Arguably the world’s most respected and successful investor of all time, Warren Buffett is known for his value investing strategy. He preaches a long-term investing strategy in which investors buy an undervalued stock and hold it for an extended period to benefit from the company’s gradual growth. Buffett’s latest bets have been in the electric vehicle (EV) industry, which he believes has immense growth potential given the rising demand for efficient and low-emission vehicles and governments’ policy support to address climate change concerns.
Investors’ increasing interest in the EV space is evident in the Global X Autonomous & Electric Vehicles ETFs’ (DRIV) 8% returns over the past month versus the tech-heavy Nasdaq’s 6.2% returns. According to a Research and Markets report, the global EV market is expected to grow at a 26.8% CAGR between 2021 – 2030. And President Biden’s proposed infrastructure plan includes significant spending for the EV industry. He aims to build 500,000 EV charging stations by 2030.
Given the industry’s promising prospects, Buffet is highly optimistic about the long-term performance of BYD Company Limited (BYDDF) and General Motors Company (GM). So, we think it could be wise to scoop up these stocks now.
BYD Company Limited (BYDDF)
Headquartered in Shenzhen, China, BYDDF together with its subsidiaries, researches, develops, manufactures, and sells automobiles and related products worldwide. It operates through three segments: rechargeable battery and photovoltaic products; mobile handset components and assembly; and automobiles and related products. Buffett’s Berkshire Hathaway holds 225 million shares of BYDDF.
On February 17, New Mexico officials chose BYDDF to participate in a statewide purchase agreement that gives transit agencies throughout the state and the United States the ability to buy American-made BYD coaches and buses. This agreement could increase the company’s sales in coming months.
BYDDF’s December 2020 sales surged 30.4% year-over-year to 56,322. For the third quarter, ended September 30, 2020, its operating income grew 40.7% year-over-year to RMB44.52 billion ($6.96 billion). Its net profit came in at RMB1.75 billion ($273.9 million), which represents a 1,362.7% year-over-year increase. The company’s EPS was RMB0.62 ($0.10), up 3,000% year-over-year.
BYDDF’s revenue is expected to be $9.06 billion for the quarter ending September 30, 2021, which represents a 36.6% year-over-year rise. The stock has surged 288.7% over the past year to close yesterday’s trading session at $27.39.
General Motors Company (GM)
GM designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. It operates through four segments: North America, international, cruise, and financial. It markets its vehicles under the Buick, Cadillac, Chevrolet and GMC brand names primarily. Berkshire Hathaway currently holds 67 million shares of GM.
General Motors announced on May 14, 2021, that it plans to invest $40 million in its Pontiac Stamping Plant. The investment will be used to renovate the facility and install new, highly flexible fabrication machinery and presses to support future electric vehicle production and various product applications.
GM’s adjusted EBIT surged 266.7% year-over-year to $4.4 billion in the first quarter, ended March 31, 2021. It’s GM North America adjusted EBIT grew 40.9% year-over-year to $3.1 billion. Its net income was $3 billion, which represents a 1000% year-over-year increase. The company’s EPS was $2.03, up 1094.1% year-over-year.
For the current quarter, ending June 30, 2021, analysts expect LMT’s EPS and revenue to increase 244% and 63.9%, respectively, year-over-year to $0.72 and $27.5 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 114.1% over the past year to close yesterday’s trading session at $61.34.
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BYDDF shares were trading at $27.54 per share on Friday afternoon, up $0.16 (+0.57%). Year-to-date, BYDDF has gained 4.21%, versus a 13.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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