Investors really can’t go wrong with electric vehicle stocks. With demand only set to skyrocket, I’d use any signs of weakness in companies, like Li Auto (NASDAQ:LI) stock, as a buy opportunity.
In the long term, EV stocks could double, if not triple with global demand on the rise.
The last time I weighed in on Li Auto, it traded around $30 a share on July 30.
While the stock started out strong, running to $35.44, it has since pulled back to $28.01 triple bottom support. If the stock can hold this line, I’d like to see Li Auto retest double top resistance around $36 a share in the near term. From there, given rising EV demand, I’d like to see it eventually retest prior all-time highs around $47.70.
All as countries all around the world rush to put millions of electric vehicles on the roads. President Joe Biden, for example, wants at least 50% of all new cars to be electric by 2030. China wants EVs to make up 40% of auto sales by 2030. Even Europe wants about 30 million electric cars on its roads by then, as noted by Reuters.
Better, all could easily drive EV stocks like Li Auto to higher highs.
Analysts Seem to Love LI Stock
Goldman Sachs just added Li Auto to its “best stock ideas,” and said the stock could double, as noted by Barron’s contributor Al Root. In fact, Goldman Sachs’ analyst Fei Fang has a price target of about $30.86. Bank of America analyst Ming-Hsun Lee also has a buy rating with a price target of $39.
In addition, Citi analysts Jeff Chung just initiated a buy rating on LI stock. The analyst noted, “We believe the company’s second primary listing would be positive for the company as it should provide more cash for R&D initiatives, offset political/policy risks stemming from its US listing status and allow the company to potentially tap into more mainland Chinese institutional investors,” as quoted by Street Insider.
All after the company debuted its stock in Hong Kong, as well.
Li Auto Deliveries Have Been Solid
In July, the company delivered 8,589 Li Ones. Month over month, that’s up 11.4% and about 251% from last year. As of July 31, the company delivered 38,743 year to date. That’s a significant improvement from the last time I spoke about Li Auto in late July. In fact, as I noted at the time, “In June, the company delivered 7,713 Li Ones, growth of nearly 321% year-over-year. In May, the company delivered 4,323 Li Ones, a 101.3% increase year over year.”
Helping, “Chinese electric carmakers and established global auto brands have intensified their efforts to dethrone Tesla in China by launching dozens of new models in the country,” as reported by the Financial Times’ contributor Christian Shepherd. That includes Li Auto.
The Bottom Line
When it comes to electric vehicle stocks, like Li Auto, there’s plenty to get excited about.
For one, with solid global demand for electric vehicles, Li Auto should be one of the top EV winners to buy and hold. Two, analysts seem pleased with the growth opportunities they’re seeing with the company. Goldman Sachs for example believes the stock could still double from current prices. In addition, month over month deliveries continue to be impressive. Plus, I expect to see another round of strong earnings growth from the company.
Again, I’d use weakness at triple bottom support as an opportunity to buy. With a good deal of patience, I strongly believe Li Auto could run back to $47.70.
In addition, I believe the stock could accelerate as the company nears earnings on Aug. 30 before the bell. With recent deliveries, and demand picking up steam, earnings should be solid.
On the date of publication, Ian Cooper 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.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
