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Shares in online classifieds giant Carsales.com Ltd (ASX: CAR) are rangebound today and are now trading 0.4% lower at $25.21.

It’s been a volatile 3 months for Carsales shareholders, with prices closing as high as $26.44 and trading as low as $24.15 in that time.

Over a longer time frame, Carsales has been trading sideways since late August after scoring relatively healthy gains mid-year.

Fear surrounding the new Omicron COVID-19 variant hasn’t been kind to shares of specialist platforms such as Carsales. With uncertainties clouding visibility moving forward, it’s worth checking what the experts are saying.

So, is it a buy? Let’s take a look and find out.

What’s UBS saying about the Carsales share price?

UBS is bullish on the company and rates it as a buy amid the current market mechanics. The broker reckons that Carsales can grow its domestic dealer revenue by an average of 8.5% into FY26.

It says Carsales offers vendors and dealers a unique value proposition that ensures modest price increases can be maintained.

In view of the speculation surrounding inflation and price increases over the coming years, this kind of pricing power is important, UBS says.

Meanwhile, the broker also likes Carsales’ recent retailing and financing initiatives, which it feels could add another 3-5% to revenue growth over the next five years.

Not only that, but UBS is also optimistic about the classifieds company’s growth trajectory into South Korea. It bakes in similar projections for its revenue performance there.

With these points in mind, the broker upgraded its price target on the stock in a recent note to clients, lifting its valuation by 6% to $27 per share.

What’s the sentiment on the Carsales share price?

However, UBS might be one of a few contrarians covering Carsales. From a list of analysts provided by Bloomberg Intelligence, just 25% advocate buying shares in the company right now, whereas 25% have it as a sell.

The remaining 50% have it as a hold or retain a neutral stance on the direction of the Carsales share price. Jefferies is most bullish on the outlook for investors, valuing the company at $30.08 per share.

Evans and Partners, alongside Barrenjoey Markets, also has Carsales as a buy with $30.40 and $30 price targets respectively.

However, the price targets vary more than $9 per share, indicating a 43% spread in opinion on the valuation of Carsales share price.

Even still, the consensus price target on the company is $26.37, indicating an upside potential of more than 4% at the time of writing.

Carsales share price summary

Year to date, the Carsales share price has climbed around 28%. Although it fell sharply earlier in December, it now trades up 1.41% for the month.

Over the longer term, the company’s shares have outpaced the S&P/ASX 200 Index (ASX: XJO) benchmark which has gained just under 14% year to date.

The post What’s UBS saying on the Carsales (ASX:CAR) share price? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Why Carsales, Magellan, Nickel Mines, and Sigma shares are dropping

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has been another spectacular day for the AVZ Minerals Ltd (ASX: AVZ) share price on Wednesday.

In morning trade, the lithium developer’s shares jumped 11% to a new record high of 78.5 cents.

When the AVZ share price reached that level, it meant it was up 360% since the start of the year.

Why is the AVZ share price shooting higher?

Investors have been bidding the AVZ share price higher today despite there being no news out of it.

However, it is worth highlighting that a number of lithium shares are rising strongly today amid the ever-increasing bullish sentiment in the sector.

For example, Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS) shares are both recording strong gains at the time of writing. In fact, the latter is the best performer on the ASX 200 on Wednesday.

What else is boosting its shares?

Also boosting the AVZ share price has been a recent development in relation to its Manono Lithium Project in the Democratic Republic of the Congo.

Over the last few years there have been doubts that this project would ever see the light of day. But thanks to record high lithium prices, it now appears likely to be given the green light in the near future.

Especially after AVZ received firm commitments to raise $75 million (before costs) at 50 cents per new share earlier this month. Approximately 85% of the funds were raised from global institutions, with the balance coming from existing sophisticated shareholders. This includes cornerstone investor Suzhou CATH Energy Technologies.

AVZ’s Managing Director, Nigel Ferguson, believes this was an important milestone for the company.

He commented: “This capital raising marks an important milestone in our journey to develop the Manono Project which strengthens the financial position of the Company and will assist to keep the Project timeline within reach.”

