Happy Thanksgiving, everybody. I hope you all got your fill over the weekend.
As we look ahead to next week, I’ve got a stock that I’ve been eyeing for a while, and today, I finally pulled the trigger. It’s a Chinese EV manufacturer, and it’s actually the first Chinese stock I’ve added to the portfolio in a long time.
The ticker is $BYDDY (BYD Company).
If that name sounds familiar, it’s likely because this was a longtime favorite of Warren Buffett and Charlie Munger. While Berkshire has exited the position, the company itself has evolved into a monster.
I bought a starter position today at $12.50. Here is the deep dive on why I like the story and, more importantly, why I love the chart.
The Fundamental Story: “Scorched Earth” Dominance
BYD is currently China’s largest EV manufacturer. They are so dominant that they are effectively waging a price war to suffocate the competition.
If you look at their financials, you’ll see something interesting: they generate an insane amount of revenue ($27 billion), but they only “clear” about a billion of that. Their net margin is sitting around 4%.
At first glance, that looks weak. But here is the reality: It is intentional.
BYD is using its scale to lower prices and hurt its own margins in the short term to squeeze out smaller players like NIO and XPeng. They are even pushing out legacy giants like Volkswagen and Toyota from the Chinese market. They are burning the furniture to heat the house, knowing that when the smoke clears, they will be the only ones left standing.
The Global Pivot
The other concern people have is tariffs. The U.S. market is effectively closed to them. But BYD is pivoting aggressively to the rest of the world:
Turkey & Hungary: They have opened factories in Turkey and are bringing a plant online in Hungary in 2026 to bypass EU trade barriers.
Brazil: They have launched heavily here, seeing 800% growth and replacing U.S. brands.
Moving Up Market: They aren’t just selling cheap cars anymore. They recently launched a high-end sports car/luxury line to compete directly with Lexus and BMW.
The stock is currently trading at 16x earnings. For a company with this kind of dominance and growth, that is historically cheap.
The Trade Setup
Fundamentals are great, but as always, I trade the chart. And right now, BYDDY is flashing one of my signature high-time-frame setups.
We saw a massive leg up, the stock gained support, and now it has retraced right back down into a “juicy” area that I really like.
Entry: I bought today at $12.50.
The Stop: I am placing my stop down around $10.50.
The Risk: This gives me exactly $2.00 of risk per share.
The Target: I am looking for a move back up to $13.50 to take some initial profit, with a longer-term analyst target sitting up at $14.67.
From a technical perspective, it is hard for me to look at this chart and not assume it’s going to blow. If it can catch support right here at this level, the risk-to-reward ratio makes total sense to me.
I’m starting with 100 shares—nothing crazy—just to get the exposure.
Summary:
I think the “margin compression” fear is overblown, and the technicals suggest we are at a floor. I’m willing to risk $2.00 to see if the “Toyota of EVs” can dominate the global stage.
Do your own homework, but that’s what I’m seeing.
I will see you guys on Sunday for the full Trade Plan. Until then, enjoy the rest of the holiday weekend.
Cheers,
Ryan Bailey
