NIO Inc. (NIO) Stock Sinks As Market Gains: What You Should Know

NIO Inc. (NIO) Stock Sinks As Market Gains: What You Should Know

TipRanks

Let’s talk portfolio defense. After last week’s social flash mob market manipulation, that’s a topic that should not be ignored. Now, this is not to say that the markets are collapsing. After 2% losses to close out last week’s Friday session, this week’s trading kicked off with a positive tone, as the S&P 500 rose 1.5% and the Nasdaq climbed 2.5%. The underlying bullish factors – a more stable political scene, steadily progressing COVID vaccination programs – are still in play, even if they are not quite as strong as investors had hoped. While increased volatility could stay with us for a while, it’s time to consider defensive stocks. And that will bring us to dividends. By providing a steady income stream, no matter what the market conditions, a reliable dividend stock provides a pad for your investment portfolio when the share stop appreciating. With this in mind, we’ve used the TipRanks database to pull up three dividend stocks yielding 8%. That’s not all they offer, however. Each of these stocks has scored enough praise from the Street to earn a “Strong Buy” consensus rating. New Residential Investment (NRZ) We’ll start by looking into the REIT sector, real estate investment trusts. These companies have long been known for dividends that are both high-yield and reliable – as a result of company compliance with tax rules, that require REITs to return a certain percentage of profits directly to shareholders. NRZ, a mid-size company with a market cap of $3.9 billion, holds a diverse portfolio of residential mortgages, original loans, and mortgage loan servicing rights. The company is based in New York City. NRZ holds a $20 billion investment portfolio, which has yielded $3.4 billion in dividends since the company’s inception. The portfolio has proven resilient in the face of the corona crisis, and after a difficult first quarter last year, NRZ saw rising gains in Q2 and Q3. The third quarter, the last reported, showed GAAP income of $77 million, or 19 cents per share. While down year-over-year, this EPS was a strong turnaround from the 21-cent loss reported in the prior quarter. The rising income has put NRZ in a position to increase the dividend. The Q3 payment was 15 cents per common share; the Q4 dividend was bumped up to 20 cents per common share. At this rate, the dividend annualizes to 80 cents and yields an impressive 8.5%. In another move to return profits to investors, the company announced in November that it had approved $100 million in stock repurchases. BTIG analyst Eric Hagen is impressed with New Residential – especially by the company’s sound balance sheet and liquidity. “[We] like the opportunity to potentially build some capital through retained earnings while maintaining a competitive payout. We think the dividend increase highlights the strengthening liquidity position the company sees itself having right now… we expect NRZ has been able to release capital as it’s sourced roughly $1 billion of securitized debt for its MSR portfolio through two separate deals since September,” Hagen opined. In line with his comments, Hagen rates NRZ a Buy, and his $11 price target implies an upside of 17% for the year ahead. (To watch Hagen’s track record, click here) It’s not often that the analysts all agree on a stock, so when it does happen, take note. NRZ’s Strong Buy consensus rating is based on a unanimous 7 Buys. The stock’s $11.25 average price target suggests ~20% upside from the current share price of $9.44. (See NRZ stock analysis on TipRanks) Saratoga Investment Corporation (SAR) With the next stock, we move to the investment management sector. Saratoga specializes in mid-market debt, appreciation, and equity investments, and holds over $546 million in assets under management. Saratoga’s portfolio is wide ranging, and includes industrials, software, waste disposal, and home security, among others. Saratoga saw a slow – but steady – rebound from the corona crisis. The company’s revenues fell in 1Q20, and have been slowly increasing since. The fiscal Q3 report, released early in January, showed $14.3 million at the top line. In pre-tax adjusted terms, Saratoga’s net investment income of 50 cents per share beat the 47-cent forecast by 6%. They say that slow and steady wins the race, and Saratoga has shown investors a generally steady hand over the past year. The stock has rebounded 163% from its post-corona crash low last March. And the dividend, which the company cut back in CYQ2, has been raised twice since then. The current dividend, at 42 cents per common share, was declared last month for payment on February 10. The annualized payment of $1.68 gives a yield of 8.1%. Analyst Mickey Schleien, of Ladenburg Thalmann, takes a bullish view of Saratoga, writing, “We believe SAR’s portfolio is relatively defensive with a focus on software, IT services, education services, and the CLO… SAR’s CLO continues to be current and performing, and the company is seeking to refinance/upsize it which we believe could provide upside to our forecast." The analyst continued, “Our model anticipates SAR employing cash and SBA debentures to fund net portfolio growth. We believe the Board will continue to increase the dividend considering the portfolio’s performance, the existence of undistributed taxable income, and the economic benefit of the Covid-19 vaccination program.” To this end, Schleien rates SAR a Buy along with a $25 price target. This figure implies a 20% upside from current levels. (To watch Schleien’s track record, click here) Wall Street’s analysts agree with Schleien on this stock – the 3 other reviews on record are Buys, and the analyst consensus rating is a Strong Buy. Saratoga’s shares are trading for $20.87, and carry an average price target of $25.50, suggesting an upside of 22% for the next 12 months. (See SAR stock analysis on TipRanks) Hercules Capital (HTGC) Last but not least is Hercules Capital, a venture capital company. Hercules offers financing support to small, early-stage client companies with scientific bent; Hercules’ clients are in life sciences, technology, and financial SaaS. Since getting started in 2003, Hercules has invested over $11 billion in more than 500 companies. The quality of Hercules’ portfolio is clear from the company’s recent performance. The stock has bounced back fully from the corona crisis of last winter, rebounding 140% from its low point reached last April. Earnings have also recovered; for the first nine months of 2020, HTGC posted net investment income of $115 million, or 11% higher than the same period of 2019. For dividend investors, the key point here is that the net investment income covered the distribution – in fact, it totaled 106% of the base distribution payout. The company was confident enough to boost the distribution with a 2-cent supplemental payment. The combined payout gives a $1.28 annualized payment per common share, and a yield of 8.7%. In another sign of confidence, Hercules completed a $100 million investment grade bond offering in November, raising capital for debt pay-downs, new investments, and corporate purposes. The bonds were offered in two tranches, each of $50 million, and the notes are due in March of 2026. Covering the stock for Piper Sandler, analyst Crispin Love sees plenty to love in HTGC. “We continue to believe that HTGC’s focus on fast growing technology and life sciences companies sets the company up well in the current environment. In addition, Hercules is not dependent on a COVID recovery as it does not have investments in “at-risk” sectors. Hercules also has a strong liquidity position, which should allow the company to act quickly when it finds attractive investment opportunities,” Love commented. All of the above convinced Love to rate HTGC an Outperform (i.e. Buy). In addition to the call, he set a $16 price target, suggesting 9% upside potential. (To watch Love’s track record, click here) Recent share appreciation has pushed Hercules’ stock right up to the average price target of $15.21, leaving just ~4% upside from the trading price of $14.67. Wall Street doesn’t seem to mind, however, as the analyst consensus rating is a unanimous Strong Buy, based on 6 recent Buy-side reviews. (See HTGC stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Is NIO Stock A Buy After Its January Delivery Numbers?

