This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Electric vehicle (EV) sales are rising. In 2021, 6.6 million EVs were sold worldwide, nearly double the sales in 2020. EV Volumes, a data base, estimates 2022 global EV sales at 10.6 million, up nearly 60% from 2021. More than 16.5 million electric cars and trucks were on the road in 2021.

Despite such encouraging growth in sales, EV makers' stocks have continued to falter in 2022. Let's see why that was so, and if the stocks look attractive for 2023 after the steep declines.

Top EV stocks fell steeply in 2022

U.S. stock markets have corrected significantly so far this year. The S&P 500 is down 17%, while the Nasdaq Composite has fallen more than 28% as of this writing. Since growth stocks typically trade at high multiples, they tend to fall harder during market corrections. This has certainly been true in 2022.   

TSLA data by YCharts..

While Tesla (NASDAQ: TSLA) stock has fallen 49%, Lucid (NASDAQ: LCID), Rivian (NASDAQ: RIVN), and Nio (NYSE: NIO) have fallen more than 60% year to date. And all four stocks have fallen far more from their all-time high prices; while Tesla stock has dropped more than 55% from its peak, the others are down more than 80% from theirs.

Is the correction justified, or is there a buying opportunity?

In early 2021, the valuations of EV stocks went through the roof thanks to the hype surrounding electric vehicles. As the broader markets corrected, EV stocks fell, too. And supply chain challenges have hurt the production of EV companies while raising their costs. But has the recent decline finally made these stocks attractive?

For sure, the EV story is just getting started. All these companies have a long growth runway as the transition from internal-combustion vehicles to EVs unfolds. While it is broadly accepted that this transition is inevitable, what isn't as clear is which players will thrive in the long run.

Tesla continues to post solid performance

Tesla's stock seems to have fallen to an attractive level. While it is difficult to determine whether it'll fall further in the short term, the stock is intriguing for several reasons. To begin with, its valuation is far more sensible than it has been in the past.

TSLA PS Ratio data by YCharts.

Tesla's price-to-sales ratio has fallen to 8.3 from around 30 in January 2021. Although it still looks high compared to traditional automakers, that's because Tesla is still growing fast. The company's revenue increased 56% year over year in the third quarter. And that isn't a one-off quarter; its growth over the years is impressive.

TSLA Revenue (TTM) data by YCharts. TTM = traling 12 months..

The above chart compares Tesla's revenue growth over the last three years with that of traditional automakers.

At the same time, its margins remain impressive.

TSLA profit margin (quarterly); data by YCharts.

Overall, Tesla appears to be on a solid footing to keep posting sustained growth in the coming years.

Nio's growth looks impressive

Chinese EV maker Nio expects substantial growth in vehicle deliveries in the fourth quarter and in 2023. Although the company is still incurring losses, it is increasing revenue rapidly, as the chart above shows. Its upcoming models and expansion plans in Europe can be key drivers in the coming years.

Lucid and Rivian look promising

Lucid and Rivian are still at very early stages of their growth compared to Tesla, but both look promising. Lucid managed to establish itself as a serious player by delivering the longest range for its first model, the Lucid Air. The company, which started deliveries at the end of October 2021, has delivered roughly 2,500 cars in a year. It targets producing 6,000 to 7,000 cars in 2022.

After launching the Sapphire, Pure, and Grand Touring variations of the Lucid Air, the company now plans to open registrations for its first SUV, the Gravity, in early 2023. Its focus on the less-tapped Saudi market could help it drive significant growth.

After starting deliveries in September 2021, Rivian has already produced more than 15,000 vehicles. And it has a backlog of more than 114,000 units of its R1, including both SUVs and pickup trucks. It has an attractive order backlog, too: 100,000 delivery vans from Amazon. What's more, it has enough cash to fund its operations through 2025.

Both Lucid and Rivian are at early stages of their growth and are incurring losses. As young EV makers, they are more affected by the supply chain issues that the industry is facing than are the established players. Both companies look promising, but investors should note that these stocks are riskier compared to those of legacy automakers or Tesla.

But they have corrected drastically and, if successful, could generate windfall returns for long-term investors. In short, all four stocks look like attractive buys for 2023.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Down more than 50% from their highs, are Tesla and these other EV stocks buys for 2023? appeared first on The Motley Fool Australia.

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Rekha Khandelwal has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Nio Inc., and Tesla. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

One way to identify potentially winning stocks is to look for companies that are growing their revenue and earnings fast. If you invest at the right time, this strategy could generate handsome returns in the long run. Here are five such growth stocks.

Tesla

Tesla (NASDAQ: TSLA) revolutionized the auto sector with its electric cars. The company made electric vehicles mainstream and forced major automakers to shift toward electrification.

