BYD Company Ltd (SHE:002594) shares spiked nearly 12% last week amid rising interest in Chinese EV stocks. Investors pounced on Xpeng, Li Auto, and Nio, among others driving their stock prices higher.
Analysts suspect investors have shifted focus to Chinese automakers after extending their market share in the local market amid chip shortage. Japanese and German automakers continue to experience supply chain headwinds caused by bottlenecks in chip shipment.
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RBC Capital Markets analyst Joe Spak said on Friday that China is capitalising on battery electric vehicles to become a major force in the automobile industry. Some of the top Chinese automakers, like BYD Company, are already exploring options to expand abroad.
The company has set shop in Norway as a testing ground for its expansion into Europe.
Should you buy BYD Company shares?
From an investment perspective, BYD Company shares trade at a steep price-earnings ratio of about 216.48, making the stock less attractive to value investors. However, given the company’s exciting growth prospects amid its expansion into Europe, it could be a great addition to your portfolio.
Therefore, although the stock is up 37% this year and more than 120% over the last 12 months, it could still be a good time to buy.
Is a pullback imminent?
Technically, BYD Company shares seem to be trading within a sideways channel formation in the intraday chart. However, the stock recently bounced off the trendline support at the 100-day moving average to surge towards the trendline resistance.
Therefore, investors could target short-term pullbacks at about $32.92, or lower at $30.09. However, with shares yet to reach overbought conditions, the stock could extend gains towards $38.01, or higher to $41.02.
BYD Company could still be a good buy
In summary, BYD Company shares appear to have recently bounced off the key support level to surge towards the current all-time highs.
However, given the company’s exciting growth prospects, the stock could extend the current gains for the foreseeable future before reaching overbought conditions.
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