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The Road to Redemption: 3 Undervalued Chinese EV Stocks Accompanying Investors on a Bumpy Ride

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China now dominates the EV market, claiming a staggering 60% share of global EV sales. Amidst this electric boom, some of China’s leading EV stocks are revving up their operations for an international stage.

However, not all is smooth sailing in this electrified sea. Several of China’s top EV stocks are experiencing a bumpy ride, navigating through turbulent waters marked by economic strains and fierce market competition.

Unlike the growth seen in the S&P 500 in 2023, Chinese stocks faced a different fate. A $100 investment at the start of the year would have dwindled down to a mere $70 by year-end. The Chinese market continues to grapple with economic challenges magnified by a housing crisis, dwindling productivity, and a post-pandemic recovery labyrinth.

So, with these headwinds steering the course, why should investors set their sights on Chinese EV stocks?

The hype is not all for show; the ongoing challenges faced by these stocks have been factored into their pricing, offering a rare discount on investments in highly innovative players within a burgeoning market.

The EV market is projected to soar to nearly $1 trillion by 2030, boasting a compound annual growth rate (CAGR) of 13.7% in the coming years. These discounted stocks, if they can unleash their full potential, might just spark a lucrative journey for investors ahead.

Li Auto (LI): A Beacon Amidst the Storm

Li Auto electric car in store. Li Auto Also known as Li Xiang, is a Chinese electric vehicle (EV) company

Source: Robert Way / Shutterstock.com

If we’re talking about luminary figures in China’s EV constellation, Li Auto (NASDAQ:LI) is a star too bright to overlook. Not only is Li Auto a heavyweight in China’s EV realm, but it glimmered with more than 30% gains in 2024 after becoming the country’s first prominent EV startup to turn profitable.

In a stellar performance, Li’s Q4 2023 gross profit skyrocketed to approximately $1.38 billion, a meteoric 174.4% surge from Q4 2022. This lofty ascent was fueled by the delivery of 131,805 vehicles during the quarter, contributing to a total of 376,000 deliveries in 2023.

The upcoming year, 2024, seems poised to be a breakthrough phase for Li Auto, heralding the highly anticipated unveiling of its flagship MEGA MPV. LI stands as one of the sturdiest pillars in the Chinese EV market currently, with the fortunes of the MEGA likely holding the key to Li’s fortunes this year.

Add to this the news of Li’s global expansion ambitions in 2024, kickstarting with an entry into the Middle Eastern markets, showcasing that this stock is a beacon in the murky waters of China’s economic turbulence.

NIO Inc. (NIO): Battling the Storm Clouds

Nio Chinese automobile manufacturer logo displayed on mobile phone

Source: Piotr Swat / Shutterstock.com

Despite experiencing a stormy start in 2024, NIO (NYSE:NIO) has weathered turbulent times, shedding over 30% in the initial months. Nevertheless, NIO’s past peaks still loom large, evident in its substantial $12 billion market capitalization.

So, why should investors pay heed to a company buckling under recent adversity? NIO’s performance has been a ray of sunshine amid the shadows of economic uncertainty in China. With revenues exceeding $2.3 billion in Q3 2023, marking a 46% YOY increase, and a similarly impressive 37% revenue surge in the preceding year.

Further propelling forward, NIO is accelerating its deliveries in 2024, dispatching 8,132 vehicles in February, comprising 4,765 smart electric SUVs and 3,367 smart electric sedans.

BYD Company (BYDDY): The Thrilling Ride Continues

BYD Company Revs Up Innovation with High-Performance Electric Supercar

BYD Redefines China’s Economic Landscape

BYD Company (OTCMKTS: BYDDY) is making waves in the Chinese stock market with its relentless pursuit of innovation, outshining competitors on the global stage. The recent introduction of a high-performance electric supercar priced at 1.68 million yuan ($233,450) catapults BYD into the league of iconic automakers like Ferrari and Lamborghini. This bold move not only showcases technical prowess but also downplays economic concerns in China, signaling a promising future for the company.

Affordable and Environmentally Friendly Offerings

BYD Company’s commitment to affordability and sustainability is evident in its latest offering, the Seal U. This plug-in hybrid vehicle, designed to hit the European markets, boasts an impressive electric-only range of over 60 miles. The company’s strategic focus on eco-friendly transportation solutions aligns with the growing global demand for sustainable mobility options. Such forward-thinking initiatives position BYD as a frontrunner in the electric vehicle market, promising significant growth opportunities.

Financial Triumph: Stellar Q4 Earnings Forecast

As per the latest Q4 earnings forecast, BYD is expected to report a substantial year-over-year increase in net profit attributable to shareholders for 2023. Projections indicate a surge ranging from 74% to 86%, with estimated profits fluctuating between 29 billion and 31 billion yuan ($4.03-$4.31 billion). This financial triumph underscores BYD’s robust performance and strategic investments in cutting-edge technologies.

Shareholder Confidence: Buyback Proposal and Stock Performance

Chairman Wang Chuanfu’s proposal for an extensive share buyback reflects BYD’s unwavering commitment to enhancing shareholder value. The initiative aims to bolster stock performance and instill confidence among investors amidst economic uncertainties. Despite the company’s impressive growth trajectory, BYD’s stock remains attractively priced, offering investors an opportune moment to capitalize on its future potential.

On the date of publication, Dmytro Spilka did not hold (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.

Dmytro is a finance and investing writer based in London. He is also the founder of Solvid, Pridicto, and Coinprompter. His work has been published in Nasdaq, Kiplinger, FXStreet, Entrepreneur, VentureBeat, and InvestmentWeek.

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