As Biden winds down his first term, he and his administration are introducing a slew of new electric vehicle (EV) policies to make the market more accessible and, possibly, reinvigorate slumping sales as car buyers increasingly cycle back toward conventional car offerings. Last year, EV sales dropped more than 70% as consumers considered their high pricing, relatively limited range and fairly slow charging times compared to the environmental impact and “cool” factor of driving something like a Cybertruck.
Biden’s new initiatives include pushing for hybrid options that combine plug-in charging with combustion engines, cost-cutting initiatives and increasingly tight restrictions on utility vehicle emissions. In some cases, we can expect Trump to roll back some (or all) of Biden’s regulations when or if he takes office—but, in the meantime, these stocks stand to gain from Biden’s last-ditch push toward EV adoption acceleration. Better yet, each of these stocks stands on its own merit, so while they may see a short-term boost from Biden, they also have a place in a long-term, buy-and-hold portfolio.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) stands out among the many available semiconductor stocks, including industry giants like Nvidia (NASDAQ:NVDA), by carving a niche within the electric vehicle EV market. Last year, Aehr Test Systems secured a $25 million order from a “leading Fortune 500 supplier of semiconductor devices” with a substantial presence in the automotive semiconductor sector, aimed at boosting EV production.
Though the company’s announcement deliberately keeps details under wraps, it’s not hard to speculate about the identity of the Fortune 500 company in question. With EVs increasingly dependent on semiconductors, there’s a growing need for the specialized testing and quality assurance services that Aehr Test Systems provides.
Aehr Test Systems’ role as a semiconductor support entity means it’s in a unique position to thrive, irrespective of which companies lead in the semiconductor or EV markets. With its fingers in several pies—including 5G technology, autonomous vehicles and data center infrastructure—Aehr Test Systems stands out as a versatile player. This makes it an attractive investment for those looking to benefit from various burgeoning technological advancements, positioning it as a hidden jewel among EV stocks boosted by Biden’s policies.
Mister Car Wash (MCW)
Mister Car Wash (NYSE:MCW) may not focus purely on EVs, but it is poised to benefit from Biden’s policies. The logic is straightforward: owners of new, gleaming EVs seek effortless ways to maintain their vehicle’s shine and want assurance of gentle care during the process. Mister Car Wash meets these needs and offers even greater potential.
The company has recently expanded, opening 35 new locations in 2023 and reporting a 7% quarterly revenue increase. Remarkably, Mister Car Wash operates debt-free, a significant achievement given its aggressive expansion and the substantial capital costs associated with constructing new facilities. This ability to grow through cash reserves and avoid debt indicates strong financial stewardship that will likely benefit the stock in an uncertain economic climate.
Furthermore, Mister Car Wash’s future looks promising, thanks to its membership-based business model. As stated in its filing, monthly memberships generate a substantial part of the net revenue, ensuring steady income through recurring fees. Securing large revenue from such subscriptions is invaluable for Mister Car Wash. With pricing set at levels that do not strain household finances, these monthly memberships are unlikely to be canceled, even during economic downturns, especially by customers keen on keeping their newly “affordable” EVs.
Magna International (MGA)
Magna International (NYSE:MGA) provides a wide array of automotive parts to leading players in the electric vehicle (EV) industry, including giants like Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM). Like Aehr, Magna’s broad market reach ensures its success regardless of which EV manufacturer leads the market.
According to the latest report, Magna’s sales have grown robust, increasing by 15% year-over-year. The company is also leveraging Biden’s EV sector initiatives to elevate its income forecasts for 2024. While it operates on thin margins—high costs have confined income to below $500 million despite consistently generating over $10 billion in revenue—Magna’s sales and performance remain steady. This consistency cements Magna’s role as a dependable component of a diversified investment portfolio with EV offerings.
Moreover, Magna’s financial stability uniquely positions it to deliver shareholder value, a notable distinction in the EV stock landscape where many companies ditch dividends in favor of growth. With a current yield of 3.4%, Magna offers potential income and is an essential asset for investors aiming to build a well-rounded EV portfolio.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.