Quality electric cars that can go long distances on a single recharge, along with a sufficient network of charging stations, have helped to relieve buyers' concerns of getting stuck with no place to charge a dead battery.

These factors, coupled with a reasonable pricing structure, drove the demand for Tesla's cars higher. In five years, Tesla grew its revenue at an average rate of more than 50%.

TSLA Revenue (Annual YoY Growth) data by YCharts

Moreover, analysts expect Tesla to grow its per-share earnings at an average rate of nearly 50% over the next three to five years. Tesla also guides for 50% average annual growth in vehicle deliveries in the coming years. The company expects to start vehicle deliveries from its new factories in Berlin and Texas soon.

In addition to its existing models, Tesla's planned vehicles -- the Cybertruck and Semi -- are already receiving strong interest from potential buyers. The timetable for the launch of these two vehicles is less certain, though, as their respective launch dates have been pushed back several times.

Enphase Energy

Solar technology company Enphase Energy (NASDAQ: ENPH) continues to enjoy robust demand for its products. The company grew its annual sales at an average rate of 40% over the last five years. In 2021, Enphase's revenue grew by 78%.

The company's microinverters clearly look to be the preferred choice among homeowners. That's because, in addition to converting direct current to alternating current at the module level, Enphase's easy-to-use platform integrates solar generation, storage, and energy management on a single system.

Analysts expect Enphase Energy's per-share earnings to grow at an average rate of 40% in the next three to five years. Innovative offerings, good control on costs, and a long growth runway are some factors that will drive Enphase's long-term growth.

Amazon

In five years, Amazon.com Inc (NASDAQ: AMZN) grew its revenue at an average rate of 28%. That's also the average rate at which analysts expect per-share earnings of the e-commerce giant to grow in the coming three to five years. Though Amazon is famous for its online retail business, it is the company's cloud computing business that's boosting its bottom-line growth lately.

In 2021, Amazon's cloud computing business, Amazon Web Services (AWS), contributed 74% of the company's operating income. Interestingly, this business accounted for just 13% of the company's sales. What's more, AWS revenue grew 37% in 2021.

Solid e-commerce operations combined with growing high-margin cloud computing business bodes well for Amazon's long-term growth. In short, Amazon is a no-brainer growth stock to add to your portfolio. The stock split and $10 billion buyback program are just icing on the cake.

Nvidia

Nvidia Corporation (NASDAQ: NVDA) grew its annual revenue at an average rate of 34% in five years. In 2021, the company's revenue grew a whopping 61% to nearly $27 billion. Analysts expect Nvidia's per-share earnings growth rate to be around 24% over the next three to five years.

Nvidia's high-performance graphics cards are in huge demand in the gaming markets. Further, the company's graphic processing units (GPUs), coupled with its software and services, find applications in artificial intelligence, robotics, augmented and virtual reality, autonomous vehicles, and the metaverse. Given that each of these areas continues to see heightened growth, demand for Nvidia's products should remain strong.

Nvidia partners with major computer makers, including Cisco, Dell, HP, and Lenovo, and cloud service providers, such as Alicloud, AWS, Baidu Cloud, Google Cloud, IBM Cloud, and Microsoft Azure. Nvidia's leadership position in the GPU market means that the company may remain on its hypergrowth trajectory for many more years.

Netflix

In five years, Netflix Inc (NASDAQ: NFLX) grew its annual revenue at an average rate of 28%. Netflix's high revenue growth showed signs of slowing down in the last couple of years. In 2021, Netflix's revenue grew by 19%, which was lower than its five-year average rate.

Netflix's slowing growth concerned investors and the stock has fallen around 48% off its 52-week high price, offering an attractive entry point for long-term investors. That's because Netflix's continued growth, albeit at a slightly lower rate, indicates the exceptional demand for its services. The company has a strong content catalog, and it is also exploring other growth avenues such as gaming, which could potentially be a significant growth driver.

Analysts expect the company to grow its per-share earnings at an average rate of 30% over the next three to five years. In short, Netflix is one beaten-down stock that you should consider buying right now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 5 of the fastest-growing stocks on the planet appeared first on The Motley Fool Australia.

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Rekha Khandelwal has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon, Baidu, Cisco Systems, Dell Technologies Inc., Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool Australia has recommended Amazon, Netflix, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Making electric vehicles mainstream, selling them for a profit, and becoming the richest man in the world in the process -- Tesla (NASDAQ: TSLA) CEO Elon Musk has done it all. And by generating profits for two straight years, Tesla has proved its naysayers wrong. The company's stock has risen some 1,400% over the past three years.

