The electrification of the auto industry is undeniable. Federal governments, all over the world, are committed to reducing pollution.
Consequently, the world is gradually shifting from fuel-run cars to electric vehicles (EVs). Improved automotive performance, government subsidies, and cost-efficiencies are the major incentives for car buyers to shift to EVs. The country’s expanding middle class and their increasing purchasing power should further help drive sales of EVs.
Niu Technologies (NIU) and AYRO Inc. (AYRO) are two lesser-known EV players that are well-positioned to garner a lot of investor attention given their ability to deliver robust returns in the years ahead.
Niu Technologies (NIU)
Based in the People’s Republic of China, NIU is involved in designing, manufacturing, and selling of smart electric-scooters, scooter accessories, lifestyle accessories, and performance upgrade components like wheels and brakes. NIU has a streamlined product portfolio consisting of seven EVs by offering four e-mopeds, two electric motorcycles, and a single bicycle.
NIU has maintained a fast pace of growth and has sold an accumulation of over 1 million smart electric two-wheeler vehicles worldwide. As of September 2020, the number of franchised stores in China was 1,266 while the international sales network expanded to 36 distributors covering 46 countries. In early October, the company opened its flagship store in Bristol, United Kingdom. The company also opened a store in Porto, Bergamo, and Jakarta among other places this year.
NIU reported a top-line of $131.4 million in the third quarter, rising 36.7% year-over-year. E-scooters sales volume surged 67.9% year-over-year to 250,889, attributable to a 70.2% increase in e-scooter sales in China, and 6.3% growth in the international markets. NIU’s e-commerce sales also grew by 43.2% year-over-year to 451,187 units. Adjusted EPS for the quarter came in at $0.16.
The company has been expanding aggressively internationally and further plans to expand in Europe and the United States, increasing its direct sales capacity instead of relying on third-party distributors. Hence, analysts expect revenues to grow 19.1% and 136.3% in the current year and next year, respectively. NIU’s EPS is expected to grow 250% next quarter and 118.4% next year.
NIU has gained more than 270% year-to-date to close Friday’s trading session at $31.58. The stock is up 196.5% in the past six months and is currently trading at a 15.7% discount from its all-time high of $37.44.
NIU’s strong momentum is reflected in its POWR Ratings. It has an overall “Buy” rating with an “A” in Trade Grade and “B” for Industry Rank. The stock is also ranked #13 out of 30 stocks in the Technology – Hardware industry.
AYRO Inc. (AYRO)
Texas-based AYRO designs and manufactures purpose-built, light-duty, emissions-free electric vehicles for urban and community transport, local delivery, closed campus mobility, recreational, and government use. It offers AYRO 311, a 3-wheeled vehicle for professional and personal use; Club Car 411 for low-speed logistics and cargo services for campus; and AYRO 511 4×4 concepts.
AYRO has recently received a strategic investment of $10 million from Carnegie Hudson Resources, an investment arm of Wanxiang America, along with several existing institutional investors. Wanxiang America is a subsidiary of Wanxiang Group, a Chinese conglomerate, and owner of Karma Automotive and A123 Systems, a developer of EV batteries and supplier to automotive manufacturers worldwide. The Karma Automotive Innovation and Customization Center (KICC) also signed strategic manufacturing, engineering, and design partnership with AYRO in September this year.
In the third quarter ended September 2020, AYRO generated $388,654 in revenues, increasing 46.4% year-over-year. The company Announced $584,000 in orders for its mobile food truck following its partnership announcement with Gallery Carts. It also delivered 411 cars to Club Car during the quarter via its exclusive relationship with them and deployed an initial order from Club Car for nine Club Car 411 EVs to serve a military medical campus in the northeast United States. AYRO reported a loss of $0.13 per share, significantly improving from the year-ago loss of $0.77 per share.
AYRO is growing fast and the company is focusing on scaling mass production. The company has completed the expansion of its Austin manufacturing facility to 24,000 square feet in the last quarter to increase production capacity from 200 electric vehicles per month to 600 per month. Moreover, together with Karma, AYRO aims to deliver over 20,000 light-duty trucks and electric delivery vehicles over the next three years and estimate this production goal to have a value of over $300 million.
AYRO closed Friday’s trading session at $8.38, gaining more than 90% year-to-date. The stock is up 146.5% in the past three months to hit its 52-week high of $10.60 last week. But AYRO is presently trading 21% below its 52-week high.
It’s no surprise that AYRO is rated “Buy” in our POWR Ratings system. It also has an “A” for Trade Grade and Industry Rank. It is ranked #23 out of 34 Auto & Vehicle Manufacturers stocks.
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NIU shares were trading at $29.76 per share on Monday morning, down $1.82 (-5.76%). Year-to-date, NIU has gained 248.89%, versus a 13.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...
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