Any company investing in electric vehicles was a popular place for investors in 2020 and going into 2021. But that interest waned, and a number of companies in the space ended up having a tough year.
However, that could simply be a pause before EV stocks head higher, likely moving up again in 2022. That’s thanks to continued investment and capital flowing into the space, in what looks to be one of the biggest multi-trillion-dollar trends of the decade.
Looking at opportunities in the space, NIO (NIO), the Chinese automaker that saw shares lose nearly 36 percent of their value in the past year, could be a winner.
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Chinese stocks have been hard hit on regulatory changes and the Evergrande default saga over the past few months. However, the world’s most populous country continues to see rising demand for cars, particularly EV ones. That may explain why a number of analysts are starting to get bullish on NIO following its most recent drop.
Action to take: While still unprofitable, this growth play has seen revenue rise nearly 117 percent over the past year. And it’s cash rich, allowing it to continue expanding operations as it ramps up production. This could be a big winner in a period of years rather than months.
For traders, 2022 could be a solid year for shares after a great 2020 but poor 2021. A longer-term option like the January 2023 $40 calls, last going for $5.45, could lead to big returns this year should shares reverse last year’s course and head higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.