China is the world's No. 2 economy and home to dozens of companies that trade in the U.S. Right now, Tesla rivals BYD, Li Auto and XPeng, as well as gaming giant NetEase and e-commerce play PDD Holdings are China stocks worth watching or potentially buying.
After China finally eased strict Covid restrictions in late 2022, there was a lot of optimism about a Chinese economic revival. But growth has sputtered in recent months, while the long-ailing property sector is worsening. Despite Chinese officials vowing to support the economy, actual stimulus has been limited.
U.S. tensions are a concern. In recent months, the White House has barred shipments of key chip technology to China, adding to tariffs and other curbs on Chinese goods. Beijing has retaliated.
Investors should pay attention to many other Chinese stocks, including e-commerce titan Alibaba, messaging and gaming player Tencent, search giant Baidu.
Top Chinese Stocks To Buy Or Watch
| Company | Ticker | Industry Group | Composite Rating |
|---|---|---|---|
| XPeng | XPEV | Auto Manufacturers | 68 |
| BYD | BYDDF | Auto Manufacturers | n.a. |
| Li Auto | LI | Auto Manufacturers | 98 |
| NetEase | NTES | Computer Software-Gaming | 97 |
| PDD Holdings | PDD | Retail-Internet | 98 |
XPeng Stock
XPeng is a Chinese EV maker, only making fully electric vehicles. Sales have been picking up steadily in 2023, hitting a record in October. Competing mostly in the mainstream EV market with sedans and crossovers, XPeng have unveiled the X9 minivan, an increasingly crowded segment.
XPeng is still losing money, and that's set to continue. Q3 revenue rose 22% to $1.17 billion, ending a three-quarter slide.
The China EV market is fiercely competitive, with ongoing price cuts and a stream of new models making it difficult to maintain momentum. XPeng is stepping up exports to Europe, but those are still relatively modest.
Earlier this year, Volkswagen took a stake in XPeng as part of a partnership. VW will use XPeng technology for its own vehicles.
XPEV stock more than tripled from its June 1 low of 7.50 to its July 28 high of 23.62. Since then shares have consolidated in a wide and loose pattern, setting a recent low of 13.22 on Oct. 23. XPeng stock has rebounded back above the 50-day line.
On Nov. 21, shares topped an aggressive entry at 17.91, but then pulled back. Investors could use Monday's intraday high of 18.41 as a new early entry. The buy point is 23.62, though investors could view the pattern as an awkward double-bottom base with a 19.96 entry.
stock broke out of long consolidation in late July, but then moved sideways around the buy zone. On Aug. 22, shares gapped out of a multiweek shelf on the strong Q2 results. Shares ran up until mid-September, then pulled back to the 21-day line.
Bottom line: XPEV stock is not a buy.
BYD Stock
BYD is a China EV and battery giant. It's the world's largest EV maker, including its long-range hybrids, though it still trails Tesla in fully electric BEVs. It's the No. 1 automaker in China and No. 10 in the world.
In October, BYD sold 301,833 EVs, the sixth straight monthly record, up 38.6% vs. a year earlier and 5% vs. September. Passenger BEV sales picked up to 165,505 in October, up from 151,193 in September.
There's a strong chance that BYD will top Tesla in BEV sales in Q4.
Third-quarter income came in at RMB 10.41 billion ($1.41 billion), up 82% vs. a year earlier and nearly 53% vs. Q2, in local currency terms. Revenue swelled 38.5% vs. a year earlier to RMB 162.15 billion ($22.6 billion), up 38.5% vs. Q3 2022.
BYD dominates in the low-to-affordable EV market, but is expanding via the premium Denza brand. It's also launched the "F-Brand" and super-premium Yangwang. The Yangwang U8, a $150,600 off-road vehicle, will begin meaningful deliveries this month. The F-Brand's Bao 5 off-road vehicle just started deliveries.
The vast majority of sales remain in China, but exports are booming.