The post Why did the AVZ (ASX:AVZ) share price jump 11% to a record high today? appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX growth shares offering big potential returns in 2022
• Macquarie names the best ASX lithium shares to buy in 2022
• 3 excellent ASX growth shares analysts are excited about
• Is the IGO (ASX:IGO) share price a better buy than Allkem?
• Why AVZ, Brickworks, Charter Hall, and Senex shares are storming higher

Motley Fool contributor James Mickleboro owns Orocobre Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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The Michael Hill International Ltd (ASX: MHJ) share price is storming to a fresh 52-week high today. The company provided investors with a trading update following an early indication of performance for the half-year of FY22.

At the time of writing, the specialist retail jewellery chain’s shares are up 13.22% to $1.285 apiece. In contrast, the All Ordinaries (ASX: XAO) is travelling 1.03% higher to 7,824.2 points.

How is Michael Hill performing for H1 FY22?

Investors are driving up the Michael Hill share price after the company revealed a positive business update despite COVID-19 challenges.

According to its announcement, Michael Hill advised it has delivered sales growth and sustained margin exposure throughout November and December. This comes after management navigated the business through extended periods of store closures across Australia and New Zealand from July to November.

Regardless of the rise in COVID-19 cases around the globe, all stores were open during the critical Christmas trading period.

The company has a total of 285 stores across all markets in Australia, New Zealand, and Canada.

Michael Hill anticipates the strong performance to exceed its first-half expectations, particularly against earnings before interest and tax (EBIT). Previously, the company achieved EBIT for H1 FY21 of $44.6 million.

While its second-quarter trading update will be released on 14 January, all eyes will be on its key operating metrics.

Furthermore, the company’s first half of the FY22 financial results will be delivered on 23 February 2022.

Michael Hill share price snapshot

In the past 12 months, Michael Hill shares have boasted a gain of more than 92% from continued positive investor sentiment. The company’s share price charged higher since October following a sound first-quarter trading update for FY22.

Based on today’s price, Michael Hill commands a market capitalisation of around $500 million, with roughly 388.29 million shares outstanding.

The post Michael Hill (ASX:MHJ) share price rockets 13% to a 52-week high. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why did the AVZ (ASX:AVZ) share price jump 11% to a record high today?
• Is it a buy? Jefferies tips 25% upside for the Incitec Pivot (ASX:IPL) share price
• ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again
• The Select Harvests (ASX:SHV) share price is slipping today
• Is Amazon stock too expensive?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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Shares in chemicals and fertilisers giant Incitec Pivot Ltd (ASX: IPL) are edging higher on thinly traded volume today and are less than 2% in the green at $3.24.

Incitec Pivot has gathered steady support since mid-June and shares have broken through key resistance levels more than three times in that period to date, including advancing to new 52-week highs.

Plus with critical supply shortages of the chemical neutraliser AdBlu keeping Incitec Pivot in the spotlight, investors have thrust the company’s share price from a closing low of $2.97 since the beginning of December. So with that in mind, is it a buy? Here’s what the experts have to say.

What’s going on with Incitec Pivot lately?

The wide-ranging price action seen on Incitec Pivot’s chart has come amid a few key updates in its growth narrative going into 2022.

Firstly, the company announced the closure of its Gibbon Island manufacturing operations effective December 2022. This is the date when current natural gas feedstock supply arrangements expire.

The Gibbon Island facility will be closed after more than 50 years of operation and around 170 employees will have to be reassigned.

One-off costs to close the plant include an $83.5 million cash impairment to close the facility and a $102.5 million asset depreciation.

The company also announced strengths in its full year results in November to which investors reacted positively, paring some of the losses incurred in previous sessions.

In the presentation, Incitec advised it had grown revenue 10% to $4.35 billion and saw a 91% rebound in net profit after tax (NPAT) to $209 million.

After some short-term turbulence, shares are now trading back in line with the longer-term bullish momentum and are heading back towards 52-week highs.

Is Incitec Pivot a buy right now?

Analysts at investment bank Jefferies certainly think so. The firm recently hammered down its conviction in a note to clients as well, noting that the $6 billion Incitec’s earnings outlook has likely been improved thanks to the recent spike in ammonia prices.

Jefferies notes that Incitec’s average ammonia price for Q1 FY22 has lagged the key benchmark by around 1 month and that the current average is presently around $110–$700 tonne higher than the broker’s internal ammonia price estimates for FY22.

This dislocation in Jefferies’ ammonia forecasts and Incitec’s performance could bode in well for the fertiliser giant, particularly to its operating cash flows.

