The Oracle of Omaha Trusted Chinese Manufacturers of Electric Vehicles; here are a few worth watching

Content of the article

This article was created by MoneyWise. Postmedia and MoneyWise can earn affiliate commission through links on this page.

Advertising

Content of the article

After a heated early November, stocks of electric vehicles have fallen sharply for about a month. But for investors who got started early enough and stick around, returns are still strong.

Rivian Automotive, which debuted on the Nasdaq last month at US $ 78 per share, continues to trade close to US $ 100. And Lucid Group, which went public via a SPAC deal this summer, remains up 55% in the past two months.

Then there’s Tesla, which, despite its recent decline, has grown by 2,210% over the past five years.

Warren Buffett isn’t known for chasing the hype, but that doesn’t mean he’s missing the electric vehicle boom.

In fact, Buffett entered the industry over ten years ago. It has poured hundreds of millions into Chinese electric vehicle maker BYD, and it continues to pay off.

Advertising

Content of the article

Here’s a look at the legendary investor’s favorite EV stock, plus two other Chinese manufacturers that might be worth it with all the extra cash you have.

BYD (BYDDY)

BYD Han EV (electric vehicle)

Jengtingchen / Wikimedia Commons

In 2008, Buffett’s firm, Berkshire Hathaway, bought 225 million BYD shares for $ 232 million.

Berkshire’s latest letter to shareholders shows that it still held those shares as of December 31, 2020 – except that their market value had jumped to around $ 5.9 billion.

Given that BYD has grown another 25% this year, Buffett’s company would have made an additional $ 1.48 billion gain on that position, assuming he didn’t sell any shares.

And the business isn’t just about the hype. In the third quarter, BYD sold 183,000 new electric vehicles (including hybrids), up 294% from the previous year. And when it comes to pure electric vehicles, the company sold 91,616 of them, which is an increase of 186%.

Advertising

Content of the article

Despite its well-established position, BYD shares are not listed in North America. They only trade over-the-counter here, so you’ll need to hire a specialist broker. But other fast-growing Chinese electric vehicle makers have reached US stock exchanges.

NIO (NIO)

NIO vehicle, rear view, at a car show in the middle of a crowd of people

Jengtingchen / Wikimedia Commons

NIO is one of them.

The company entered the market in December 2017 with a premium seven-seater electric SUV called the ES8. A year later, it debuted with the ES6, and in late 2019, NIO added a five-seat “crossover coupe” SUV called the EC6 to its lineup.

The company delivered 24,439 EVs in the third quarter of this year, doubling the number of EVs delivered in the same period last year. As of November 30, cumulative deliveries of the three NIO models have exceeded 156,000 vehicles.

Advertising

Content of the article

NIO stocks have been a roller coaster ride. Last summer, the stock was trading below US $ 10. It skyrocketed to over US $ 60 during the memes market frenzy earlier this year, before losing a good chunk of the gains. Today, the shares are trading at around US $ 30 each.

If you’re worried about putting your money into such volatile tickers, you can always throw your “spare” into a wallet suited to your risk-taking comfort.

XPeng (XPEV)

multicolored XPeng vehicle on road, front view

Yirangong / Wikimedia Commons

XPeng is another Chinese electric vehicle company that trades on the US stock market.

It went public in August 2020 with an IPO price of US $ 15. Thanks to the huge market appetite for EV stocks over the past year, XPeng stocks have climbed to over US $ 40 each.

Again, this isn’t just the hype – the business is booming. The automaker is rapidly increasing its production.

Advertising

Content of the article

In the third quarter, XPeng delivered 25,666 electric vehicles, representing a 199.2% year-over-year increase and marking a new quarterly record.

At the same time, total revenue jumped 187.4% year-over-year to US $ 887.7 million for the quarter.

New technology or classic art?

Work of Andy Warhol (car painted by the artist)

Davidwiz / Wikimedia Commons

Investors love EV stocks because many of them offer oversized returns, but you should always remember that they are always subject to the ups and downs of the stock market.

If you want to invest in something more stable that still has high return potential, consider an overlooked asset: the fine art.

Contemporary art has surpassed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart. Meanwhile, the correlation factor between contemporary art and the S&P 500 has been -0.1 over the past 25 years.

Investing in art by Banksy and Andy Warhol was previously only an option for the ultra-rich, like Buffett. But with a new investment platform, you can also invest in iconic works of art, just like Jeff Bezos and Bill Gates do.

This article was created by Wise Publishing. Wise is dedicated to providing information that helps readers navigate the complex landscape of personal finance. Wise only associates with brands he trusts and believes may be of use to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertising

comments

Postmedia is committed to maintaining a vibrant but civil discussion forum and encourages all readers to share their views on our articles. Comments may take up to an hour of moderation before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread that you follow, or if a user that you follow comments. Check out our community guidelines for more information and details on how to adjust your email settings.


Source link