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3 China-based EV Stocks to Buy in February 2022

China-based electric vehicle stocks such as XPeng and Nio have underperformed the markets in the last year, but remain top buys right now.

Investors remain bullish on electric vehicle stocks as the shift towards clean energy solutions is bound to accelerate in the upcoming decade. Further, China is the world’s largest electric vehicle market making stocks such as Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Niu (NYSE: NIU) top bets right now. Let’s see why each of these stocks should be part of your shopping list right now.

XPeng

XPeng has delivered over 150,000 vehicles to date, out of which 98,155 vehicles were delivered in 2021. In January 2022, its vehicle deliveries stood at 12,922, which increased 115% year over year.

XPeng offers three vehicle models to buyers that include the G3 SUV, the P7 sports sedan, and the P5 family sedan. Given the pricing of these vehicles, it’s quite evident that XPeng aims to target the mass market in China. The cars are priced between $23,500 and $63,000, which is much lower than EV manufacturers in the U.S., such as Tesla and Lucid Motors.

XPeng is valued at a market cap of $35 billion and is forecast to increase sales from $908 million in 2020 to $6.4 billion in 2022.

XPeng confirmed it would continue to expand production capacities to meet rising consumer demand and a massive order backlog. Analysts also remain bullish on XPeng and expect the stock to increase by 45% in the next 12-months.

Nio

Nio’s vehicle production run-rate stands at 130,000 vehicles or around 10,000 each month. The company’s management aims to increase the production run-rate to 600,000 by the end of 2022, which suggests Nio will deliver 50,000 vehicles each month by December.

Nio is well-positioned to capitalize on the growing demand for EVs and ended Q3 with close to $7 billion in cash, providing the company with enough room to expand manufacturing capabilities and support cash burn.

Nio is trading at a market cap of $41.5 billion and is forecast to report sales of $9.88 billion in 2022, up from $2.55 billion in 2020. The stock is down 58% from all-time highs but is expected to more than double in the next 12-months.

Niu Technologies

The final EV stock on my list is Niu, which manufactures battery-powered scooters. While Niu is a small-cap company valued at just over $1 billion, unlike Nio and XPeng its already reporting an adjusted profit.

Wall Street expects Niu sales to rise by 52.3% to $578 million in 2021 and by 54% to $890 million in 2022. Comparatively, its adjusted earnings per share are forecast to touch $0.92 in 2022, up from $0.41 in 2020. We can see that Niu is an undervalued growth stock as the price to 2022 sales multiple is less than 2x while the price to earnings ratio is also attractive at 15.4x.

Niu’s shipments in Q4 of 2021 rose to 238,188 units, an increase of 58.3% year over year. It continues to grow in China via expansion of its retail network as it added 422 new stores in the country in Q4.

In 2021, Niu sold over 1 million units, and shipments soared by 72.5% year over year. The company now aims to accelerate expansion in other international markets in Europe and Southeast Asia.

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