The big question now is whether the stock is still a buy. Again, the investors are sharply divided. Let's take a closer look at the stock to see whether it's Tesla bulls or bears who are likely right about the stock.

The growth of electric vehicles

Had there been any doubts earlier, the growth in electric vehicles (EVs) in the past couple of years made it clear that the future of transportation is electric. Electric car sales, including plug-ins, more than doubled in 2021 to 6.6 million units. That was nearly 9% of the global car sales for the year. At 3.4 million units, the EV sales in China alone accounted for more than half of the global sales. Around 2.3 million EVs were sold in the Europe and over half a million in the U.S. 

Tesla sold the most EVs globally in 2021, with 936,000. The company operates in all three major markets for EVs, with 352,000 cars sold in the U.S., 321,000 in China, and 170,000 in Europe last year. Presence in all the major markets not only diversifies Tesla's revenue, but also allows it to grow faster. Volkswagen followed Tesla, selling 763,000 electric vehicles in 2021.

The demand for EVs right now exceeds the supply. This could well be the case over the next few years until the companies ramp up their EV production. That bodes well for Tesla, which is not only selling the most EVs right now but can continue doing so, considering its focus on expansion. Tesla's factories in Texas and Berlin are at the equipment test stage, and the company expects to start vehicle deliveries from both factories soon.

Furthermore, the company is doing exceptionally well on the margins front. Tesla reported an operating margin of 14.7% for the fourth quarter.

TSLA Operating Margin (Quarterly) data by YCharts

The EV maker generated industry-leading margins in the third quarter as well.

Tesla stock trades at a premium

Tesla's leadership position in EVs gets reflected in the premium valuation of its stock. Tesla stock trades at a significantly higher price-to-earnings (P/E) ratio compared to legacy automakers.

TSLA PE Ratio data by YCharts

What's more, Tesla stock is trading at a significant premium compared to even the top technology stocks.

TSLA PE Ratio (Forward 1y) data by YCharts

Tesla's P/E to growth (PEG) ratio, which divides its P/E ratio by its expected earnings growth, is less than 1. All other things remaining equal, a lower PEG ratio is better for a stock, and a ratio below 1 indicates that a stock likely isn't overvalued. Tesla's lower PEG ratio reflects its high earnings growth.

Tesla faces stiff competition

Tesla had a huge edge over its competition so far. When it started selling EVs, no other manufacturer was doing so seriously. But that isn't the case anymore. With so many new EV companies as well as traditional car companies pouring billions of dollars into electrification, Tesla faces some stiff competition. Volkswagen intends to make half of its sales electric by 2030. Ford aims to make 40% to 50% of its sales electric by 2030. Then there are new EV companies, such as Lucid and Rivian, trying to capture a share of the EV pie.

In China, apart from global automakers, Tesla also faces competition from domestic EV companies such as BYD, Nio, and XPeng.

Is the EV pioneer's stock a buy?

Tesla stock's premium valuation is in large part due to its higher revenue growth and higher margins compared to other automakers. However, with rising competition, the higher growth and margins may not last very long.

Yet, Tesla can enjoy the high growth and margins at least for the next couple of years, till its competitors catch up. That would be enough to further solidify Tesla's position in the EV market. This growth potential already gets reflected in the stock's valuation.

However, beyond that, Tesla needs to show that it can sustain the high growth at such high margins. Otherwise, the company will have to look at profitability-enhancing sources -- maybe full self-driving, robo-taxis, or car insurance based on drivers' risk profiles generated using informatics -- to justify its valuation.

So, Tesla could be an EV company, with its current offerings, which does not indicate much upside potential for its stock. Or it can continue disrupting the EV space to create still higher value for its shareholders. The latter case is unproven yet, and it is important to note that buying Tesla stock believing that the company will be successful in autonomous driving, or other such endeavor, entails risk. Of course, Tesla can succeed there too, but if you are risk averse, you may not want to jump in right now. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is Tesla stock a buy? appeared first on The Motley Fool Australia.

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Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends BYD, NIO Inc., Tesla, and Volkswagen AG. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla's growth plans

Are Tesla's growth projections realistic?

Electric vehicles and autonomous driving

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post How big could Tesla get by 2030? appeared first on The Motley Fool Australia.

More reading

• Aurizon Holdings vs Atlas Arteria: Which ASX 200 high-yield share wins for reliable passive income?
• Why these are my favourite ASX growth shares to buy and hold
• Is your superannuation fund any good? How to compare performance and fees
• If I could only buy 5 ASX shares for retirement, these would make my shortlist
• Here's the average superannuation balance at 60 and 70 in Australia

Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.