Overseas sales rose to a record 30,521 in October vs. 28,039 in September and 10,536 in June. Exports should continue to trend higher.
BYD is building its first EV plant outside of China in Thailand, which is set to begin operation in mid-2024. The EV giant plans to build EVs in Brazil and is expected to name a location for a plant in Europe before year-end.
A European plant could help BYD avoid any future EU restrictions on made-in-China EVs.
BYD stock tumbled for much of August and has struggled to get and stay above the 50-day line since then. Shares are just between the 50-day and 200-day ines.
Shares have a consolidation with a 36.27 buy point.
BYD has traded tightly in recent days and weeks, with a lot of resistance in the 32.50-32.80 area.
Investors could use 32.50, 32.76 or 32.80 as an early entry.
Bottom line: BYD stock is not a buy.
Li Auto Stock
Li Auto is an electric vehicle maker, competing in the premium market. The Tesla rival doesn't sell pure electric vehicles yet, or plug-in hybrids. Instead, it has a small gas engine to top off the battery when needed.
Li Auto sold 40,422 extended range EVs in October, a new record, with each of its three SUVs selling more than 10,000 units.
On Nov. 9, Li Auto reported third-quarter earnings well above views, the fourth straight profitable quarter. Sales skyrocketed 262% in U.S. currency, with growth rapidly accelerating for a fourth straight quarter.
Li Auto sees Q4 deliveries at 125,000-128,000. That implies 84,678-87,578 In November-December.
The company's revenue guidance suggested some margin pressure, amid intense China EV competition.
Li Auto began presales of its first pure electric vehicle, the high-end Mega minivan, on Nov. 17.
Li Auto stock more than tripled from its October 2022 low to its August 2023 high of 47.33. Shares sold off to the 200-day line, then rebounded in late October. LI stock gapped above its 50-day line on Nov. 6. Shares pulled back after earnings to just above the 50-day, but then bounced.
The official buy point is 47.33.
Investors could have used the Oct. 6 high of 40.14 as an early entry from a too-low handle. It's above that level. It's also possible that LI stock will forge a proper handle now.
Bottom line: LI stock is a buy.
NetEase Stock
NetEase is a leading online game provider. It also offers a search engine, streaming music and other internet services.
Earnings growth is accelerating, but flat Q2 revenue came in a little low. Video games accounted for 78% of Q2 revenue.
Third-quarter earnings topped views on Nov. 15, but once again revenue came in a little low, though it rose vs. a year earlier. NetEase also cut its quarterly dividend per ADR by 3 cents, to 49.5 cents.
NTES stock broke past a 94.99 flat-base buy point in June, then topped a 99.78 shelf entry on July 12. Shares peaked at 110.82 on Aug. 1,
NTES stock is in buy range from a flat base with a 110.82 buy point, breaking out on Nov. 3. The RS line hit a new high ahead of the stock.
Shares tumbled initially following mixed Q3 results, but closed off lows, then rallied to out of the buy zone on Nov. 17.
Bottom line: NetEase stock is not a buy.
PDD Stock
PDD Holdings is the parent of Chinese e-commerce giant Pinduoduo. It also operates the fast-growing U.S. site Temu.
On Aug. 29, PDD easily beat Q2 views, with revenue jumping 66%. Q1 earnings spiked 117% per ADS with revenue up 46%.
PDD will release Q3 earnings on Nov. 28.
PDD stock gapped out of a seven-month cup-with-handle base with a 92.79 buy point on Q2 earnings. Shares then consolidated around the buy zone.
On Oct. 6, PDD surged out of a short consolidation, which investors also could treat as an alternate handle to the long cup.
Shares pulled back to test the 50-day line amid reports that Alibaba is getting more aggressive on prices.
But shares have rebounded from the 50-day line, nearing the top of a messy range.
PDD stock cleared that short consolidation on Nov. 15 following JD.com earnings, but is now extended.
Bottom line: PDD stock is not a buy.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
