Shares of Bitauto Holdings Limited (NYSE: BITA) increased 24.8% in September, according to data from S&P Global Market Intelligence , due to ratings upgrades and momentum for the company’s transaction services platform.
Bitauto operates an online platform for car sellers to display their wares and has also branched into the transaction services space with its Yixin subsidiary. With a roughly $3 billion market cap and roughly 10% of its shares sold short, Bitauto’s stock is positioned for volatile swings and can post big movement on sometimes minor news.
Ratings upgrades likely played a substantial role in the stock’s September gains. CLSA initiated a “buy” rating on the stock on September 1, BidaskClub upgraded the stock from a “hold” to a “buy” in a September 8 note, and Zacks Investment Research upgraded its rating on Bitauto from “sell” to “hold” on September 15. Shares popped roughly 9% on September 14 alone and now trade up roughly 160% on the year.
Image source: Getty Images.
The company’s core auto-selling platform appears to have reached a peak, but Bitauto still has considerable upside as it transitions to a more transactions-focused business. Yixin has become China’s leading online automobile transaction and financing platform — and it looks positioned to enjoy strong performance as more Chinese buy cars and turn to loans to make their purchases.
With a forward P/E ratio of roughly 45, Bitauto trades at a lofty earnings multiple, but the company has been delivering impressive growth and has a favorable market position. Its August quarterly report recorded a roughly 55% year-over-year sales increase and 69% growth for net income, and the company could continue to impress as it scales its business with Yixin.
Substantial short interest also paves the way for big share price gains down the line if the company continues to deliver strong earnings results.
10 stocks we like better than Bitauto Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Bitauto Holdings wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.