If this current average is held throughout FY22, “this would deliver incremental EBIT of $200 million” the investment bank reckons.

With its projections, Jefferies values Incitec at $4 per share and advocates a buy in its recommendation on the stock.

Jefferies is joined by fellow brokers Morgan Stanley, Macquarie and Morgans, who each value Incitec Pivot at $4.30, $3.56 and $3.75 respectively.

In fact, in a list of analysts provided by Bloomberg Intelligence, 58% of the coverage advocates Incitec Pivot as a buy, whereas there is just 1 firm that says it is a strong sell, being Sadif Investment Analytics.

The spread of price targets ranges from $4.30 at the top to a bottom of $2.70, whereas the consensus price target sits at $3.51. At the time of writing, this implies an upside target of 8%.

The Incitec Pivot share price has climbed 41% in the last 12 months after climbing another 41% this year to date.

The post Is it a buy? Jefferies tips 25% upside for the Incitec Pivot (ASX:IPL) share price appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again
• Is the Incitec Pivot (ASX:IPL) share price the next shortage winner?
• 5 things to watch on the ASX 200 on Friday
• 4 ASX shares tipped for buybacks in 2022: expert

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is back from the break and charging higher. The benchmark index is currently up 0.9% to 7,489.2 points.

Here’s what is happening on the ASX 200 today:

ASX 200 bank shares storm higher

It has been a great start to the week for ASX 200 bank shares. Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks are all recording solid gains today and helping to drive the ASX 200 higher. The Westpac Banking Corp (ASX: WBC) share price has been the best performer in the group with a gain of 1.3%.

Afterpay shares fall

The Afterpay Ltd (ASX: APT) share price is bucking the trend and dropping into the red on Wednesday. The buy now pay later provider’s shares are falling in response to yet another pullback in the Block (Square) share price overnight. Afterpay shareholders recently voted in favour of Block’s all-scrip takeover proposal.

Incitec Pivot rated as a buy

The Incitec Pivot Ltd (ASX: IPL) share price is pushing higher on Wednesday. This morning the agricultural chemicals company’s shares were given a boost from a broker note out of Jefferies. The broker has put a buy rating and $4.00 price target on the company’s shares. It expects high ammonia prices to support its earnings.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Pilbara Minerals Ltd (ASX: PLS) share price with a 5% gain. Investors have been buying lithium shares amid optimism that prices of the battery making ingredient will stay higher for longer. The worst performer has been the Afterpay share price with a 2% decline following Block’s pullback overnight.

The post ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again appeared first on The Motley Fool Australia.

More reading

• Is it a buy? Jefferies tips 25% upside for the Incitec Pivot (ASX:IPL) share price
• Pilbara Minerals (ASX:PLS) share price surges 6% to hit new record high
• December is shaping up to be pretty good for the Telstra (ASX:TLS) share price . Here’s why
• 2 ASX 200 dividend shares named as buys
• Why the Afterpay (ASX:APT) share price has tanked 20% in December

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited. The Motley Fool Australia owns and has recommended Afterpay Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Select Harvests Limited (ASX: SHV) share price is in the red this morning amid news of a Boxing Day fire in the almond grower’s handling area at its Carina West site.

After heading north in early trading, the Select Harvests share price changed direction and has dropped 1% to $5.86 at the time of writing.

Fire in handling area

Select Harvests is Australia’s largest almond grower and processor, and the third-largest in the world.

While the grower reported no injuries to personnel, it said the fire engulfed “co-waste” — a low-value bi-product that comes from the hulling and shelling process of almonds.

The full extent of infrastructure damage is still under investigation, with smoke and water damage in other site buildings and materials identified.

However, the company expects to recommence its receiving and processing activities of product following the start of harvest early next year.

In the meantime, Select Harvests advised it would submit a claim for compensation for losses relating to the production halt.

What about the dividends?

The company also released a series of announcements this month relating to its distribution of dividends and its cease in securities.

Shareholders in Select Harvest were informed to expect a dividend payment of 8 cents per security to be paid on 4 February 2022.

In the meantime, the security coded SHVAA ceased due to expiry on 8 December.

Select Harvests share price update

Over the last 12 months, the Select Harvests share price has risen by almost 11%.

The almond grower saw a rise in its share price back in late July, following a positive crop update and continued into early September, before seeing a steady decline.

