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Is China Automotive Systems a Buy?

Stock Markets9 minutes ago (May 07, 2021 10:30AM ET)Is China Automotive Systems a Buy?© Reuters. Is China Automotive Systems a Buy?

China Automotive (CAAS) saw its share price surge substantially over the past year thanks to optimism surrounding China’s growing electric vehicle market and the company’s technological and product advancement. However, as a new wave of competitors threatens its market share, what are the company’s prospects? Read more to find out.Headquartered in Jingzhou City, China, China Automotive Systems, Inc. (NASDAQ:CAAS) is a manufacturer and seller of power steering gears, electronic and hydraulic power steering systems and other components. Its shares have rallied 145.7% over the past year, driven by increased sales of electric vehicles in China and investor optimism surrounding the Chinese government’s electric vehicle (EV) target of 20% of all new cars by 2025.

However, CAAS’ stock has declined 14.7% over the past month and 31.9% year-to-date. Also, its stock is trading 68.9% below its 52-week high, indicating short-term bearishness. This is attributable primarily to a decline in passenger vehicle sales and increased expenses in the last reported quarter.

While the company’s strategic investments in the Chinese EV space could benefit the stock in the long run, the intensifying competition in the EV space could be a big headwind.

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