Thanks to the COVID-19 pandemic, 2020 has been one of the most volatile years on record for the global economy and stock markets have been more unpredictable than ever. Although many companies saw their stocks hit record lows, there have also been some big winners. Stocks of companies that were structurally positioned to benefit from changing trends and that have been perceived as contributing to making a better work and lifestyle future for society have surged.
Because the market has rallied on factors that still exist, such as a federal stimulus packages, the deployment of COVID-19 vaccines, accommodative monetary policy and low interest rates, the bull run for the 2020 winners may well continue. But, obviously, it is important to analyze the stocks and consider how long the rally might continue for them.
NYSE-listed stocks like Nio Limited (NIO), QuantumScape Corporation (QS) and Nautilus, Inc. (NLS) have gained more than 850% this year. These stocks still have enough upside left we think because their companies can continue to capitalize on powerful long-term secular trends.
Nio Limited (NIO)
NIO is a designer, manufacturer and seller of electric vehicles offering five-, six- and seven-seater electric SUVs worldwide. The company also manufactures e-powertrains, battery packs, charging solutions, and battery swapping services. NIO was founded in 2014 and is based in Shanghai. On December 17, NIO announced the completion of an offering of 68 million American depositary shares at $39.00 per ADS. The company plans to use the offering’s proceeds and for research and development of new products, service network expansion and for general corporate purposes
NIO has recently launched an innovative ‘Battery-as-a-Service’ subscription model that allows customers to purchase electric vehicles and subscribe to the usage of battery packs separately. This solution should help NIO’s vehicles stand out in the market.
NIO’s revenue increased has 146.4% year-over-year to $666.60 million in the third quarter ended September 30, 2020. Gross profit rose 87.1% sequentially to $86.30 million, while its gross margin increased 452 basis points sequentially to 12.9% in the third quarter.
The consensus EPS estimate for the next quarter ending March 31, 2021 represents a 47.8% improvement from the year-ago value. Moreover, NIO has an impressive earnings surprise history, with the company beating consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $715.25 million for the next quarter represents a 265.3% increase over the same period last year. The stock has gained 1103.5% this year.
How does NIO stack up for the POWR Ratings?
A for Trade Grade
A for Peer Grade
B for Industry Rank
B for Overall POWR Rating.
The stock is currently ranked #14 of 115 stocks in the China group.
QuantumScape Corporation (QS)
QS produces and commercializes solid-state lithium-metal batteries for electric vehicles. The company was founded in 2010 and is headquartered in San Jose, California.
QS company recently released performance data for its solid-state battery technology that demonstrates that it is capable of working faster and at higher power levels than conventional batteries. This commercially viable development should help QS increase its production and cater to a wider variety of electric vehicles in the market.
On November 27, QS announced that it has completed its business combination with Kensington Capital Acquisition Corp and that its shares will trade on the NYSE. This move should allow the company to fund the development and commercialization of its products soon.
The consensus EPS estimate for QS for the next year indicates a 15.4% improvement year-over-year. The stock has gained 892.8% this year.
Nautilus, Inc. (NLS)
NLS is a fitness solution company offering cardio and strength fitness products, and related accessories for consumer and commercial use in the United States, Canada, and internationally. The Vancouver, Washington. company operates through two segments: Direct and Retail.
On December 17, NLS announced the launch of its new Bowflex treadmills that feature an enhanced JRNY digital fitness platform. This launch should further enhance the company’s product portfolio and help increase its subscription base.
In mid-October , the company announced that it had completed the sale of its commercially focused Octane Fitness business to TRUE Fitness Technology for $25 million. This move should allow NLS to make strategic advancements in streamlining its operations and accelerate the transformation of the business.
NLS’s net sales have increased 151.8% year-over-year to $155.39 million in the third quarter ended September 30, 2020. Its gross profit has grown 256.3% from the year-ago value to $67.94 million, while adjusted EBITDA improved to $37.10 million compared to an adjusted EBITDA loss of $5.50 million over this period.
The consensus EPS estimate of $1.65 for NLS for the next quarter ending March 31, 2021 represents a 487.5% improvement year-over-year. NLS has an impressive earnings surprise history; the company beat consensus EPS estimates in each of the trailing four quarters. A consensus revenue estimate of $147.33 million for the next quarter represents s a 57.2% increase from the same period last year. The stock has gained 978.9% this year.
Under our POWR Ratings, NLS has an “A” for Industry Rank. It is ranked #29 of 34 stocks in the Athletics – Recreation group.
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NIO shares were trading at $48.93 per share on Thursday morning, up $0.55 (+1.14%). Year-to-date, NIO has gained 1,117.16%, versus a 17.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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