If you’re in the market for a stake in a China-based electric vehicle (EV) maker, the most obvious choice would be Nio (NYSE:NIO). Or, you might prefer something like Li Auto (NASDAQ:LI). However, those aren’t the only Chinese EV options out there. Xpeng (NYSE:XPEV) is a worthy contender and Xpeng stock could offer investors some strong returns.
Of course, it’s tempting to just stick with NIO stock, I’ll admit. After all, the company reportedly delivered 7,007 vehicles back in December. That’s an impressive improvement of around 121% year-over-year (YOY).
However, Nio’s not the only way to get exposure to the fast-growing Chinese EV market. Plus, it’s perfectly okay to diversify your investment into multiple companies in this niche. That will reduce your risk.
So, Xpeng is a solid pick. But don’t just buy it as a portfolio diversifier. You’ll first need to make sure that you like the company as well as the price action of its stock.
A Closer Look at Xpeng Stock
Xpeng stock was first listed on the New York Stock Exchange in August of last year. For a couple of months, the shares traded in a narrow range and couldn’t seem to break through the $22 level.
However, that changed in November, which was easily the best month for XPEV. The bulls charged ahead, bringing the share price all the way up to a 52-week high of $74.49.
Of course, I’m constantly advising folks not to chase stocks after parabolic moves and Xpeng is a perfect illustration of this. By Dec. 28, the stock had declined to a short-term low of around $38.
But there was some recovery in the share price after that, with the stock settling at $48 and change by the end of January. So, where this name goes next will largely depend on the company’s ability to deliver in the future. And, as we’ll see, the deliveries are already coming in fast.
Better Than Nio?
In the opening of this article, I alluded to Nio’s 121% increase in December’s vehicle deliveries. That figure’s impressive — and pretty much unbeatable, right?
The short answer? No. That’s because Xpeng has actually proven to be Nio’s rival on the metric, delivering a company record of 5,700 vehicles during the month of December.
That’s a 35% month-over-month increase, which is already noteworthy. But it gets even better — Xpeng easily outperformed Nio with an astonishing 326% YOY vehicle delivery increase for December.
I wouldn’t dare try to incur the wrath of Nio stockholders by suggesting that XPEV is a better company. However, I will invite you to consider this: there’s a distinct possibility that Xpeng stock today is similar to where Nio was back in the second half of 2020. That could mean there’s significant upside in store for the EV maker.
A Second Chance to Buy a Winner
It seems like ages ago, but Nio and the company’s stakeholders were really struggling in early 2020.
Even before the Covid-19 pandemic, there were whispers on Wall Street that its stock price could go to zero. It was a scary time that got even scarier during the onset of the novel coronavirus.
Now, though, I’m sure that many investors wish they could turn back the clock and invest in Nio a year ago, then hold on for the outstanding gains that came in the latter half of the year.
But don’t count on NIO stock going back to those price levels anytime soon. Instead, take note of Xpeng stock’s similar path to success lately.
It’s one amazing statistic after another, with Xpeng delivering 12,964 electric vehicles in the fourth quarter of 2020. That’s a 303% increase on a YOY basis as well as a 51% improvement from the prior quarter.
So, if you missed out on the run-up in the Nio, don’t fret.
Today, you have a second chance to take a stake in a fast-improving Chinese EV manufacturer. But don’t hesitate for too long with Xpeng stock — you might not get a third opportunity to cash in.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content -and crossed the occasional line -on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.