The grower has a market capitalisation of around $712 million, and a price-to-earnings ratio (P/E) of 65.

The post The Select Harvests (ASX:SHV) share price is slipping today appeared first on The Motley Fool Australia.

More reading

• Is it a buy? Jefferies tips 25% upside for the Incitec Pivot (ASX:IPL) share price
• ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again
• Is Amazon stock too expensive?
• Pilbara Minerals (ASX:PLS) share price surges 6% to hit new record high
• Why is the Carnaby Resources (ASX:CNB) share price up 66% today?

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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

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

There are several ways to consider if a stock is expensive. However, you may be surprised to find that they do not include the selling price. That’s because even though Amazon‘s (NASDAQ: AMZN) stock is selling for over $3,000, what truly matters is where it trades relative to the company’s results, such as earnings or revenue.

What’s more, from a practical standpoint, most brokerages will allow you to buy fractional shares of a company. For instance, if you only had $300 to invest in Amazon, you can buy 0.10 shares (at a $3,000 stock price). That said, let’s look at Amazon’s business and then determine if the stock is expensive using financial ratios. 

The pandemic boosted an already successful business 

Over the past decade, Amazon has grown to a massive size. Sales in its fiscal 2020 year surpassed $386 billion. That was 37.6% higher than the previous year. The coronavirus pandemic caused hundreds of millions of people to avoid shopping in person for fear of contracting the potentially deadly virus.

Amazon was one of the prime beneficiaries of that change in consumer behavior. The company did an excellent job in delivering items that folks needed during the pandemic with only a few hiccups. That will certainly help keep those newly acquired customers with Amazon even in the aftermath of the pandemic. 

The surge in customer spending also had a more immediate impact. In the 12 months ended Sept. 30, Amazon generated $55 billion in cash from operations and another $55 billion during the same period last year. That massive inflow of capital has allowed Amazon to invest in the business’s infrastructure. Indeed, during that same two-year period, the company has spent over $87 billion on property and equipment, such as data centers, warehouses, and delivery vans.

These investments could make Amazon an even more customer-friendly shopping destination —  allowing it to reduce shipping times, add more items to its “Prime Delivery” option, and lower prices for customers. 

For Amazon, attracting new shoppers and increasing the frequency at which existing shoppers buy can fuel further increases in another lucrative business segment: advertising. In its most recent quarter, the segment that houses Amazon’s advertising revenue reported a rise of 49% to $8.1 billion. And for the most recent four quarters, Amazon earned nearly $31 billion in advertising revenue. 

Amazon’s price multiples reveal it’s not expensive

Amazon’s business is heading in the right direction, but are its excellent prospects already priced into the stock, making it expensive for investors? 

According to Amazon’s price-to-earnings and price-to-sales ratios, it is not expensive; in fact, it is relatively inexpensive. However, when looking at Amazon’s price-to-free cash flow ratio, the stock does look expensive (see chart above). Considering that Amazon nearly doubled its investment in property and equipment from $30.6 billion to $56.9 billion, the cash flow figure may be less informative.

So, overall: No, Amazon stock is not expensive. 

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

The post Is Amazon stock too expensive? appeared first on The Motley Fool Australia.

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• 5 unstoppable trends to invest $5,000 in for 2022
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• What do Wesfarmers (ASX:WES) and Amazon.com have in common?
• If this is volatility, bring it on

Parkev Tatevosian owns Amazon. 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 recommends Amazon. 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 Bruce Jackson.

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

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The Pilbara Minerals Ltd (ASX: PLS) share price is being boosted to new heights today despite the company’s silence.

For the first time, the lithium and tantalum producer’s stock has broken through the $3 mark. It’s a significant milestone for the company’s shares which started this year trading at just 87 cents.

At the time of writing, the Pilbara Minerals share price is $3.11, 5.07% higher than its previous close.

Earlier today, shares in the company were swapping hands for $3.145, marking a 6% gain and a new all-time high.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.92%.

Let’s take a look at what could be driving the company’s stock today.

What might be boosting the Pilbara Minerals share price?

It’s a good day for Pilbara shareholders as the company’s share price surges amid reports 2022 is set to be another good year for lithium.

As The Australian reported over the ASX’s Christmas break, global analysts are predicting next year will see a surge in lithium acquisitions as international giants aim to get a stronger foothold in the industry.

