$57 Price Target Could Be Just the Beginning for XPeng Not everybody is enamored with Chinese stocks right now, but investors should consider investing in electric vehicle manufacturer XPeng (XPEV). Here's why.
By David Moadel •
This story originally appeared on StockNews
Not everybody is enamored with Chinese stocks right now, but investors should consider investing in electric vehicle manufacturer XPeng (XPEV). Here's why.
Let's be honest. Not every investor loves Chinese companies and stocks right now. Perhaps they saw what happened to ride-hailing giant Didi Global < NYSE:DIDI>, and they're afraid to take a position in China-based electric vehicle (EV) maker XPeng < NYSE:XPEV> because XPEV stock might also tank.
Yet, let's not make generalizations here. Granted, the Chinese government has been cracking down on some companies, mainly due to cybersecurity and antitrust concerns.
But then, not every China-based company is in trouble. Moreover, XPEV stock won't necessarily meet the same fate as DIDI and other Chinese stocks.
Indeed, recently issued statistics indicate that Xpeng is firing on all cylinders. Besides, one prominent analyst is bracing for higher share prices, and his bullish argument is convincing.
A Closer Look at XPEV Stock
XPEV stockholders did have their time in the sun, back in November of 2020. At that time, the share price rocketed from $20 to a peak of $74.49.
Unfortunately, folks who chased the stock in the mid-$70's were soon punished for their haste.
As it turned out, a nasty crash ensued in late 2020 and persisted throughout the first few months of 2021.
Since the summer, XPEV stock has been range-bound and can't seem to break above $45.
There's an old saying, though: the longer the base, the higher in space. In other words, prolonged sideways periods can sometimes be the launch pad for a major breakout.
So, don't be discouraged by the lateral movement of XPEV stock. A big move could be just around the corner - and it would be a shame if you're not in the trade if it happens.
Can't Argue with These Results
There will be doubters and naysayers, especially when it comes to Chinese companies nowadays.
However, they'd be hard-pressed to argue with the numbers contained in XPeng's recently published vehicle delivery update.
Seriously, the company just killed it across the board. For one thing, XPeng posted 10,412 deliveries in September, marking the company's highest-ever monthly delivery figure.
Along with passing the 10,000 milestone, that number also represents a 199% increase year-over-year, and a 44% increase over the previous month.
Need more ammo for the bull thesis? Fine, here you go: for 2021's third quarter, Xpeng achieved a quarterly record of 25,666 deliveries.
That signifies a 48% increase quarter-over-quarter, as well as a 199% year-over-year improvement.
But wait - it gets even better when we extend the timeline. Year-to-date, XPeng delivered a total of 56,404 vehicles, which signifies a whopping 301% year-over-year increase.
Bear in mind, this occurred during a semiconductor shortage, as well as the Chinese government's crackdown on multiple industries.
Yu Said It
Even with those delivery stats in mind, some folks will still be nervous about XPeng because Chinese stocks have taken a beating this year.
To help assuage their fears, I'll refer the skeptics to Deutsche Bank's Edison Yu.
While acknowledging that there have been several reasons for the under-performance of Chinese stocks, Yu asserts that the "largest overhang" has been investors' reluctance to commit following the Chinese authorities' crackdown on Didi.
I tend to concur with Yu's reasoning here. Looking ahead, Yu posits that "sentiment could be bottoming going into year-end" - which, of course, should be beneficial to XPeng and its shareholders.
Furthermore, for the fourth quarter, Yu believes that XPeng will guide for deliveries in the 35,000 to 40,000 range, while achieving 15,000 vehicle deliveries in December.
That's not unrealistic, and would bring XPeng's full-year volume to almost 94,000 deliveries, representing a 247% year-over-year increase.
With that, Yu raised his price target on XPEV stock from $51 to an even more ambitious $57.
The Bottom Line
I like the sound of $57, but long-term investors can aim even higher than that if they truly believe in the company.
And, why wouldn't they? Just look at those delivery numbers, and especially the percentages.
They're outstanding, and suggest that XPEV stock deserves to be much higher than the $40's.
So, just be patient if you're in the trade, and be prepared for a spectacular ending to XPeng's already record-breaking year.
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On the date of publication, David Moadel 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.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
XPEV shares were trading at $46.58 per share on Monday morning, up $3.44 (+7.97%). Year-to-date, XPEV has gained 8.76%, versus a 22.69% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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