Nio Inc. (NYSE:NIO) stock is still one of my favorite electric vehicle plays. Well, next to Tesla (NASDAQ:TSLA).
While the NIO stock hasn’t been anything to write home about technically, don’t write it off just yet.
After catching support dating back to March, the stock is just starting to pivot higher.
From a current price of $37.70, I’d like to see NIO closer to $57.50, especially as global leaders push for millions of electric vehicles. President Joe Biden for example wants EVs to make up about 50% of all new vehicle sales over the next decade. Even better, Nio continues to impress with month-over-month EV deliveries, too.
Nio Sales Growth is Still Impressive
While it’s not reflected in the stock price, Nio delivery numbers are solid.
For September, the company delivered 10,628 vehicles, a year-over-year increase of about 126%. Over the last three months, it delivered a total of 24,439 vehicles – a 100.2% improvement year over year. Cumulatively, deliveries are now up to 142,036. With deliveries likely to accelerate, I’d use any weakness as an opportunity.
Goldman Sachs analyst Fei Fang upgraded the NIO stock to a buy rating with a $56 price target. As noted by Tip Ranks, the analyst says we’ll see “strong volume expansion” as NIO introduces its ET7 electric vehicle in China and enters the Norwegian EV market.
According to TheFly.com, Mizuho analyst Vijay Rakesh is bullish on NIO heading into earnings, too, citing “strong electric vehicle uptake and subsidy tailwinds.”
Even Bank of America (NYSE:BAC)analyst Ming Hsun Lee just reiterated a buy rating on NIO with a $62 price target.
EV Demand Shows No Signs of Slowing
Remember, in an effort to combat global climate issues, global leaders want millions of electric vehicles on the roads yesterday. The U.S. wants 50% of all auto sales to be electric by 2030. The U.S. also wants to cut emissions by up to 50% over that time as well.
Europe wants to cut emissions by 55% by 2030. China wants to be carbon neutral by 2060.
One way to do that is by taking millions of gas-guzzlers off the roads and replacing them with EVs. Even major automakers are replacing fleets with EVs. Honda (NYSE:HMC) wants all of its sales to be electric by 2040, says Consumer Reports’ contributors Ben Preston and Jeff S. Bartlett.
BMW (OTC:BMWYY) wants about a dozen EVs on its fleet by 2025. Ford (NYSE:F) wants all vehicles to be electric by 2030, in Europe.
We could go on, but you get the point. The shift to going electric is happening fast.
Electric vehicles could get another boost when President Biden attends the UN’s Climate Change Conference of the Parties (COP26) in early November. Reportedly, world leaders will come together to discuss how to battle climate change issues.
The Bottom Line on NIO Stock
What’s not to like about NIO?
It’s incredibly oversold at major support. Delivery numbers and earnings growth continues to impress. Global leaders want millions of EVs on the roads yesterday. Major automakers are shifting to all-electric vehicles.
Coupled with the fight for a greener future, EV stocks like NIO could easily accelerate higher over the long term.
As we near its next earnings report, I’d like to see further recovery in NIO stock.
Hopefully, its next report will be as good as the last one, when total revenues came in at $1.308 billion – a 127.2% jump year over year. Gross profits were up 402% to $243.8 million. Gross margins improved to 18.6% from 8.4% year over year as well.
Again, I’d take full advantage of the latest pullback in NIO. As long as the stock doesn’t break below support, it could be a solid long-term winner.
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.
