This lesser known stock can surge over 40% in under a year

Zeekr Intelligent Technology (ZK), a luxury EV brand, might be a compelling investment option in 2024, led by strong fundamentals, robust market performance, a highly mature supply chain, and stable finances.

Trading.biz analyst Rahul Nambiampurath believes the stock currently trades at $22.60 and can potentially breach the $35 mark in 2024.

“Zeekr’s strategic partnership with Geely provides a significant competitive edge, allowing it to mitigate the heavy capital expenditure typically associated with EV manufacturing. This positions Zeekr favourably in the rapidly evolving EV market,” mentions Rahul Nambiampurath.

For those unaware, Zeekr Intelligent Technology is partly owned by Chinese automotive giant Geely, formerly known as Zhejiang Geely Holding Group. Geely is an automotive company headquartered in Hangzhou, China.

Technicals backing the optimism

While Rahul delved deeper into Zeekr’s fundamentals, he was particularly impressed by ZK’s hourly chart despite the lower high formation.

Zeekr Intelligent Technology (ZK) Hourly Chart: TradingView

ZK trades inside a triangle pattern, with the price closing in on the upper trendline. Per Rahul’s analysis, a move above $24.06 can propel ZK towards a high of $26. However, a clear, bullish direction will be confirmed if and when ZK crosses $29.44.

“If ZK manages to move past its all-time high of $32.17, $34 should follow rather immediately, per the Fibonacci indicator,” adds Rahul.

However, the RSI indicator should move higher than 53 for an uptrend to start.

Fundamentals in sight

Zeekr Intelligent Technology (ZK) is a relatively new brand that went public in May 2024. Its first financial report is due in mid-June. However, Rahul identified a bunch of key financially-aligned fundamental components that could add to the price-specific bullishness:

Impressive

Delivery Numbers: In May 2024, Zeekr delivered 18,616 vehicles, representing a 115% year-over-year increase.

Cumulative Deliveries: Since starting deliveries, Zeekr has achieved a total of 264,397 electric vehicles delivered.

Asset-Light

Manufacturing Model: By leveraging Geely’s factory capacity, Zeekr adopts an asset-light manufacturing model, reducing heavy upfront capital expenditures.

Cost Advantage

Geely’s established supply chain provides Zeekr with a cost advantage, resulting in a higher vehicle contribution margin of 18.2%, compared to Nio’s 16.2% and XPeng’s 3.7%.

Financial

Stability: In 2023, Zeekr had RMB 3 billion in net cash and RMB 2.3 billion in operating cash flow. Despite an expected negative operating cash flow of RMB -4 billion in 2024, it is still better than Nio’s -10 billion and XPeng’s -6.5 billion. Free cash flow is expected to turn positive by 2027.

Expansion

Plans: The company is working on expanding its product line, including an upscale luxury sedan.

This analysis highlights Zeekr’s impressive growth in vehicle deliveries, effective use of Geely’s manufacturing and supply chain advantages, and strong financial position despite short-term challenges. The company’s recent IPO success and continuous innovation position it well for future growth.

Rahul’s analysis is validated by Tina Hou, an analyst at Goldman Sachs. Hou has a “Strong Buy” rating for ZK and a price target of $34.