The ongoing electric vehicle (EV) boom is expected to revolutionize the global automotive industry as people shift increasingly to EVs in response to a rising awareness about climate change. While the coronavirus pandemic-induced lockdown brought economic activity to a near stand-still last year, the EV industry outperformed the broader market. This is evidenced by KraneShares Electric Vehicles and Future Mobility Index ETF’s (KARS) 81% returns over the past year.

As a result, many tech giants are seeking to capitalize on the booming electric car market and are investing significantly in this space.

Baidu, Inc. (BIDU) is currently working on its own EV and has teamed up with Geely (GELYY) in the endeavor, while  Apple Inc. (AAPL), has reportedly partnered with Hyundai to manufacture EVs. Considering these developments, we think these stocks should be good additions to your portfolio now.

Apple Inc. (AAPL)

With a market capitalization of more than  $2.20 trillion, AAPL has been one of the best performing technology companies for quite some time. Its proprietary gadgets include iPhone, iPad, Mac, Apple Watch, and Apple TV.

According to recent news reports, AAPL is planning to resume its Project Titan to create the next generation electric car, the production of which is expected to begin by 2024. The project had been temporarily shelved after the tech-giant laid-off some 190 employees in 2019. Since cars have now become a big part of the tech industry, AAPL has reportedly  green-lighted the project to capitalize on the EV boom.

Last November 11, AAPL launched a new generation of Macbooks powered by the M1chip, which is designed for higher efficiency and safety. The products include the new MacBook Air, 13-inch MacBook Pro, and Mac mini, which is expected to provide seamless user experiences. These breakthrough products should broaden AAPL’s market reach and give a significant boost to its revenue.

AAPL’s revenues have improved slightly year-over-year in the fiscal fourth quarter ended September 26, 2020. Gross margin has increased 1.5% from the year-ago value to $24.69 billion, while its EPS has risen 10.4% year-over-year to $3.31 over the same period.

Analysts expect AAPL’s revenues to increase 16% year-over-year to $102.62 billion in the fiscal first quarter ended December 31, 2020. The consensus EPS estimate of $1.40 for the first quarter represents a 12% rise year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 72.9% over the past year.

How does AAPL stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Industry Rank

A for Overall POWR Rating.

The stock is ranked #1 of 52 stocks in the Technology – Hardware industry.

Baidu, Inc. (BIDU)

BIDU is a leading search engine, knowledge and information centered Internet platform, and AI company. It operates through two segments–Baidu Core and iQIYI, which provides online entertainment services.

Earlier this month, BIDU announced plans to establish a company to produce intelligent electric vehicles. BIDU entered a strategic partnership with multinational auto manufacturer Geely and has been investing heavily in AI to build a portfolio of world-class self-driving services. Under this agreement, Geely will handle vehicle manufacturing while Baidu will contribute the design, tech, and capital to scale production. The new partnership is expected to pave the way for future passenger vehicles.

BIDU’s revenues have surged 8.4% sequentially to $4.16 billion in the third quarter ended September 30, 2020. Its adjusted EBITDA has increased 77% year-over-year to $1.34 billion in the third quarter, while non-GAAP EPS rose 61% year-over-year to $3 over the same period.

Analysts expect BIDU’s revenues to increase 23.7% year-over-year to $3.99 billion in the current quarter ending March 31, 2021. The consensus EPS estimate of $1.76 for the current quarter represents  a 39.7% rise year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 83.7% over the past year.

BIDU’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade and Peer Grade, and a “B” for Industry Rank. It is ranked #4 of 103 stocks in the China industry.

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AAPL shares rose $0.23 (+0.17%) in after-hours trading Friday. Year-to-date, AAPL has gained 4.81%, versus a 2.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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