Today, the electric vehicle market is demonstrating an accelerated pace of development. Tesla and other electric car manufacturers are increasing car sales every year, and many countries are actively encouraging the population to switch to electric cars. In some countries, a full-fledged infrastructure for servicing and charging electric vehicles has appeared, and the government encourages citizens to buy electric vehicles by reducing taxes on their ownership. Therefore, this industry can be called one of the most promising.
The most popular stock in the electric vehicle market is Tesla. However, Tesla is now too overvalued in fundamental and technical analysis. After all, its shares have recently grown strongly. In 2020 alone, Tesla shares are up 500%. Tesla has a P/E ratio of 84.98, one of the highest among electric vehicle manufacturers. The P/E indicator (price/Earnings Ratio) allows you to evaluate the prospects for buying a stock. Therefore, investors should pay attention to new and undervalued stocks of electric vehicle manufacturers, which can show significant growth in the future.
Therefore, in this post, we are going to take a look at the top 3 Chinese EV stocks to buy now.
Nio, Xpeng and Li auto companies are among the young and promising Chinese stocks of electric vehicle manufacturers. The shares of these companies are traded at a low price (around $20-35) and have great growth prospects.
Why do we recommend Li Auto (LI), NIO (NIO) and XPeng (XPEV) stocks?
- 1. Firstly, these are young and promising companies that have not yet reached net profit. The price of these shares is in the region of 20-35 US dollars. Young and undervalued companies are cheap. It is easier for such stocks to grow on positive news or a good financial report.
- 2. Second, there is too much hype around EV stocks. Investors love to invest in electric vehicles. But do not forget that the shares of electric vehicles are quite volatile. Positive news can lead to strong growth, while negative news can lead to a fall.
- 3. Thirdly, Li Auto (LI), NIO (NIO) and XPeng (XPEV) are located in China, where there is a large and promising market that is growing every year.
The main reasons for the growth: the popularity of electric vehicles, support from the Chinese authorities for the development of clean energy sources, new technologies, a possible entry into other markets of the world.
Risks: companies do not yet have a net profit, high competition, as many large car manufacturers also plan to invest in electric vehicles.