There Just Might Be a Better Buy Than Nio Stock

Nio’s (NYSE: NIO) most up-to-date topple in mark noticed NIO stock topple from a Feb. 10 high of $64.60 to a May perchance well well 13 low of $30.71 sooner than getting better some of those losses over the 2nd half of of the month and into June.

A Nio (NIO) sign and logo on a tan concrete building.

A Nio (NIO) trace and stamp on a tan concrete constructing.

Provide: Sundry Pictures / Shutterstock.com

That’s a 52% correction from high to valley.

On June 2, Nio offered its deliveries for May perchance well well. It delivered 6,711 electric autos (EVs) in May perchance well well, 95% better than May perchance well well 2020. Nonetheless, its May perchance well well deliveries had been 5.5% lower than in April. Year-to-date, Nio’s delivered 33,873 EVs, 225% better than a year in the past thru the reside of May perchance well well.

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On balance, Nio is having an shapely year. Does this invent it a entirely to find?

Perhaps. Perhaps no longer.

NIO Stock Used to be Too Low

On May perchance well well 13, InvestorPlace printed my most up-to-date article about Nio. I advised that the alternate-wide chip scarcity offered merchants with a buying quite loads of.

“[I]f you’ve never owned the stock, however judge the electrification of passenger autos is the true deal, now would be an shapely time to evaluate taking a set,” I wrote.

I couldn’t salvage my timing any better if I attempted. Within the three weeks since, it’s regained nearly 30% of its losses, Trading round $42.12 as I write this. Add in the out of the ordinary deliveries file for May perchance well well — yes, deliveries had been down 5.5%, however that needed to place with the chip scarcity setting again manufacturing for several days — and it seems all however obvious to continue its plod well into June.

“[T]he Firm will be in a set to plod the provision in June to invent up for the delays from May perchance well well. The company maintains and reiterates the provision steering of 21,000 to 22,000 autos in the 2nd quarter of 2021,” acknowledged Nio’s June 1 press unencumber.

Within the 2nd quarter final year, Nio delivered 10,331 autos. At the time, the corporate’s third automobile, the EC6, had but to invent it to market. In May perchance well well, it delivered 2,282 EC6’s.

From where I sat in May perchance well well, NIO stock simply gave the impression too darn low. To invent the next 30% leg as a lot as $55 or $60 will possess plenty extra to find-in from merchants.

So, while you happen to neglected the boat in May perchance well well, I’ve bought a that you just would also judge quite loads of to Nio stock that can even no longer be barely as dangerous. I’ll existing what I imply in the next portion.

Care to Bet What It Is?

On several occasions in 2021, I’ve had the quite loads of to recommend the First Have confidence NASDAQ Gorgeous Vitality ETF (NASDAQ: QCLN).

In February, I advised QCLN would invent an shapely quite loads of to Nio, which modified into as soon as one in every of 2020’s entirely-performing shares.

“Because it offered the $1 billion in funding, Nio stock is up 1,400%, and it’s bought a market capitalization of $86.6 billion, nearly double Ford (NYSE: F),” I wrote on Feb. 24. “In case you restful are looking to salvage in on the Nio action however pain you’ve neglected the boat on its stock appreciation, First Have confidence’s QCLN elegant energy ETF offers you shapely exposure to the electric automobile (EV) manufacturer with a weighting of 6.7% of the fund’s $3.3 billion in entire fetch resources.”

As of late, Nio is the ETF’s no 1 conserving with a weighting of 8.37% and resources of nearly $2.5 billion. Traders possess abandoned elegant energy up to now in 2021, and it shows with QCLN’s entire return of -10.7% as of June 4.

The 2nd time I discussed QCLN modified into as soon as in the the same breath as my June 1 article recommending Xpeng (NYSE: XPEV) in the mid to high $20s at some level at some level of the summer. My rationale modified into as soon as that institutional merchants would load again into elegant energy shares later in the year.

Nonetheless, while you happen to didn’t desire the corporate explicit-threat of XPEV, QCLN would make it more straightforward to as a minimal accomplish exposure to it and the leisure of the EV alternate for an cheap 0.6% management price.

The Backside Line

Don’t salvage me unsuitable. I judge that while you happen to to find Nio at $41 this day and take care of for the next 2-3 years, barring a valuable correction in the total markets, which can presumably maybe positively happen, I’m confident you’ll invent money on your funding.

That acknowledged, I’m always looking to most up-to-date readers with choices. In this case, it’s QCLN.

I place so vivid that the ETF has had barely of a cooldown in 2021 after 2020’s entire return of 184%, which followed a 43% return in 2019.

The contrarian/mark investor in me says wait to head attempting while you happen to would possibly presumably maybe decide it up under $50 — it final traded at $50 in November 2020 — however while you happen to take care of for 2-3 years, you wants to be okay in the low $60s.

Or, in a tip of the cap to my February article, you to find 33% in QCLN, 33% in Nio, and 33% in the Invesco S&P 500 Equal Weight ETF (NYSEARCA: RSP). Bob’s your uncle; you’ve bought a ready-made three-stock portfolio that will place well over the prolonged haul.

On the date of e-newsletter, Will Ashworth did no longer possess (either straight or circuitously) any positions in the securities talked about listed here. The opinions expressed listed listed below are those of the creator, self-discipline to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments beefy-time since 2008. Publications where he’s appeared consist of InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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