I am lucky that I don’t need to commute to work. Millions more are now like me because of the pandemic. This is helping to fuel a serious assault on the internal combustion engine by electric vehicles. And importantly to the bullish thesis for XPeng (NYSE:XPEV) stock is that fight is in the early innings.
XPEV stock is one of the budding alt-car companies and it’s a fan favorite. Case in point is how it rallied 100% in less than two months from May.
The company is not alone, and they are all chasing the big dog Tesla (NASDAQ:TSLA). Under the quirky leadership of Elon Musk, TSLA did all the hard work. It plowed the roads clear of the obstacles that stood in the way of electric vehicles. Now it is mainstream – even cool – to own one. Furthermore, every major manufacturer has committed to also flip the electric switch up.
Meanwhile, there is a slew of smaller startups looking to carve a niche out of this huge pie. “Niche” is the operative word because that’s what most of them will be.
The largest portion of the actual electric vehicles sold in the future will come from the current producers. The legacy manufacturers will be the largest contributors just from their sheer size.
Of course, Tesla will also be there thanks to first-mover advantage. Besides Tesla, I would add XPEV and Nio (NYSE:NIO) to the winners’ list of this electrification venture.
Buy the Deep Dips in XPEV Stock
XPEV stock is a buy on dips, and/or a hold for the long term. In January I wrote about taking position in tranches. This is more important now since markets are still setting records.
How people invest in a successful stock can differ. There isn’t one perfect way that fits all goals. Today’s Wall Street is different than the one we’ve known for decades. Technology has changed the field of play. For example, I am an investor, but I enjoy trading the shorter-term ranges too. Experts in the media resisted liking this for years, but now they are all doing it.
Technology empowers anyone to be their own independent expert on stocks. Retail investors have all the tools to do in-depth homework and employ complicated tactics to achieve profits. Who cares how one goes about achieving profits? The goal is the same, and the roads can be different.
In this case, I’m confident owning XPEV stock from $32 per share. I would add to the position if it falls like it did in May. I would even chase breakouts from $48 for a fast trade. It’s that simple as long as the company’s delivering strong results. Fundamentally, it is not cheap, but it doesn’t need to be. The company must overspend to deliver the growth. And they do deliver that in droves.
XPeng Is Delivering
Don’t take my word for it, just look at the scoreboard. Xpeng quadrupled revenues in two years and through a pandemic. Clearly, the company is well on its way for long-term success. This is a stock that remains on my shopping list for as long as this is a bullish market.
Conversely, I am not a fan of buying electric vehicle stocks that don’t have current successful businesses. I would much rather invest in an opportunity like XPeng that already exists. Therefore, my only gamble with XPEV stock is on its status quo trajectory. Then it’s a matter of how fast they grow, not “if” they grow.
The competition is already fierce. That’s usually a huge hindrance for a budding contender. There are some prominent names running fast behind, but the top three are still Tesla, Nio and XPEV stock.
On the date of publication, Nicolas Chahine 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.
Nicolas Chahine is the managing director of SellSpreads.com.
