Two high-growth electric car stocks to consider (other than Tesla)

 

Two high-growth electric car stocks to consider (other than Tesla)

The electric car revolution is underway but still has enormous long-term growth potential.

One of the most significant growth trends today is the shift of the global vehicle fleet to electric power. In 2021, sales of new all-electric light-duty vehicles nearly doubled in the United States from the previous year, while light vehicles increased just 3%, according to government figures. The growth of international electric cars has also been strong.

The good news for investors is that this secular trend is still in its infancy. The percentage of the world's light-duty vehicles on the road that is all-electric or plug-in hybrids is still deficient. At the end of 2021, that number was less than 2%.

Tesla was instrumental in sparking the electric car revolution and still has a long growth path. Investors also have many other options for getting to know this space. Two stocks with strong long-term growth potential are shares of lithium producer Albemarle (ALB 2.66%) and electric vehicle maker Rivian Automotive (RIVN 0.96%).

Albemarle: A Profitable EV Game

Many publicly traded companies are involved in the electric vehicle supply chain, but not many are profitable, pay dividends, and have significant current exposure to electric vehicles. Albemarle fits this law.

The US-based company is one of the world's largest producers of lithium, a component of the lithium-ion batteries that power electric vehicles. While it's not a pure EV game, its lithium business is the largest of its three segments (such as 60% of total sales in the second quarter), and the bulk of the lithium it produces is used to make EV batteries.

Albemarle's results have returned dramatically after being hurt during the early stages of the pandemic. Excluding the Fine Chemistry Services segment it sold last year, sales were up 98% in the one year through the second quarter. The main driver behind this was the skyrocketing price of lithium, which is tight in supply and appears poised to stay that way for some time. In the second quarter, revenue and adjusted earnings per share jumped 91% and 288%, respectively, year-over-year.

Albemarle's stock has a dividend yield of 0.55% as of the market close on September 23rd. Even a modest dividend can make a big difference over time. Over the past decade, total earnings per share have been 488% (versus 207% for the S&P 500) — and dividends have contributed 82 percentage points.

Rivian: a relatively new promising electric car maker

An increasing number of pure electric vehicle makers have recently been introduced to the public. Rivian is a newcomer with a good chance of survival and prosperity. It is a US-based company that held its initial public offering in November 2021.

Rivian was the first company to launch a mass-produced electric pickup truck, which is supposed to give it a first-mover advantage. Its partnerships with two big names should also prove positive. It has an order from Amazon.com, which owns a significant stake in Rivian, to produce 100,000 custom-built electric delivery trucks. And earlier this month, the company and premium car maker Mercedes-Benz announced plans to create a joint venture to build a European plant to manufacture electric trucks for both companies.