Stocks to buy

China-based electric vehicle (EV) manufacturer Li Auto (NASDAQ:LI) is definitely in the fast lane in 2023. The LI stock price doesn’t fully reflect Li Auto’s amazing vehicle delivery data. Don’t be surprised if Li Auto’s shareholders book solid returns this year — and don’t complain if you missed out on this prime buying opportunity.

There’s no denying that Li Auto has to deal with fierce competition in China’s new energy vehicle (NEV) market. Yet, the numbers don’t lie and there’s evidence that Li Auto is selling plenty of NEVs.

So, don’t be afraid to take a chance on Li Auto. It won’t always be a smooth ride, but investors’ patience and loyalty will likely be rewarded in the end.

LI Stock Can Hit $40 Again

I’m choosing $40 as my target for LI stock because it reached that price point (more or less) in late 2020, and then again in mid-2022. And as the old saying goes, resistance levels are meant to be broken.

Besides, the analysts’ consensus forecast for the Li Auto share price is $37.30. So, I’m just rounding it up to $40. By the way, five out of five analysts gave Li Auto a “buy” rating, which is certainly encouraging.

One thing that I really like about Li Auto is that the company isn’t in a deep financial hole. In fact, Li Auto is actually a profitable business, having reported 265.3 million RMB ($38.5 million) of net income in the fourth quarter of 2022.

In addition, Li Auto free cash flow in Q4 2022 literally doubled when compared to the year-earlier quarter. So, while some EV startups are financially flailing, Li Auto is clearly on the right track.

Li Auto’s EV Delivery Growth Is Astounding

If you need more evidence that Li Auto is a well-oiled machine, just look at the numbers. The company’s recent update reveals that Li Auto delivered 20,823 vehicles in March, up 88.7% year over year (YOY).

Furthermore, for the first quarter of 2022, Li Auto delivered 52,584 vehicles, up 65.8% YOY. Chairman and CEO Xiang Li proudly declared that Li Auto has “delivered over 300,000 vehicles cumulatively,” making the company “the fastest among China’s premium NEV manufacturers to achieve this milestone.”

Those data points should convince the skeptics to consider a position in LI stock. Besides, Li Auto could easily sell more EVs and generate more revenue as the company introduces new and exciting vehicle models.

In particular, Li Auto has started deliveries of the Li L7, a five-seat family SUV. Moreover, Li Auto’s chief executive expects the company to commence deliveries of the L7 Air and Li L8 Air models this month.

So, Is LI Stock a Buy, Sell or Hold?

I fully agree with the five analysts who gave Li Auto a “buy” rating. The automaker’s sales growth is undeniable, and Li Auto’s new vehicle models should enhance the company’s top and bottom lines.

In case you haven’t figured it out by now, I would wholeheartedly rate LI stock as a buy and expect it to revisit $40. Just don’t go overboard with your share position. I could be wrong about Li Auto’s future growth prospects, and there’s always risk when investing in EV startups.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) 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.

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