Ferrari extends its legacy with a future vehicle. The stock is still a buy.

Ferrari (RACE 0.83%) evolves before your eyes, which is especially exciting if you’re a savvy investor and have followed the iconic car company. Ferrari already extended its legacy slightly when it launched the Purosangue, its first SUV — though Ferrari refuses to call the 4-door an SUV.

And in case you missed it, Ferrari is about to extend its legacy once again as it enters the world of electric vehicles (EVs).

The first one ever

After a roller coaster ride of a year for electric vehicles and their manufacturers, Ferrari is finally getting ready to enter the fray. The company is designing an electric vehicle built on the legacy of its high-powered gas vehicles. It will be an electric crossover that could arrive as soon as 2026, according to AutoForecast Solutions.

Most electric vehicle manufacturers are struggling to lower prices for consumers, and sales are growing more slowly than expected. However, Ferrari could still make a splash because its iconic brand image can fuel the price tags that can make electric vehicles profitable. In fact, Ferrari’s first EV is expected to cost at least $535,000.

This strong brand image and pricing power make Ferrari a unique investment opportunity.

Spectacular edges

These high price tags help generate amazing gross profit margins compared to other stalwarts in the industry.

RACE Gross Margin (Yearly) data by YCharts.

Ferrari more than doubles its closest competitors in gross margin, and that filters down to the bottom line. That’s right, Ferrari’s strong pricing power helps it earn earnings before interest and tax (EBIT) margins double those of many competitors, and its results have consistently been much stronger than its rivals over the past decade .

F EBIT Margin (TTM) data by YCharts. EBIT = earnings before interest and taxes. TTM = last 12 months.

Another aspect of Ferrari’s pricing power is that it is virtually company controlled; management allows only a certain number of sales annually to keep supply lower than demand, boosting pricing power. In fact, in the second quarter, Ferrari delivered just 3,484 units, a modest 2.7% increase over the previous year. But that modest growth drove second-quarter revenue up 16.2 percent, again demonstrating strong pricing power.

Another upside to owning Ferrari stock is simply that it’s more recession-proof. Ferrari’s target audience is generally less affected by economic downturns and will still buy a Ferrari regardless. It is also true that many Ferrari vehicles are considered collectibles, which helps maintain their value over time. The downside is that you pay a premium to own Ferrari stock and its unique high-margin auto business. The company trades at a price-to-earnings ratio of 55.

Evolution

Perhaps the biggest takeaway, especially for a storied company like Ferrari, is its willingness to evolve. So often, older, more traditional companies refuse to adapt and eventually disappear. But Ferrari has not only embraced and evolved with an SUV (which it refers to as a sports car), it’s also started spending on its EV strategy — and that’s great news for investors. Ferrari remains one of the best car stocks you can own.