September is a notably poor month for investing. In fact, the trend is so well known that it has been dubbed the September Effect. The data supports the notion with the S&P 500 averaging a 1% decline in the month from 1928 to 2021.
That’s the bad news.
The good news is that as time has gone on, the effect has become less pronounced. Over the past 25 years, September returns for the S&P 500 have averaged -0.4% with the median monthly return being positive.
2022 has seen the market struggle more than average, with the S&P 500 down 2% so far this month.
Investors looking to reverse that trend should consider investing in the EV sector as there are notable winners there. Here are some of the best EV stock picks right now.
One of the best EV stock picks to beat the September slump is Albemarle (NYSE:ALB). The Charlotte, North Carolina company is a leading lithium producer. That has made it a go-to equity for investors seeking a picks-and-shovels investment in electric vehicles. That’s because lithium is a vital component in the manufacture of lithium-ion EV batteries. In short, Albemarle has established a leading position in the new automobile economy.
ALB stock has performed exceedingly well this year. It’s up 23% at the time of writing. The S&P 500, on the other hand, remains off by 16.5%.
The company intends to double down and seize the opportunity in lithium. At the end of August, Albemarle announced a corporate restructuring intended to better capitalize on lithium demand. The market has responded positively to the news which followed a strong earnings report.
Nio (NYSE:NIO) stock has long been one of the most interesting electric vehicle investments. The Chinese manufacturer made a lot of investors a lot of money between 2020 and early 2021. It has come back down since, but plenty of room for optimism remains.
Nio, like all Chinese EV manufacturers, has been deeply affected by Covid-19 lockdowns and rising inflation. The latter has made growth stocks much less appealing while the supply chain issues have continuously rattled expectations.
The good news is that despite Nio reporting lower-than-expected earnings and weak guidance, sales impressed. It seems that investors are ready to give Nio the benefit of the doubt moving forward in the hopes that the worst has passed.
That implies that NIO stock, which is down sharply this month, could pop up quickly and prove a bright spot in what is often a difficult month for investing.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stock hasn’t done poorly in 2022. In fact, it has outpaced the broader markets by remaining flat overall. That hasn’t been as impressive as Albemarle or a few other select lithium equities. But despite the fact that other lithium stocks have performed better, LAC stock has strong upside potential.
The reason to believe that relates to the three lithium mining projects the Vancouver-based firm is developing.
The company does not yet produce any lithium. However, LAC stock currently trades for less than $30 with a target price of $34. That strongly suggests investors believe that the company will mine significant amounts of lithium.
But the real reason I think investors should consider it as one of the top EV stock picks is that the firm continues to explore a separation of its U.S. and Argentina operations. If done, its U.S.-based shares will become particularly attractive as Thacker Pass, where the operations exist, is the largest-known lithium resource in the U.S.
The U.S. is pushing to reshore vital industries. There is little doubt that shares in lithium stocks with resources sourced from within the U.S. will command higher prices than those from lithium sourced from China. Thacker Pass could prove to be a phenomenal strategic resource as those supply chain reshoring efforts play out in the EV sector.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.