A Pick-and-Shovel Stock That Benefits From EV Adoption, Renewable Energy Transition, and China's Grid Upgrade

One thing we’ve noticed about investing in China is that the boring stocks tend to perform better in the long run. Think banks, telcos, and energy. The sexy Chinese tech stocks, on the other hand, suffer from huge volatility—and many don’t compound returns as well as their Western counterparts.

Today, we’re covering a boring stock that most investors may not have even heard of. China being the factory of the world, it’s only reasonable to expect that a compounder-type stock would be an industrial one. This company is dominant in its industry, has solid financials that qualify it as a compounder, and has gained 304% in the last 10 years—about 14.6% per year.

But it remains undervalued today, dragged down by poor sentiment in the Chinese stock market due to the Iran war as well as some domestic consumption challenges. Nevertheless, it’s a pick-and-shovel play for the global EV and green energy transition, and counts giants like BYD, Huawei, Tesla, Midea, and Haier among its customers. It’s also going to be very much needed as AI data centers get built and grow more power-hungry.