GigaCloud (NASDAQ:GCT) and Li Auto (NASDAQ:LI) are two growth stocks I’ve been watching for some time. They’re also two stocks I currently hold as part of my diversified portfolio. Here’s why I believe they can supercharge my Stocks and Shares ISA portfolio.
Buying the electrification dip
Shares in electric vehicle (EV) manufacturers have dipped in recent weeks following some less-than-impressive production figures. Li Auto is among them having delivered fewer vehicles than expected in February before lowering its Q1 deliveries estimate considerably.
Li then smashed its revised target, but the stock remained beaten down.
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In short, Li, which has previously focused on EREVs (Extended Range Electric Vehicles which have combustion and electric engines), made an underwhelming entry into the BEV (Battery Electric Vehicle) market this year.
While there was lots of interest in the all-electric Li Mega, the vehicle’s appearance has drawn some criticism — the company didn’t respond positively to comments that it looked like a hearse.
However, Li’s rate of growth remains impressive and it recently became the first Chinese new energy vehicle manufacturer to pass the 700,000 deliveries mark. Its Q1 figures were also up 52.9% over 12 months. That’s still impressive, albeit slower than previous.
Moreover, while EV sales might be slowing — Tesla recently announced that annual sales had slowed sequentially — the electrification agenda’s here to stay.
From a valuations perspective, I find Li very attractive. It’s trading at 15.8 times earnings for 2024, 11.6 times earnings for 2025, and 9.1 times earnings for 2026. This is a huge discount versus Tesla, at 58.6 times earnings for 2024.
In turn, Li’s price-to-earnings-to-growth ratio currently sits at 0.8, inferring the firm could be significantly undervalued.
A new model for furniture shipping
GigaCloud Technology has nothing to do with cloud software as the name suggests. But it’s an interesting company that connects large package items (furniture) manufacturers in China with buyers and resellers in North America and Europe.
The business has proven very success as storing unsold furniture in the country of sale isn’t cheap. After all, furniture takes up a lot of space. So in this digital age, connecting producers with buyers provides a considerable efficiency gain.
The stock’s seen plenty of volatility, but the long-term trajectory’s upwards. It’s currently very cheap at 11 times forward earnings and offers best-in-class growth with earnings growing by 80.2% over the coming year. Moving forward, the price-to-earnings ratio falls to 8.8 times in 2025 and 7.4 times in 2026.
The company’s said it expects some macroeconomic headwinds in 2024, but that’s not enough to hold me back. GigaCloud is also looking to expand its Europe business following the success of its North American venture.
