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With Chinese electric-vehicle manufacturer Nio (NYSE:NIO) gaining a high profile among stock traders, some folks have turned their attention to Kandi Technologies Group (NASDAQ:KNDI) recently. After all, it’s conceivable that Kandi Technologies stock could spike just like Nio stock did.
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The comparison is inevitable, as everyone wants to find the next Nio. And they want to own a company with similar growth to Nio, which in August posted a 104% year-over-year increase in its SUV sales.
But let’s not assume that the two companies are one and the same. Sure, they’re both electric -car manufacturers headquartered in China. Yet anyone who invests hard-earned capital in Kandi Technologies stock will want to know what makes that company unique.
A closer look at Kandi Technologies reveals that this automaker isn’t just a clone of other companies in the electric-vehicle space. Besides, comparatively speaking, Kandi Technologies is trading at a reasonable valuation.
A Closer Look at Kandi Technologies Stock
Even though we’re dealing with new and exciting technologies, it never hurts to use some old-fashioned valuation metrics. Perhaps we can channel the spirit of Benjamin Graham and assess whether the valuation of Kandi Technologies stock is attractive.
To do so, we can compare the trailing 12-month price-to-earnings ratios of Kandi Technologies stock to those of two of its competitors:
- Kandi Technologies: 49.38
- Nio: None (its trailing 12-month earnings per share is -$44.10)
- Tesla (NASDAQ:TSLA): 1,058.16
Judging by this metric, the valuation of Kandi Technologies stock is clearly more attractive. Plus, the stock is trading much closer to its 52-week low of $2.17 than its 52-week high of $17.40.
Therefore, it should appeal to electric-vehicle investors seeking to employ a “buy low, sell high” type of strategy.
Priced Right for Commuters
One thing that sets Kandi’s cars apart isn’t a fancy feature or gadget. On the contrary, it’s the cars’ low price tag that makes these vehicles ideal for urban commuters.
This demographic will likely choose to focus on practical considerations, such as vehicle price and fuel efficiency, rather than superficial appearance. Assuming that’s the case, Kandi’s got a deal that’s as sweet as candy.
Kandi Technologies appears to have rolled out the cheapest electric cars in the United States. Without federal tax credits, the small but efficient Kandi K27 starts at $20,499. After the federal tax credit, however, the price goes down to just $12,999.
But wait, it gets better. In some U.S. states, after electric-vehicle incentives have been applied, a brand-new Kandi K27 could be purchased for around $10,000.
No-Frills Cars for Everyone
Compared to generalists Tesla and Nio, Kandi appears to be a specialist with a focus on no-frills, short-trip commuting. And there’s nothing wrong with targeting that niche market.
Given its ultra-low price point, the Kandi K27 is a timely entrant into the urban-commuter-car market. Delving even deeper into the car’s stats, we find that the K27 runs on a 17.69 kWh battery pack and has a range of 100 miles.
Okay, so it’s not a power car in Tesla’s league. Nevertheless, 100 miles is a pretty decent range for a cute little car like the K27. Besides, the focus of Kandi’s vehicles isn’t really power or frills.
As Kandi America CEO Johnny Tai explains, his company’s larger purpose is to make sustainable, efficient vehicles available to everyone:
“Kandi’s mission is to make electric cars accessible to all. With these first two models [the K27 and the slightly larger K23], we are starting an Auto EVolution that will enable anyone, regardless of their financial status, to afford a reliable, high-tech EV.”
The Bottom Line
All that being said, I’ll be the first to admit that not every trader will like Kandi Technologies stock, since the company operates within a highly specific sub-niche.
But if you can envision that niche growing and Kandi growing along with it, then a small position in the stock could be a bold and worthy investment.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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