Stocks to buy

Chinese electric vehicle (EV) manufacturer Li Auto (NASDAQ:LI) stock is on a roll, so to speak. The automaker recently reached a milestone, producing 200,000 Li ONE electric hybrid SUV models.

Overall, Li Auto’s ramp-up in EV deliveries has been outstanding. If China’s EV market can recover from challenges including Covid-19 lockdowns and supply-chain disruptions, LI stock has the potential to move much higher.

Sometimes, U.S.-based investors might forget that the clean-energy movement is truly international. Sure, there are some high-conviction EV makers in America, but China is the world’s biggest car market. So, why not consider seeking potential profits abroad?

Li Auto has to deal with the challenges inherent to the Chinese EV industry in 2022, but this market could improve in the coming months and years.

LI Li Auto $29.94

What’s Happening with LI Stock?

Not long ago, InvestorPlace contributor Faisal Humayun put LI stock at the top of his list of five undervalued auto stocks to buy before they zoom higher. Indeed, the stock has “zoom” potential as the buyers have been attempting a breakout above $40 for a while.

As Humayun points out, Li Auto’s second model, Li L9, is a smart SUV that will be open for mass deliveries this month. “In the coming quarters, the new model will help in accelerating deliveries growth,” Humayun expects.

That’s a fair point, but Li Auto is already marking a major milestone with its first vehicle model, the Li ONE electric hybrid SUV.

In just 986 days, Li Auto managed to produce 200,000 Li ONE models. Furthermore, the automaker delivered 10,422 Li ONEs in July, indicating a 21.3% year-over-year (YOY) increase.

So, it’s easy to see where Humayun is coming from as Li Auto’s value proposition appears to only be growing stronger. Granted, the company has been working through challenges inherent to the Chinese EV industry. These include Covid-19 lockdowns and supply-chain constraints.

On the other hand, contrarian traders can consider buying LI stock during the tough times, in anticipation of possible gains during the good times.

Citigroup analyst Jeff Chung observed that typical seasonal patterns in China’s EV market have been impacted by Covid-related issues. Seasons come and go, though, and these issues could subside in 2022’s second half.

All in all, Li Auto’s investors should think long-term. After all, China’s EV market is forecast to reach $799 billion by 2027, with a compound annual growth rate (CAGR) of over 30.1% from 2022 to 2027. Clearly, this ongoing trend should benefit Li Auto in the long run.

What You Can Do Now

China’s EV market recovery could take a while, so LI stockholders will need to be patient. Still, Li Auto’s production and delivery data ought to keep the company’s shareholders in a positive, confident mood.

It takes a contrarian spirit to invest when there’s trouble. Forward-looking investors can envision a rebound taking place in the Chinese EV industry.

It’s difficult to establish an exact time frame for this eventuality. Yet, sooner or later, a stake in Li Auto could realize its “zoom” potential.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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