One of the biggest movers higher in today’s rather dim market is China-based Huadi International (NASDAQ:HUDI). At the time of writing, HUDI stock has soared more than 90% alongside most Chinese names, which continue their rally this week on rumors that Chinese officials may be moving away from a zero-Covid policy sometime soon.
Aside from this geography-specific catalyst, there’s some major company-specific news driving HUDI stock higher today. Huadi announced this morning that it is wading into the clean energy industry. The company has put together a strategic plan to utilize its industrial stainless steel production capabilities for anode materials, key to battery development.
This sort of vertical is one that appears to make a lot of sense for Huadi. This company is best known for its industrial stainless steel pipes and tubes used mainly in the construction space. However, with the housing market in China entering a period of disarray, the timing of this strategic shift couldn’t be better.
Let’s dive into what this means for investors looking at Chinese stocks right now.
Why Is HUDI Stock Soaring Today?
U.S.-traded China-based companies are having a very good week, rallying on some pretty speculative catalysts. That said, where there’s hope, there’s the potential for a rally. Thus, many investors may want to consider a basket-based approach to ride this momentum higher, for those so inclined.
But for those looking for one-off opportunities in the market, Huadi is certainly moving up the watch list for many investors after this announcement. This move toward renewable energy development, which is clearly a top priority for the Chinese Communist Party, could garner favor among government officials. For a company that plays an important role in the development of Chinese industry, that’s a great thing for shareholders.
Right now, it appears Huadi’s strategic plan is focused on the Sichuan region. Notably, government officials have negotiated this strategic plan, suggesting there’s some sort of support (direct or indirect) being provided here. Accordingly, for those concerned about regulatory risk in the Chinese market, HUDI stock is one that’s starting to look a lot more attractive right now.
On the date of publication, Chris MacDonald 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.
