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Why Apple and Kandi Technologies Shares Jumped Today

Following last week's record finish on a blowout jobs report, stocks eased lower today as investors awaited the start of earnings season later this week. By the end of the day, the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) had given back 44 points, or 0.3%, while the S&P 500 lost 0.4% and the Nasdaq fell 0.8%. Cyclicals and small caps led the fall, indicating that investors may believe that stocks have grown a little too richly valued as the S&P has gained 14% since the start of February. 

There were no major economic reports out today, but earnings season will pick up later this week as Wells Fargo reports its quarterly results on Friday and a slew of Dow companies will deliver their earnings next week. Last week's strong jobs report may have also prompted some selling as investors fear that the Federal Reserve will raise interest rates sooner than expected. The unemployment rate fell from 6.3% to 6.1%, basically reaching the Fed's goal of 6%, and Goldman Sachs said it now expects the rate increase to come in the third quarter of next year instead of Q1 2016. Analysts are expecting an increase in profits of 6.2% for the second quarter, but considering the strong economic data that's come in, earnings growth could easily top that.

Apple  (NASDAQ: AAPL  ) shares finished up 2% today, hitting their highest level in nearly two years, and made small gains after hours amid reports that the company had hired an executive from Tag Heuer, pointing to an upcoming launch of the so-called iWatch. The iPhone-maker nabbed Patrick Pruniaux, the VP of sales and retail at Tag Heuer, just the latest addition to its executive team as it had earlier brought in a marketing exec from Yves Saint Laurent. Shares of Apple have risen lately on anticipation for the iWatch as well as the upcoming iPhone 6 and because of its recent acquisition of Beats Electronics. According to 9to5Mac, the watch has been tested by select professional athletes, has 10 sensors for functions such as heart rate, hydration, and blood pressure, and is expected to be released in October. With wearables seen as the next big frontier in technology, the success of the iWatch's release may determine the future of the company. 

Elsewhere, Kandi Technologies  (NASDAQ: KNDI  ) shares finished 6% higher after the Chinese electric-vehicle maker reported $31.8 million in new subsidies from the Chinese government for a joint venture it has a 50% stake in. The windfall is based on sales of over 3,000 EVs between June and December 2013, and over 1,000 for the first quarter of 2014, and is the first subsidy the joint venture has received. CEO Hu Xiaoming said the payments will enable the company to accelerate its EV sales and its EV-sharing program. The announcement was a bone for investors to chew on, as the stock has fallen sharply from its peak amid an ongoing SEC investigation and some accounting concerns. Kandi will continue to be a momentum stock, but its EV-sharing program could be huge if the company wins more subsidies like today's.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 08, 2014, at 12:12 AM, saeedabroad wrote:

    I have followed and respected MF's articles and videos for a long time now.

    However on this occasion and for the first time have felt compelled to offer additional inputs. Since early last week MF has published on at least three separate occasions the same news regarding potential SEC violations. Each time, KNDI pps has risen to the challenge as more investors see true potential. Today, KNDI closed at a 3 month high, with bullish technical indicators pointing to further gains. There are also strong fundamental factors leading to the rebound.

    With each passing day, new news vindicates the impressive business model and roll out of China's largest EV program.

    I'm not going to unashamedly pump KNDI. Instead, point out that the EV story in China is perhaps one of the most compelling investment propositions seen in any industry in the last 50 years - and is only just beginning.

    Confirmation of government subsidies to manufacturers is welcome news. Not only have they started paying, they have confirmed a timetable for future payments based on quarterly production data. In any business, knowing your future cash-flow, and timing of receivables is worth gold. This will have a significant and material difference on Chinese EV players' results moving forward.

    Let's put the government subsidies into perspective. With them, manufacturers recoup almost the full value of the car. Yes, the car is paid for by the government. That's a good customer to have.

    Through these incentives, the Chinese government is putting its wallet where its mouth is. For the first time, people are actually believing the Chinese are serious about tackling pollution - and looking for 5,000,000 EVs on the road by 2020.

    And who better to take advantage of this vastly improving landscape in China, but KNDI - who is already the largest EV manufacturer in China according to publicly available industry data.

    in China there is a need, and today there is a way.

  • Report this Comment On July 08, 2014, at 7:44 AM, captainccs wrote:

    Windfall: a piece of unexpected good fortune, typically one that involves receiving a large amount of money.

    The subsides cannot be qualified as "windfall" for the simple reason that they have been in existence for years. What was uncertain was only when they would actually be disbursed.

    Why do some Fools keep parroting old "news" about Kandi? One would think they would do their own Foolish research first.

    China has a major urban pollution problem not unlike the famed London Fog and, like the Brits, they must do something about it. One solution is zero tailpipe emissions which means switching from ICE to EVs. Not only have they instituted subsidies for EVs, they are also restricting license plates for ICE vehicles and removing clunkers from the roads.

    The Chinese middle class is growing by leaps and bounds and they want private transportation. They are upgrading from bikes and motorbikes. The conditions are ripe for the growth of EVs sales. Unlike the old "news" about Kandi, these pressures will not fade away. There is a true paradigm shift happening in Chinese transportation. You just might want to get on the bandwagon while it's in the early stages.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/31/2015 1:34 PM
^DJI $16539.72 Down -103.29 -0.62%
AAPL $113.43 Up +0.14 +0.12%
Apple CAPS Rating: ****
KNDI $6.76 Up +0.03 +0.45%
Kandi Technologies CAPS Rating: **