Market Recovery Alert: 3 EV Stocks to Buy Before They Soar

US stocks appear to be back in rally mode. The April CPI report is partly to blame. Headline inflation was below estimates month-over-month, while “core inflation,” which excludes food and energy costs, was in line with economists’ forecasts. Most importantly, inflationary pressures marked the first cooling in prices in six months. This has led to an overall increase in US stock prices.

With view on Nasdaq And S&P 500 Indices, both have been in the black since the beginning of the quarter. The Global X Autonomous and Electric Vehicles (NASDAQ:DRIVE) has of course only recovered slowly. High interest rates, declining consumer demand and intense competition have reduced the profits and stock prices of many public electric vehicle (EV) companies.

However, better than expected macroeconomic data could well reverse this trend. Below are 3 EV stocks you should buy before they skyrocket.

BYD (BYDDY)

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BYD (OTCMKTS:BYDDY) is a force to be reckoned with in the global EV space. The EV manufacturer was not only able to Tesla (NASDAQ:TSLA) in terms of electric vehicle deliveries in December 2023, but BYD continued to grow its sales and deliveries strongly in the first quarter of 2024. The latest delivery numbers in April were also positive. Notably, BYD sales rose 49% year-on-year in April to 312,048 deliveries.

Despite strong sales growth, the extremely competitive environment of China’s electric vehicle market has hurt BYD’s profits. As we saw in the first quarter fiscal 2024 earnings release, operating profits fell more than analysts predicted. Shares of the Chinese electric vehicle giant were up nearly 7% for the year through the end of last Friday’s trading session. The stock trades at 17.5 times forward earnings, and if the macro environment becomes less volatile, BYD will be one of the stocks poised for a significant rally.

Tesla (TSLA)

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The legendary American electric vehicle manufacturer Tesla’s share price collapsed in 2024. Disappointing delivery numbers and strong competition from emerging Chinese electric vehicle giants have put Tesla in something of a quandary. Tesla’s Shanghai factory delivered 18% fewer units in April year-on-year and 30% fewer than in March. The slump came as Chinese electric vehicle manufacturers reported a surge in deliveries. In other words, Elon Musk’s recent visit to China, which earned him preliminary government approval for his company’s autonomous driving system, may not be enough to pull Tesla out of the doldrums.

What is consistent with Tesla’s stock price is its ability to recover under certain market conditions. The automaker’s stock price has fallen more than 28% year-to-date since last Friday, which could create an interesting buying opportunity for investors willing to bet on Tesla’s ability to bounce back.

Li Auto (LI)

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Li car (NASDAQ:LI) is another Chinese electric vehicle maker whose stock has taken some damage this year but has a chance to recover significantly. The price war in Li Auto’s largest market, China, has weakened margins and slowed sales growth. In April, for example, delivery sales growth was essentially flat, increasing just 0.4% year-over-year. This value has also fallen by 11% compared to March. In mid-April, Li Auto announced the launch of the Li L6, a five-seat family SUV that will be priced at around $34,507. New cars in different price ranges can help cushion the decline in demand and potentially boost growth figures.

Li Auto’s share has fallen by around 33.5% since the beginning of the year. Similar to the other entries on this list, LI could benefit from an improving macroeconomic environment. If we get more inflation reports like we did in April, the price of the stock and the entire electric vehicle sector could rise again as traders become bullish on rate cuts.

At the time of publication, Tyrik Torres did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.