That’s reflected in some brokers’ expectations for the Pilbara Minerals share price.

As The Motley Fool Australia recently reported, Macquarie Group Ltd (ASX: MQG) analysts have tipped the stock as a buy. They’ve slapped it with a $3.70 price target. That implies it has another 17% to gain on top of its shiny new record high.

According to the broker, its expectation for Pilbara Minerals rests on its prediction for lithium prices. It believes the lithium market will continue to strengthen over the coming year, taking the lithium producer’s stock higher in the process.

Though not all brokers are bullish on Pilbara Minerals’ future. Credit Suisse has placed a $2.05 price target on its shares.

Today’s gains follow on from last week’s mammoth surge. Over the last 8 days – of which, only 4 were trading days – the Pilbara Minerals share price has gained 23%.

The post Pilbara Minerals (ASX:PLS) share price surges 6% to hit new record high appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Why AMP, Hipages, Pilbara Minerals, and Webjet shares are storming higher
• These 3 ASX 200 shares are topping the volume charts this Thursday
• What is the 2022 outlook for the Pilbara Minerals (ASX:PLS) share price?
• Here are the top 10 ASX shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Carnaby Resources Ltd (ASX: CNB) share price is exploding today on the back of a major mining update.

Shares in the company are swapping hands at $1.22 at the time of writing, up 66% since the Christmas Eve close. Earlier in the session, they were going for as high as $1.38.

Let’s take a look at what may be spurring investor sentiment today.

Major discovery

The company announced it has made a major copper and gold discovery at the company’s Nil Desperandum Prospect within the company’s Greater Duchess Copper-Gold Project in Mount Isa, Queensland.

Carnaby said it had identified an “exceptionally broad and high-grade copper gold intersection” at drill hole NLDD044.

The results were better than the company estimated in announcements last week.

Speaking on the major copper gold discovery, managing director Rob Watkins said:

Nil Desperandum is shaping up as a major iron oxide copper gold discovery which is rapidly getting bigger and better at depth.

The scale of the mineralised system we are seeing is exceptional.

We look forward to 2022 as being an incredible ride for Carnaby shareholders as we escalate the exploration at the Greater Duchess Copper Gold Project to a whole new level.

The company said it is still waiting on results from many other drill holes at the mine site, including one 80 metres to the northeast of NLDD044. More surveys and drilling will start from January 2022.

Carnaby Resources share price snap shot

The Carnaby Resources share price has charged up 219% year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 12% over the past year.

The company’s shares have also gained a staggering 404% in the past month.

Carnaby has a market capitalisation of roughly $149 million based on its current share price.

The post Why is the Carnaby Resources (ASX:CNB) share price up 66% today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Carnaby Resources (ASX:CNB) share price has exploded 114% in a week
• Carnaby Resources (ASX:CNB) share price explodes 46% on ‘spectacular’ copper find
• Carnaby (ASX:CNB) share price rockets 33% on lithium update

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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

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

Seemingly every month, a legacy automaker makes an announcement outlining bold plans to decarbonize its operations by investing in electric vehicles (EVs).

Simultaneously, we’ve seen plenty of new players enter the space, including Chinese automakers like Nio (NYSE: NIO) and U.S. players like Lucid Group (NASDAQ: LCID) and Rivian Automotive (NASDAQ: RIVN). A few years ago, Tesla (NASDAQ: TSLA) seemed like the only true EV investment opportunity. Today, the industry feels more crowded and competitive than ever before.

If you’re wondering how to navigate the noise with sound investment ideas, you’ve come to the right place. Here’s the latest on Lucid and Rivian, what makes Tesla unique, and some other investment ideas worth considering now.

Well-deserved praise

Lucid and Rivian have plenty in common. They both have a lot of cash, impressive technology, ambitious plans to disrupt the industry, and are very expensive stocks.

Lucid’s competitive advantage is its battery technology, which has allowed it to achieve a longer range and faster charging from a compact configuration. Its battery efficiency of more than 4.5 miles per kilowatt hour is higher than the 4 miles/kWh of Tesla’s Model S and other luxury sedans. Lucid stock was the best performing among automakers in 2021 mainly because it delivered on its major promises.

