Lion Electric Stock: Overlooked EV Stock Has 253% Upside

Lion Electric Co Delivers Record Numbers of EVs for 4 Straight Quarters

There are many overlooked electric vehicle (EV) stocks out there. Most are overlooked for a reason, but some, like Lion Electric Co (NYSE:LEV), shouldn’t be overlooked.

A Quebec, Canada-based manufacturer of electric medium-duty and heavy-duty vehicles, Lion Electric has been quietly toiling away in the background.

Lion Electric Co has been ramping up production of its current range of seven vehicles, which includes the all-electric “Class 6” and “Class 8” commercial urban trucks, the all-electric midibus/minibus “LionM,” and the all-electric Type C school bus “LionC.”

There are two things going against LEV stock, neither of which the company can do anything about.

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First, as I just mentioned, Lion Electric Co is based in Canada. Most American investors don’t look at Canadian penny stocks, even if they’re trading on American exchanges. Second, the company doesn’t make sleek EVs like Tesla Inc (NASDAQ:TSLA) and Lucid Group Inc (NASDAQ:LCID).

It would be a mistake to ignore Lion Electric stock, though.

In early November, the company announced that it produced its first made-in-America school bus at its Joliet, IL factory. (Source: “Lion Electric Announces the Production of its First Made in America School Bus in its Joliet Illinois Factory,” Lion Electric Co, November 2, 2022.)

That said, more than 700 of the company’s all-electric school buses and trucks are already on the road and have traveled a total of more than 10 million miles.

The Joliet factory will initially focus on manufacturing all-electric school buses and gradually ramp up production. The facility is expected to have a production capacity of up to 20,000 buses and trucks.

Lion Electric Co expects to complete the transfer of its battery assembly line from the JR Automation facility in Troy, MI, to its own plant in Mirabel, QC by the end of 2022.

Starting commercial production at its U.S. manufacturing facility and its battery plant are important milestones in the company’s growth strategy.

On top of that, Lion Electric has been reporting solid sales growth. It sold a record 156 vehicles (108 school buses and 48 trucks) in the third quarter, up from 40 (28 school buses and 12 trucks) in the same period of last year. (Source: “Lion Electric Announces Third Quarter 2022 Results,” Lion Electric Co, November 10, 2022.)

All this is probably why Wall Street is waking up to LEV stock’s untapped potential. Analysts have provided a 12-month share-price target of between $4.13 and $13.00, which points to potential gains from Lion Electric stock in the range of 12.5% to 253%.

Chart courtesy of StockCharts.com

LEV Stock Overview

Lion Electric designs, develops, manufactures, and distributes purpose-built all-electric urban vehicles, including their battery systems, chassis, bus bodies, and truck cabins. (Source: “Earnings Call Presentation: Q3 2022,” Lion Electric Co, last accessed November 21, 2022.)

The company also provides various services, parts, and accessories, including:

  • “LionEnergy,” a customized charging infrastructure solution
  • “LionBeat,” a system to monitor and manage EV fleets
  • “LionGrant,” a service that helps customers identify and apply for grants in the U.S. and Canada
  • “LionAssistance,” a complete parts department that also provides maintenance and repair work

Lion Electric Co’s customers include Amazon.com, Inc. (NASDAQ:AMZN), Canadian National Railway (NYSE:CNI), DHL, the Government of Quebec, Ikea, and The New York Times.

Third-Quarter Results

For the third quarter of 2022 ended September 30, Lion Electric announced revenue of $41.0 million, up significantly from $11.9 million in the third quarter of 2021. (Source: Lion Electric Co, November 10, 2022, op. cit.)

Lion Electric reported a net loss of $17.2 million for the third quarter of 2022, versus net earnings of $123.0 million in the third quarter of 2021. The third quarter of 2021 included a $138.4-million gain related to a non-cash decrease in the fair value of share warrant obligations (compared to a $7.6-million gain related to a non-cash decrease in the fair value of share warrant obligations in the third quarter of 2022).

Lion Electric Co had an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $15.1 million in the third quarter of 2022, compared to an adjusted EBITDA loss of $8.8 million in the third quarter of 2021.

As noted above, the company sold a record 156 vehicles in the third quarter, up by 290% compared to the same period of last year.

Lion Electric Co also reported a vehicle order book of 2,085 buses and 323 trucks, representing a total value of approximately $575.0 million. LionEnergy’s order book at the time of 239 charging stations and related services represented a combined total value of approximately $4.0 million.

Analyst Take

Lion Electric stock is an ignored EV penny stock that’s on the precipice of great things.

Lion Electric Co already boasts seven mid-range truck and bus models and expects to boost its production with the recent opening of its factory in Joliet. The new manufacturing plant will help the company accommodate the big increase in orders for its buses and trucks.

In the third quarter, Lion Electric sold a record number of vehicles, which helped it generate high revenues. More importantly, the company has a large order book for its vehicles.

With government policies and funding in the U.S. and Canada expected to juice Lion Electric Co’s EV sales, the long-term outlook for LEV stock is bright.