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1 Stock To Buy, 1 To Dump When Markets Open: Nio, Las Vegas Sands

Published 20/12/2021, 12:00 am

Stocks on Wall Street sold off on Friday, with the benchmark S&P 500 index closing at its lowest level in nearly two weeks amid worries about tighter Federal Reserve monetary policy and the ongoing coronavirus health crisis.

SPX Daily Chart

Investors should expect more volatility in the holiday-shortened Christmas week ahead as they monitor fresh developments impacting the markets resulting from the Fed's decision to accelerate tapering, and COVID fronts.

There is also key economic data on the agenda, including the latest report on personal consumption expenditures (PCE) inflation, as well as earnings from notable companies such as Nike (NYSE:NKE), Micron Technology (NASDAQ:MU), Rite Aid (NYSE:RAD), and BlackBerry (NYSE:BB).

Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside. 

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Nio

Nio (NYSE:NIO)—which saw its shares slump to a 14-month low on Friday—will be in focus this week after the electric vehicle (EV) company made a flurry of positive announcements at its ‘Nio Day 2021’ event held over the weekend.

The EV startup unveiled its newest and most affordable electric vehicle, dubbed the ET5, at its annual event which took place at the Olympic Sports Center in Suzhou, China on Saturday.

The mid-sized EV sedan is the fifth mass-produced model from the Chinese electric carmaker to come to market and is widely viewed as a potential competitor to the Tesla (NASDAQ:TSLA) Model 3, the Xpeng (NYSE:XPEV) P7 and P5, the BYD (OTC:BYDDY) Han, as well as BMW's (OTC:BMWYY) 3 series, and Audi's (OTC:VWAGY) A6.

Nio’s ET5, which has a range of 341 miles (550 kilometers) using its standard battery pack, is priced at around $51,450 (¥328,000) before government subsidies, and $40,470 (¥258,000) with a battery subscription plan. ET5 deliveries will begin in September 2022.

Founder and chairman William Li also said the EV maker will begin deliveries of the upscale ET7 sedan model, unveiled at ‘Nio Day 2020,’ on Mar. 28, 2022. The ET7 has a range of up to 620 miles (1,000 kilometers), rivaling the Lucid (NASDAQ:LCID) Air and Tesla Model S, which have a range of up to 520 miles and 412 miles, respectively.

In addition, the Chinese electric car company revealed that it plans to be selling its electric vehicles in 25 countries by 2025, including Norway, Germany, Sweden, and Denmark.

NIO Daily Chart

NIO stock sank to its lowest level since October 2020 at $28.02 on Friday before recovering to end the session at $30.00, earning the Shanghai, China-based electric vehicle company a market cap of $47.7 billion.

After scoring a gain of more than 1,100% in 2020, Nio shares are down 38% in 2021, and 55% off their record high of 66.99 hit on Jan. 11 amid an aggressive reset in valuations throughout the entire EV sector.

Stock To Dump: Las Vegas Sands 

Las Vegas Sands (NYSE:LVS) has seen its shares steadily collapse to new lows in recent sessions. And the coming week is expected to be just as dismal due to the negative impact of several factors plaguing the casino giant.

LVS stock—which has fallen nearly 8% in the last month and 40% year-to-date—closed Friday’s session at $35.44, not far from its recent 21-month low of $33.75 touched on Dec. 2. It now stands almost 47% below its post-pandemic high of $66.77 reached on Mar. 3.

At current levels, Las Vegas Sands has a market cap of about $27.1 billion, making it one of the world’s largest casino and resort operators.

LVS Daily Chart

Investor sentiment on the already hard-hit name took a blow as China’s ruling Communist Party intensified its crackdown on the country’s Macau casino district, which is the world’s biggest gambling hub. Las Vegas Sands sold its Las Vegas properties for $6.25 billion earlier this year to focus even more on its operations in Asia, where it had been running junket operations.

Macau's Gaming Inspection and Coordination Bureau recently ordered the city’s embattled casino operators, who often bring in high-rollers and big-spending clients from mainland China, to shut down their VIP rooms and stop offering credit for gambling loans. Las Vegas Sands is set to end its junket operations by year-end.

The growing scrutiny is part of a campaign launched by Chinese authorities to rein in the country’s wealthy gambling tycoons amid money-laundering allegations.

To make matters worse, COVID infections are once again on the rise in China and Hong Kong, fueled by the spread of the highly transmissible Omicron variant, prompting several cities in the country to announce new travel restrictions and lockdowns.

Taking that into account, shares of LVS could fall further in the coming days.

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