Growth vs. GARP: Value Investors Should Buy Nio Stock Now

InvestorPlace07-17

The deliveries of Chinese EV maker Nio (NIO) are growing rapidly, while the valuation of NIO stock is quite low. Nio’s upcoming EVs have a great deal of potential. NIO stock should be helped by the ...

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Also likely to help the China-based automaker going forward are cost reductions spurred by its increasing utilization of robotics and Wall Street’s renewed respect for EVs.After NIO stock plunged 49% in 2024, the shares’ valuation is quite low. Specifically, the name has a very low price-to-sales ratio of 1.15 times.Nio is actively training humanoid robots and robot dogs to carry out inspections of its EVs. More importantly. the automaker is already utilizing 310 automated guided vehicle transpo","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","EVS.SI":"MSCI China Electric Vehicles and Future Mobility ETF-NikkoAM","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU0052750758.USD":"富兰克林中国基金A Acc","BK4532":"文艺复兴科技持仓","BK4531":"中概回港概念","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","LU0234570918.USD":"高盛全球核心股票组合Acc Close","BK4548":"巴美列捷福持仓","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","SG9999015952.SGD":"LIONGLOBAL DISRUPTIVE INNOVATION \"I\" (SGD) ACC","NIO":"蔚来","BK4534":"瑞士信贷持仓","BK4511":"特斯拉概念","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0823411888.USD":"法巴消费创新基金 Cap","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","LU0708995583.HKD":"TEMPLETON CHINA \"A\" (HKD) ACC","LU0082616367.USD":"摩根大通美国科技A（dist）","BK4533":"AQR资本管理(全球第二大对冲基金)","GARP":"ISHARES MSCI USA QUALITY GARP ETF","LU0056508442.USD":"贝莱德世界科技基金A2","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","ISBC":"投资者银行","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","BK4585":"ETF&股票定投概念","LU2063271972.USD":"富兰克林创新领域基金","BK4555":"新能源车","XPEV":"小鹏汽车","SG9999015945.SGD":"LionGlobal Disruptive Innovation Fund A SGD","TSLA":"特斯拉","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0823414478.USD":"法巴经典能源转换基金","09866":"蔚来-SW","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","NIO.SI":"蔚来","BK4550":"红杉资本持仓","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","BK4099":"汽车制造商","LU1548497426.USD":"安联环球人工智能AT Acc","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU0320764599.SGD":"FTIF - Templeton China A Acc SGD","BK4551":"寇图资本持仓"},"translate_title":"增长与GARP：价值投资者现在应该购买蔚来股票","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XPEV":1,"ISBC":1,"GARP":1,"NIO":1,"TSLA":1,"NIO.SI":0.6,"EVS.SI":0.6,"09866":0.6},"content_text":"The deliveries of Chinese EV maker Nio (NIO) are growing rapidly, while the valuation of NIO stock is quite low. \nNio’s upcoming EVs have a great deal of potential.\nNIO stock should be helped by the Street’s renewed bullishness on EVs. \n\n\n\n\n\n \n\nSource: Robert Way / Shutterstock.com\n\n\n\nGiven Nio’s (NASDAQ:NIO) strong, recent growth, the low valuation of NIO stock and the high potential for its upcoming electric vehicles, I view its shares as a buy for value and growth-at-a-reasonable price (GARP) investors alike. Also likely to help the China-based automaker going forward are cost reductions spurred by its increasing utilization of robotics and Wall Street’s renewed respect for EVs.\nStrong Growth and a Bargain Valuation\nLast month, Nio’s deliveries soared 98% versus the same period a year earlier to 21,209. And in the second quarter, the automaker handed over 57,373 EVs, representing a huge 144% jump versus Q2 of 2023. Both the monthly and quarterly delivery figures set new, all-time records for the EV maker. Clearly, the company’s EVs have become significantly more popular in China recently as its growth is trending way above the 31% delivery increase that it managed to generate in 2023. According to Seeking Alpha columnist Yiannis Zourmpanos, Nio’s recent success is due to an increased focus on selling relatively affordable EVs.\nAfter NIO stock plunged 49% in 2024, the shares’ valuation is quite low. Specifically, the name has a very low price-to-sales ratio of 1.15 times.\nUpcoming EVs Have Great Potential\nNio’s upcoming Onvo L60 EV looks poised to take significant market share from Tesla’s (NASDAQ:TSLA) Model Y in China. \nThe Onvo L60, which is expected to hit the market in September, looks similar to the Model Y in pictures, and it offers similar driving ranges to Tesla’s iconic EV. However, the Onvo 360 starts at just $30,500 in China while the most affordable Model Y model has a sticker price of $34,600.\nAlso importantly, Nio intends to launch a large SUV in 2025 that will seat six or seven passengers. In general, there are not many large electric SUVs on the market. As a result, I believe that such EVs can easily generate a great deal of demand among consumers. Indeed, six months after Xpeng (NYSE:XPEV) launched its own large X9 SUV, the firm delivered an average of 2,200 of the vehicles each month. That represents about 20% of its total deliveries. Moreover, large SUVs tend to carry relatively high profit margins for automakers.\nDeutsche Bank is very upbeat on the Onvo 360’s outlook, estimating that Nio can deliver 20,000 of the EVs per month. What’s more, the bank expects Nio’s deliveries to climb 62% in 2025. Coming on top of this year’s very strong growth, such an increase would be very good for NIO stock.\nCost Cutting and the Street’s Increased Bullishness\nNio is actively training humanoid robots and robot dogs to carry out inspections of its EVs. More importantly. the automaker is already utilizing 310 automated guided vehicle transport robots and 941 industrial robots in its assembly workshop.  The automaker’s intense utilization of robots has likely greatly reduced its costs and probably significantly contributed to the year-over-year tripling of its gross margin to nearly 5% in Q1. As the company increases its use of robotics, its costs are likely to fall further over the medium-and-long term.\nAlso likely to boost NIO stock is Wall Street’s recently increased optimism about EVs. In general, I’ve found that the Street’s view of Chinese companies within a given sector is highly influenced by the same sector’s performance in America. For example, because many U.S. solar-power firms have struggled in recent years, large American investors have generally avoided Chinese solar stocks as well, even though Chinese solar companies have generally done relatively well during that period.\nFor the last year, the Street has been very bearish on EVs. However, that mindset has seemed to change after  U.S. EV sales climbed 11% in Q2 versus the same period a year earlier. Indeed, NIO stock has advanced nearly 10% this month in the wake of the release of last quarter’s U.S. EV sales data.  \nThe Bottom Line on Nio Stock\nGiven Nio’s lack of strong technological advantages over its peers, I don’t expect it to deliver tremendous growth over the long term. However, for value investors and GARP investors, it is worth buying at this point. \nOn the date of publication, Larry Ramer held a long position in XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.\nOn the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.\nLarry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.Consumer Discretionary, Automotive, Electric VehiclesGrowth Stocks \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/07/growth-vs-garp-value-investors-should-buy-nio-stock-now/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.3","shortVersion":"4.26.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2452713281"}