10 Undervalued Cyclical Stocks to Buy According to Analysts

7. Li Auto (NASDAQ:LI)

Forward PE ratio as of September 11: 8.98

Average Analyst Price Target Upside Potential: 36.48%

Number of Hedge Fund Holders: 17

Li Auto Inc. (NASDAQ:LI) is one of the best undervalued cyclical stocks to buy, according to analysts, to gain exposure in the Chinese auto manufacturing business. It is one of the automakers spearheading the electric vehicle revolution in China.

The Chinese electric car manufacturer reported stronger-than-anticipated earnings for the second quarter and offered optimistic forecasts, indicating solid growth despite the evolving market conditions in the electric car industry.

The firm recorded earnings per share (EPS) of RMB1.42 ($0.20), exceeding the expectations of RMB1.33 set by analysts. Its sales increased by 10.6% year over year to RMB31.7 billion ($4.4 billion), meeting the forecast of RMB31.52 billion.

Li Auto Inc. (NASDAQ:LI) managed to sell 108,581 vehicles in the second quarter, marking a 25.5% increase compared to the same period in the previous year. Nonetheless, the profit margin on vehicles fell to 18.7% from 21.0%, mainly because of shifts in the product lineup and pricing approaches.

Li Auto Inc. (NASDAQ:LI) is one of the top cyclical stocks to pay attention to as the company is seeing strong demand for its cars. It expects to deliver between 145,000 to 155,000 vehicles, representing 38.0% to 47.5% Yoyo growth. Revenue in the third quarter is projected to increase by between 13.7% and 21.6%.

As a growth strategy, the company also plans to introduce multiple 800-volt high-voltage pure electric vehicles next year. It is in a solid financial position with a strong cash position of RMB97.3 billion and is on course to deliver over 500,000 cars by the end of the year. Additionally, Li Auto trades at a discount with a price-to-earnings multiple of 8.

The number of hedge funds holding Li Auto Inc. (NASDAQ:LI) dropped from 29 to 17, reflecting a decline in interest among hedge funds. However, Li Auto is a cyclical stock rated as a Buy with an average price target of $26.82, implying 36.84% upside potential from current levels.