We get a little bit of a rotation in the market, and everyone starts calling for the next big crash.
The tech-heavy Nasdaq has dropped 10% in less than a month.
The S&P 500, an index of 500 of the largest listed stocks, dropped 5% over the same time frame.
But the stable old Dow Jones Industrial Average, which only tracks 30 top industrial companies, barely budged.
This isn’t a sign of a crash.
It’s how we find mispricings in the market.
It’s times like this that we can look through the markets and find industries with huge tailwinds that can’t be ignored.
I’ve talked about how the economy is going to recover this year, and how earnings are showing us the way. And I think that momentum will drive one industry higher for years to come. It’s one that is trading at bargain prices at the moment.
And one company on my radar has the potential to nearly double over the next year.
I don’t want you to miss out on the next run higher…
This Market Is Set to Grow
I’m talking about electric vehicle (EV) makers.
They’ve fallen along with the rest of the market. Many electric vehicle stocks have fallen more than 20% since the peak in January.
But this is one of those cases where the market isn’t paying attention to what’s actually happening.
All we need to do is look at deliveries data. That’s the number of cars that companies have delivered to customers from their factories.
- Tesla, the U.S.-based electric vehicle giant, reported a delivery of 184,800 vehicles in the first quarter of 2021. That tops the previous quarter’s record in deliveries and is nearly 20,000 more cars delivered than analysts expected.
- Chinese electric car makers Nio and Xpeng both posted better-than-expected deliveries numbers for March, as well. They each set new quarterly records.
All of this tells us one simple fact — electric vehicles are booming.
You can’t deny the data.
Sales are at record highs less than a year after a global pandemic. Deliveries are at quarterly records. These companies are seeing strong demand from customers looking for green options, boosted by government initiatives and that “cool” factor.
Electric vehicle sales are getting more market share and expected to grow from $246 billion in 2020 to a nearly $1 trillion market in the next seven years.
One Mispriced Company
You may think, with electric vehicles booming over the past 12 months, you’ve missed the opportunity.
That’s not the case.
As I mentioned above, many EV companies are seeing their share prices down 20% to 40% from recent peaks.
This presents a great opportunity today. With the electric vehicle market expected to grow rapidly over the next decade, we have a tailwind that can’t be ignored.
And with the stocks seeing a dip, it creates a mispricing opportunity within this greater tailwind that we want to benefit from.
Nio (NYSE: NIO) is a great example.
The stock has fallen more than 30% from a peak in February. That’s a sharp drop in less than 60 days. But now shares are trading at a bargain price. And they’re right at a key support level that investors love to buy more shares at.
Take a look:
The green support level shows us the stock is still in an uptrend, even after a drop of more than 30%.
Now investors are looking for an opportunity to jump back in and send the stock soaring.
I recorded a “Bank It or Tank It” video on Nio at the end of January. It takes a deeper dive into some of the fundamentals and sentiment around the stock, but even at that time I thought it would do well in 2021. I expected it would hit $86 in the following months.
Instead, the stock saw a sharp drop. But that has created a great buying opportunity.
I still have an $86 price target for 2021. That will be a 100% increase for the stock in the coming months. It’s a stretch, but the next push higher could easily take it there.
Nio is one of the great ways you can capitalize on the expected electric vehicle market growth while you keep an eye out for other big movers in the space.
Editor, Quick Hit Profits