Lucid’s initial range and horsepower projections for its Air Dream Edition were met with skepticism. But then the Environmental Protection Agency (EPA) rated the long-range version of the Air Dream Edition with a better-than-expected 520 miles of range and 933 horsepower, and the performance version of the Air Dream with an estimated range of 471 miles and 1,111 horsepower.

This stamp of approval was just one factor of many that made the industry take Lucid seriously. It has expanded its manufacturing capacity, has over 17,000 reservations for its Air line, and plans to expand capacity even further while rolling out lower-priced Air versions in 2022.

Like Lucid, Rivian has a large existing manufacturing capacity, plans to expand in the years ahead, and has strong demand for its vehicles. The company is looking to disrupt the electric van, truck, and SUV market. Although it began deliveries in the third quarter, the results came in lower than Rivian had guided for. However, a bright spot was that pre-orders for its R1T truck now stand at over 71,000, and that’s on top of R1S reservations and the 100,000 delivery vans Amazon pre-ordered.

Rivian was awarded the Motor Trend 2022 Truck of the Year award and Lucid received the Motor Trend 2022 Car of the Year award. Investing in either company is a bet that their technology will hold up as new players enter the space, that they will grow production over time, and one day achieve consistent positive operating cash flow and profitably. It’s a tall order, which is why both companies are some of the highest-risk options in the industry.

A dynasty far from decline

Despite the potential of companies like Lucid and Rivian, the idea that either is the “next Tesla” is doubtful. Tesla is the industry leader and is probably going to remain the most valuable automaker for decades to come.

Its invaluable first-mover advantage, incredible technology, and years making mistakes (and learning from them) have made it a battle-hardened veteran with one of the highest operating margins in the industry. Put another way, Tesla may not produce the most cars, but it does convert more revenue into actual profit than its competitors.

Its renewable energy and energy-storage segments are growing and also very profitable. In sum, betting against Tesla is a bad idea, especially if the company continues to retain its high profitability even as it grows revenue at a breakneck pace.

Less limelight, but lots of potential

The EV industry is so much more than new automakers or Tesla becoming even bigger. Lucid and Rivian will also have to compete against a crowd of legacy automakers backed by much larger workforces and capital. Make no mistake, these companies are not just going to sit idly by and watch newcomers gobble up market share that took them decades to build.

The legacy automaker that has arguably done the best job fostering real change is Ford (NYSE: F). It may surprise you to learn that Ford stock more than doubled in 2021, making it the second-best performing automaker behind Lucid for the year. Its new management team is keen on investing heavily into EVs to dominate the electric truck industry and compete in electric SUVs — and it’ll soon be making its own batteries and producing vehicles at its new mega factories in Tennessee and Kentucky.

Another way to invest in the EV industry is through infrastructure companies like ChargePoint (NYSE: CHPT), the largest Level 2 (240 volt) charging network in North America. It’s quickly growing its Level 3 DC fast-charging network, and continues to look for ways to monetize its subscription business. Although ChargePoint’s growth and path to profitability are attractive, some investors may prefer to go with a basket of EV charging stocks.

Zoom out and focus on the big picture

Real gains aren’t made when a company beats a single quarter’s estimates. Rather, they are made over the long term as new companies evolve into paradigm-shifting growth stories that go on to define an industry. That’s exactly what Tesla did to the auto industry. And while there may never be another company quite like it, the auto industry has a very good chance of looking much different a decade from now than it does today.

An investor’s task is to determine which companies have the best chance of succeeding and avoid those that aren’t making the necessary capital commitments to prepare their businesses for the future.

It isn’t hard to envision an EV stock like Lucid taking market share from today’s leading luxury sedan makers. Or Rivian taking a chunk out of Jeep’s business. Or Ford emerging from the shift from the internal combustion engine (ICE) to the electric motor with a tighter grasp on the global truck market. Or ChargePoint expanding its footprint across North America and Europe.

No matter how good a company’s prospects look, the reality is that no one knows exactly which of them will emerge victorious, how long it will take for EVs to surpass ICE vehicles, or if other transportation fuels like compressed natural gas and hydrogen will also take large shares out of the commercial and passenger vehicle markets. Therefore, the best choice for most investors is probably to compile a basket of EV stocks. That way, diversification reduces risk without compromising the chance for upside if a single company proves to be a long-term winner.

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

The post Lucid, Rivian, and Tesla are just the tip of the EV stock iceberg appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon, NIO Inc., and Tesla. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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

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