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A Chinese EV Company That Represents Remarkable Value


Over the years, one of my most profitable investment research techniques has been to look for companies whose stock has been dragged down by negativity around the market in which they operate, even though they themselves are well-run, efficient, and profitable, characteristics that will enable them to survive a downturn and emerge stronger should competitors go under or cut back operations significantly when times are tough. So, when there is a flood of bad news about an industry and every stock is getting hit, I start sniffing around, looking for a company that fits the bill. This week, that has led me to the Chinese EV manufacturer and distributor, Li Auto (LI).

EV sales seem to have plateaued around the world, so given that many of the stocks in the industry were trading at extremely high P/Es and many other companies have never made any money so don’t have a P/E, it is no surprise that EV stocks have had a tough start to 2024. The biggest of them all, Tesla (TSLA), for example, is down around 40% YTD. You may remember that I wrote a piece about a month ago saying that I was getting back into TSLA, a trade that worked out for a while, but which I have now fully exited after the stock dipped below its 52-week low just above $152. The problems there, however, seem to be somewhat company-specific and I haven’t completely lost faith in the industry.

One of those company-specific problems is that competition in the space has heated up, forcing Tesla to cut prices.…

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