Coronavirus restrictions and regulatory issues have slowed the progress of autonomous vehicles more than I thought. However, I still believe that long-term investors will ultimately benefit greatly from buying autonomous driving stocks. Many companies including alphabet (NASDAQ:GOODNASDAQ:Google), General Motors (NYSE:GM), Velodynes (NASDAQ:VLDR), Embark (NASDAQ:EMBK) and Aurora innovation (NASDAQ:GOLD), are making great strides in commercializing self-driving technology on a significant scale.
Meanwhile, fears of the coronavirus have plummeted, and the Biden administration appears to have made a recent decision to quickly facilitate the spread of autonomous vehicles.
As evidence of the latter trend, consider the fact that the US National Highway Traffic Safety Administration recently decided to allow the construction of “fully autonomous vehicles” without certain safety features previously required in all vehicles, such as: B. Steering wheels. Additionally, US Secretary of Transportation Pete Buttigieg said earlier this month that his department does not want to prevent innovation in autonomous vehicles. He also predicted that the regulation of the sector would evolve greatly in the remainder of the 2020s.
And early March intel (NASDQ:INTC) filed papers with the Securities and Exchange Commission to launch an IPO of its Mobileye unit, which develops and sells self-driving and advanced driver-assistance systems. If Mobileye shares achieve a high valuation, it could provide a positive boost to other companies in the industry.
Since self-driving cars would save both businesses and consumers a great deal of time and money, I continue to believe that the technology will prove to be quite lucrative for the companies that successfully adopt it on a large scale.
As such, I think the best ways for investors to capitalize on the eventual spread of self-driving vehicles is to buy the following autonomous driving stocks:
- Aurora innovation (GOLD)
- Embark (EMBK)
- Velodynes (VLDR)
Autonomous Vehicle Stocks to Buy: Aurora Innovation (AUR)
Fortunately already in 2019, Amazon (NASDAQ:AMZN) invested in Aurora. In doing so, the company’s technology has been validated to a certain extent. It also helped me to do that more confidently Hyundai (OTCMKTS:HYMTF) also invested in the company in 2019.
Aurora recently announced that it has developed self-driving technology capable of “working across multiple vehicle types.” This level of standardization should make the Aurora system much easier for transportation companies and automakers to use.
My confidence in AUR stock is also boosted by the fact that the tech startup is collaborating with “Volvo on autonomous trucks and Toyota to develop a fleet of self-driving Siennas,” according to Cnet.
The current market cap of AUR stock is $6 billion. That’s not small, but I think it grossly underestimates the long-term potential of the company.
Embarkation (EMBK)
The company sells self-driving truck software called Embark Driver. It charges truckers a per-mile subscription fee for using the software.
According to the company’s CEO, Alex Rodrigues, Embark uses technology that allows “trucks to … update maps in real time, which is critical when encountering situations such as roadworks, especially when you’re on a dual carriageway and there isn’t one.” There are alternative routes.” In addition, the company’s system easily “integrates” into trucks from all major manufacturers, and “some of the leading trucking companies in the United States… [are its] Customers.” For October, the company said it had received “14,200 reservations for Embark-equipped autonomous trucks at the time, more than double the closest public competitor.”
Rodrigues noted that in the United States, human truck drivers are not allowed to drive their vehicles more than 11 hours a day. And that Embark’s software can dramatically increase that number.
Finally, the CEO reported that “over 1 million kilometers in the real world” had been driven using the company’s software “without a single reportable security incident by the transportation department.”
Stephen Houghton, who became the company’s COO in February, spent six years working on autonomous vehicles for Amazon and Cruise (currently owned by GM).
Autonomous Vehicle Stocks to Buy: Velodyne (VLDR)
In a very positive development, Velodyne announced last month that Amazon had purchased a warrant that could allow the e-commerce giant to buy nearly 40 million shares of VLDR. The warrant will be exercisable “based on Amazon’s discretionary payments pursuant to existing commercial agreements between Velodyne and Amazon,” Seeking Alpha said. I think the deal suggests Amazon believes Velodyne has great potential.
Also note that in 2017 Amazon received a warrant to purchase up to 55.3 million shares of Amazon stock power adapter (NASDAQ:PLUG) Camp. PLUG stock ended 2017 at $1.93. On March 18, 2022, it closed at $26.15.
In 2021, Velodyne’s sensor shipments increased 35% over 2020 to just over 15,000. In 2019, the company shipped just over 12,000 sensors. A record 4,900 sensors were sold in the last quarter. The company’s sales fell 1.7% year over year on its strategy of gaining market share with lower prices. Ultimately, however, I expect this approach to be quite successful.
According to Yahoo Finance, VLDR stock trades at a reasonable price-to-sales multiple of 7.67x.
At the time of publication, Larry Ramer held long positions in AUR and PLUG stocks. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.
Larry Ramer has been researching and writing articles on US equities for 15 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. His highly successful contrarian picks included GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer.
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