Looking to different geographies can really expand your horizons, and profit potential, as an investor. Today Iâ€™m inviting you to consider Chinese automotive systems and components manufacturer and seller China Automotive SystemsÂ (NASDAQ:CAAS). For some American traders, CAAS stock will be new but thatâ€™s part of its appeal.
Letâ€™s say youâ€™re interested in taking a position in the electric vehicles (EVs) market. Thatâ€™s all fine and good, but many of the more popular stocks in this sector are already expensive. The last thing I want you to do is chase after stocks that have already been bid up by the trading community.
In contrast, CAAS stock is still under the radar for many North American stock traders. Plus, with a market capitalization of around $210 million, CAAS is relatively small and has growth potential.
However, itâ€™s still necessary to â€œlook under the hoodâ€ and examine a companyâ€™s sales numbers before taking a position in the stock. As weâ€™ll see, China Automotive Systems passes the test with flying colors. Best of all, the market hasnâ€™t placed an unreasonable price on CAAS stock.
CAAS Stock at a Glance
Iâ€™m surely not the first person to point out that many stocks associated with electric vehicles have popped and dropped in 2020. Itâ€™s one of those situations where an entire sector tends to move in tandem. In this instance, CAAS stock was taken along for the ride.
But letâ€™s rewind to the beginning of the year, when the novel coronavirus crisis was taking its toll on the global equities markets. Like many other stocks, CAAS declined in March. At one point, the stock bottomed out at $1.43.
Over the next few months, CAAS stock clawed its way back to the $3 area. Then came a relatively quiet and range-bound period. It wasnâ€™t until November that CAAS popped, quickly shooting up to its 52-week high of $13.69.
That move turned out to be too much, too fast. Hence, a retracement ensued with CAAS stock pulling back to $6 and change in December. So, enterprising traders can take a position in CAAS without feeling like theyâ€™re chasing the stock at its peak price.
Steering in the Right Direction
One thing to like about China Automotive Systems is that the company is highly specialized. To be more precise, the company is known for producing power steering components.
China Automotive Systems offers its products to Chinaâ€™s electric vehicle market, which offers strong growth prospects. Chinese electric vehicle sales virtually doubled year-over-year to 144,000 units during the month of October.
Moreover, the Chinese government established an objective that by 2025, 25% of all of the nationâ€™s new cars should be electric cars.
The data suggests China Automotive Systems is faring well in this burgeoning market. The company recently revealed that it shipped roughly 120,000 electric power steering products for use in Chinese electric vehicles in 2020.
Apparently, China Automotive Systems Chairman Hanlin Chen envisions further expansion in this area. Chen expects the shipments of his companyâ€™s electric power steering products for use in Chinese electric vehicles to reach around 200,000 units in 2021.
China Automotive Systems CFO Jie Li is also evidently preparing for robust deliveries next year and beyond:
Our portfolio of EPS [electric power steering] products has the potential to become a major growth channel over the next few years as we further capture market share in the burgeoning market for Chinese electric vehicles. Our EPS systems are also well suited to be used in a wide variety of vehicles in addition to electric vehicles.
Moreover, it appears that China Automotive Systems is poised to finish 2020 on a strong note. Impressively, in November the company â€œshipped approximately 70,000 commercial vehicle steering systems to leading Chinese truck OEM [original equipment manufacturing] producers and the North America aftermarket.â€
Not all of the most interesting investments are in North America. Sometimes you might find a lesser-known stock, such as CAAS stock, with a bullish outlook.
CAAS stock is currently trading lower than its peak price. Consequently, investors can take advantage of this opportunity. This stock offers a chance to expand your geographic horizons in the burgeoning electric vehicle parts niche.
On the date of publication, neither LouisÂ 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.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system â€”withÂ returns rivaling even Warren Buffett. In his latest feat, Louis discovered the â€œMaster Keyâ€ to profiting fromÂ the biggest tech revolution of this (or any) generation.