Rivian Automotive, Altos Power & Levant – 24/7 Wall Street
This Zacks Investment Ideas feature highlights Rivian Automotive RIVN, Altus Power AMPS, and Livent LTHM.
3 Renewable Energy & Electric Vehicle Stocks to Buy for Under $25
Today’s episode of Zacks’ Full Court Finance digs into the market following the release of the August CPI and ahead of the Fed’s big September meeting next week. The Nasdaq and S&P 500 rose on Thursday to return above their 50-day moving average, while market volatility eased back near its June lows.
Against this backdrop, investors may decide it’s time to seize the opportunity to buy some home stocks from the renewable energy and electric vehicle industries.
The three stocks we’re breaking down today are Rivian Automotive, Altus Power, and Livent, and we’re looking at why each stock trading at less than $25 per share has the potential for significant upside.
The first is a US-based electric car manufacturer that has rebounded recently Rivian Automotive Company, which is currently trading at around $24 per share. RIVN is ramping up production and cutting costs, while coming up with unique offerings compared to Tesla, Volkswagen and many other electric vehicle companies.
Rivian’s EV pickup truck, the R1T, is sleek but much less futuristic than the Cybertruck (which still isn’t on the road) and the R1S SUV is a true SUV compared to anything Tesla makes.
Rivian also makes commercial electric trucks, and its partnership with Amazon (a major investor) is set to see 100,000 electric delivery vehicles on the road by 2030. In the first half of 2023, Rivian’s R1T was the fourth best-selling Electric vehicles in the US, behind only the Tesla Model Y and Model 3 and Chevrolet Bolt.
Global electric vehicle sales rose more than 65% in 2022 even as total new vehicle sales fell 1%. More importantly, the industry is expected to expand from 4% of the market in 2020 to 50% of new car sales by 2035.
Rivian’s revenue is expected to rise 161% in 2023 and another 57% in 2024 to reach $6.82 billion next year, compared to $55 million in fiscal 2021. RIVN is also expected to trim its adjusted loss from -$6.34 per share last year to -$2.92 per share in FY24.
Rivian rose in early trading days (November 2021) to around $170 per share only to decline along with most of the market for over a year. RIVN’s value rises about 30% in 2023, including a significant jump since late June. RIVN stock is also back above some key technical levels and is trading at a roughly 50% discount to Tesla at 3.6X forward 12-month sales.
Next up is a company that helps investors learn about the growing use of solar energy and battery storage in commercial and industrial buildings, warehouses and beyond. Altus Power is an electric and solar stock that trades at around $6 per share. Altus Power creates, develops, owns and operates solar generation, energy storage and charging infrastructure throughout the United States.
Altus is set to grow as a larger portion of the commercial real estate market relies on solar energy and on-site storage. Altus is expected to see its adjusted earnings decline in FY23, after falling during the first two quarters. But Wall Street is looking to the future and estimates for the third and fourth quarters look strong.
AMPS is then scheduled to rise from $0.06 per share to $0.14 per share next year. Altus’ revenues are expected to grow by approximately 70% and 53%, respectively, during this period.
AMPS stock has jumped 40% since early May. Altus is currently trading between its 200-day and 50-day moving averages, and has completed a golden crossover, with the short dated moving average crossing above the long-term trend at the end of August.
At around $6 per share, Altus is trading about 50% below its 52-week highs and 78% below the Zacks average price target. Additionally, six of Zacks’ seven brokerage recommendations are “Strong Buys.”
Last up is a high quality Livent lithium compound product. Rechargeable lithium-ion batteries are becoming essential tools in the next wave of energy and transportation, from electric vehicles and beyond, as well as other electronics and more. Lithium prices have fallen from their highs in November 2022 to where they were in the fall of 2021.
Despite some potential boom-and-bust cycles, demand for lithium is expected to outpace supply for years to come. Zacks Estimates call for Livent’s revenue to rise 32% in FY23 to $1.1 billion to help boost its adjusted earnings by 54%.
Its adjusted earnings are then expected to jump 20% higher on 27% stronger sales in 2024. All of this comes on the back of massive growth for Livent in 2022 and 2021.
Livent stock is up 115% in the past three years, but has been down since the first part of 2021. Livent is trading 55% below the Zacks average price target and 42% below its highs. LTHM is also present at oversold RSI levels.
Livent stock trades at 8.1X trailing 12-month earnings to represent a strong discount to the Zacks Sector Value of 12.6X and 95% to its own peaks. In fact, Livent is trading around its lowest levels since going public. Investors should also note that Livent said its proposed merger with Allkem is moving toward a targeted closing at the end of the year.
The deal (an all-equity merger) announced in May will create the world’s third-largest producer of the metal used to make electric vehicle batteries and more. Livent shareholders will own about 44% of the new public company.
(Disclosure: Ben Rains owns RIVN, AMPS, and LTHM in the Zacks Alternative Energy Innovators service)
Levent Corporation (LTHM): Free Stock Analysis Report
Rivian Automotive, Inc. (RIVN): Free stock analysis report
Altus Power, Inc. (AMPS): Free stock analysis report
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