NIO Stock Has Been On A Tear, Is It A Buy Now?

If you’re looking to buy the best electric vehicle stocks in the stock market today, NIO Inc. (NYSE: NIO) easily tops the list. After notching a new record high of $66.99 in recent weeks, the high-flying stock quietly retreated to a favorable entry point. Some may identify it as a bull retracement pattern. Some simply consider it a fresh opportunity to buy at dips. Either way, NIO stock seems to be on track for another year of bullish momentum.

Chinese electric vehicle stocks have seen some slowdown in momentum in recent sessions. Now, NIO started the New Year with another record-high monthly delivery. NIO delivered 7,225 vehicles in January, representing year-over-year growth of 352.1%. This could act as a catalyst to potentially lift these top Chinese EV stocks out of this lackluster phase. For those who are unfamiliar with the EV space in China, the other two dominant players are XPeng (NYSE: XPEV) and Li Auto (NASDAQ: LI). Apart from NIO, Xpeng had also reported strong delivery numbers for January 2021. While Li Auto may have yet to announce their delivery numbers, NIO’s record monthly deliveries could likely create a strong tide that lifts all boats.

There’s no doubt it’s an attractive space to watch considering China is the biggest EV market in the world. In terms of addressable market opportunity, China is any EV manufacturer’s dream to tap on as part of their global expansion strategy. Tesla (NASDAQ: TSLA) enjoyed the first-mover advantage in China. And just last week, Ford Motors (NYSE: F) reported that they are making their Mustang Mach-E in China.

