break out over the recent high at $12.83 and push back up toward $14.
The Leader of EV: Tesla (TSLA)
Tesla stock is the leader of the EV space. Without this name trading well, it will be hard for all EV stocks to trade well, in my opinion. It’s the barometer of the whole industry.
For instance, Tesla stock fell in five straight months from August through December, shedding more than two-thirds of its value until it bottomed early in January. From the all-time high, shares fell about 75%.
The company recently reported earnings, falling almost 10% in a single session as a result. The stock ultimately put in a 15% peak-to-trough decline after earnings, but continues to struggle with downtrend resistance (which is annotated on the chart with a blue line).
At the same time, it continues to ride its 10-week moving average higher, while rallying in eight of the last 10 weeks. Bulls are looking for an eventual breakout over downtrend resistance, putting the $310 to $315 area to test, then the $350 area.
Best EV Stocks to Buy Now: Rivian (RIVN)
Rivian (NASDAQ:RIVN) still somewhat quietly commands a large market capitalization, weighing at $24 billion. For a firm that did $1.66 billion in revenue last year, that’s a rich valuation, although the company is catching up.
Analysts expect Rivian to top $4 billion in sales this year, then generate $7.7 billion in 2024. Of course, the economy will play a big role in those numbers, but for now, that’s where they stand. Plus, the stock has come down considerably (as has its valuation).
Rivian stock is working on its fifth straight weekly rally and is up more than 120% from the April low. At the same time, shares remain down 85.5% from the all-time high. That shows how far it has fallen, as well as how much opportunity could be in store if momentum remains strong.
Shares keep banging up against the $27 resistance level. A breakout over this mark could eventually put $30-plus in play. Keep in mind, the 52-week high is still north of $40.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.