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NIO Is Your Big Play On China’s EV Market

At its core, the bullish case for NIO stock is somewhat straightforward. Investors have been looking for the ‘next Tesla’ stock to buy. Well, you asked for it, you got it. Since April, NIO stock has seen sensational gains and has never looked back since. Analysts believe the global EV market will only go higher, and they believe NIO stock can capitalize in China in a similar fashion Tesla did in Western markets.

“China is a greenfield EV market opportunity for many well-positioned auto players as we believe overall EV sales can potentially double in the region over the next few years given the pent-up demand for EV vehicles from customers across all price points.” – Wedbush analyst Daniel Ives

Unlike Tesla, NIO faces not only direct significant competition from Xpeng or Li Auto but also 500 other electric vehicle manufacturers in China. However, thanks to its premium positioning in the China EV market, NIO has been reporting record delivery numbers of late. The company ended 2020 on a high, having delivered a record 43,728 vehicles for the year. It has been churning out record monthly numbers since August 2020.

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Potential International Expansion In Europe Could Be A Catalyst For NIO Stock

So far, all of NIO’s sales have been in China. However, the EV industry website Electrek recently took NIO’s ES6 SUV for a spin. The portal further stated that the company is believed to be looking to market its vehicles in Europe. In addition, job postings also seem to indicate that NIO is finally breaking into Europe.

Rumored to be coming to Europe in 2021, it will be interesting to see how it competes against an abundance of German SUVs that are also entering the increasingly crowded segment. It’s still too early to say whether NIO could make a name for itself in Europe. Time will tell whether the NIO ES6 or the ET7 sedan will come and successfully conquer the European market.

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NIO’s Share Of China’s EV Market On The Rise

According to an analysis from EqualOcean, NIO acquired a larger market share in December 2020. It nabbed 3.1% of the total, which is higher than 2.84% in November and 2.53% in December 2019. While still far behind Tesla’s and BYD’s, the market share gains represented a positive development. It could signal to investors that the ongoing trend is likely to continue in 2021 and beyond.

While the Hangzhou government’s strategy and NIO’s physical capacity boosts are certain catalysts for the company, Tesla’s progress in its Shanghai gigafactory is a risk that can’t be taken lightly. Not to mention, that the newly introduced restricted traffic control policies in Hangzhou could materially affect the sales figure.

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An EV Manufacturer That Actually Makes EVs

With increasingly new players entering the EV space through the special purpose acquisition company (SPAC) route, investors must differentiate those selling the dream and those selling the real deal on wheels. Any sophisticated marketer could pull up exciting ideas and prototypes to attract investors, but putting them into action? Not many. NIO’s huge gains in its stock price are not unwarranted. Its triple-digit percentage gains year over year have certainly impressed investors across the board.

Now that the company has delivered its first sedan model, it could potentially pull in an entirely new audience. If you really believe that NIO is the ‘Tesla of China’, would you say that the ET7 would benefit NIO stock as much as the Model S has benefitted Tesla? With the new battery pack and its notable ‘Battery-as-a-Service’ program, the idea of it challenging Tesla is not too far-fetched, isn’t it? Would a new sedan from NIO bring great value to NIO stock shareholders?

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Bottom Line On NIO Stock

Now, NIO has reported another record-high for their monthly delivery numbers. Given its accelerated efforts to boost production in December, the numbers disclosed this morning may not come as a surprise. What’s more, the demand for EVs in China is likely to remain robust as the Chinese government wants about 25% of all new cars sold in the country to be electric by 2025. And this is expected to bode well not only for NIO stock but also for other EV players in China.

Despite the monstrous run-up and stretched valuations, there’s still a great chance NIO stock could continue its remarkable performance. After all, it would not be surprising if consumers in China are looking for a new ride for the new year. With so many resources under its belt, NIO has all the reasons to expand its lineup. Also, the company plans to introduce a new model each year going forward. This will no doubt boost NIO’s sales in the years to come as the demand for EVs increases. With the company’s long growth runway going forward, will you consider having NIO stock in your portfolio right now?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

NIO says January deliveries surged 352%

NIO NIO, -0.02% , the Chinese electric car maker, said January deliveries rose 352% to 7,225. It’s delivered 82,866 vehicles in total, NIO said. U.S.-listed NIO shares have skyrocketed 1304% over the last 12 months.