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Why Kandi Technologies, URS, and AECOM Technology Are Today's 3 Best Stocks

It was the perfect start to the week, if you're an optimist that is, with the broad-based S&P 500 (SNPINDEX: ^GSPC  ) hugging a tight daily range but holding on to its steady gains all day.

The interesting part about today's move higher was that it was made despite no important economic data releases at home or abroad. Instead, investors focused on a wave of merger and acquisition activity that occurred over the weekend across a number of sectors. In addition, though we're extremely early in earnings season, a number of companies that have reported have topped estimates signaling that the polar vortex is clearly in the rearview mirror and that there is no endemic slowdown in U.S. growth prospects.

By day's end, the S&P 500 had finished higher by 9.53 points (0.48%) to close at 1,977.10.

Source: Kandi Technologies.

Leading all stocks to the upside today was China-based electric-vehicle and all-terrain vehicle manufacturer Kandi Technologies (NASDAQ: KNDI  ) , which vaulted higher by 26.6% after announcing that it had sold 4,114 electric vehicles, or EVs, in the second quarter. Comparatively, that's a 238% increase from the 1,215 EVs it sold in the first quarter. As Kandi's CEO notes, "We have not only achieved success in implementing the Hangzhou Public EV Sharing System, or the 'Carshare' Program, but also in growing our group leasing model."

While these numbers are an absolute blowout for Kandi based on what investors had been expecting, and the business model makes a lot of sense on paper considering the need for low- or no-emission alternatives for some of China's highly polluted cities, I still remain somewhat skeptical. Specifically, I worry about Kandi's ability to keep up with competition that has deeper pocketbooks, such as Tesla Motors. For the time being, I remain a bystander on Kandi.

The other two big gainers for the day come from the same deal announcement: AECOM Technology's (NYSE: ACM  ) agreement to purchase engineering and construction firm URS (NYSE: URS  ) for roughly $4 billion in a combined cash and stock deal. If you include debt the deal is valued at closer to $6 billion. All told, URS stockholders, who saw their shares rise by 12.3% today, will receive $33 in cash and 0.734 shares of AECOM stock for each share they own – which is good news because AECOM shares vaulted higher by 10.1% as well.

Source: Nuclear Regulatory Commission, Flickr.

The deal would appear to make sense on a number of fronts for AECOM. It'll allow the combined entity to be more competitive on a global scale for projects in rapidly growing Asia, it'll further expand AECOM's footprint in the energy and construction sectors, and it gives AECOM access to URS' U.S. government contracts which accounted for around a third of its revenue last year. In other words, AECOM's revenue stream just got a whole lot safer and its global growth prospects appear to have improved due to the new size of this combined company. Although I'm a bit reluctant to suggest investors consider the idea of chasing shares higher here, over the extreme long run there's little reason to believe that AECOM shares couldn't head even higher.

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Comments from our Foolish Readers

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  • Report this Comment On July 14, 2014, at 6:52 PM, corstrat wrote:

    Sean, Your kidding right? "You are not serious with this quote, are you? ".. I worry about Kandi's ability to keep up with competition that has deeper pocketbooks, such as Tesla Motors.."

    What on earth does TSLA with its $150,000 EV's have to do with KNDI's $15,000 EV's in China?

    Not only is KNDI clearly the #1 Pure EV maker in China, and did it without subsidies, but with today's announcement is set up to receive another $75 million or more in subsidies for the first half alone to add to the $31 million they announced was paid last week. .

    KNDI, with support of its partner Geely, the #1 ICE passenger car manufacturer in all of China, is a least a year ahead of all competitors with current annual EV capacity of 300,000 cars per year, with an additional 400,000 capacity in four additional Provinces scheduled for completion by the end of 2015.

  • Report this Comment On July 14, 2014, at 9:00 PM, Gdubu wrote:

    Your worry is misplaced Sean. It's management's responsibility to worry about competitive forces and if you studied and analyzed Kandi you would know management is doing an outstanding job regarding its competition. As a writer or journalist it's your responsibility to report the facts and obviously you are not in command of the facts. You don't know Kandi, the market it serves, and the macro economic and environmental issues it addresses. What I like most about Kandi is that it is giving customers what they want - an elegant, economical, personal, environmentally friendly, intra-city transportation system. Companies that tend to give customers want they want tend to prosper. Kandi is one of the great emerging growth stock opportunities of our time lead by a visionary leader. Seriously Sean, your worry is misplaced.

  • Report this Comment On July 14, 2014, at 10:29 PM, Tgar13 wrote:

    They are not in competition at all!

    1. They serve entirely different markets

    2. Tesla doesn't get a subsidy

    3. Local governments are mandated to buy 30%electric vehicles [i don't think they will be buying Teslas!] and build a infrastructure that won't be compatible with Tesla

    4. An affordable Car share Program for the masses that coordinates with one of the biggestUtilities in the world the State Grid of China - this my foolish friend is not Tesla

    Don't get me wrong Tesla is a great company but you are comparing Walmart to Tiffany's

  • Report this Comment On July 14, 2014, at 10:34 PM, Tgar13 wrote:

    I have been long since the mid 4's and have consistently ignored all fool articles on this company and have been amply rewarded and I am now fully invested with the Houses Money

    A careful look at the potential revenue growth shows a runway that may not slow down until 2020

    The Chinese government has added subsidy upon subsidy and it is obvious they are all in on EV's to replace ICE cars as a solution to " Airpocalypse"

    The company has a current annual production capacity for 300,000k cars and is now producing at a rate of 18k per year

    I would due your own due diligence on the yahoo

    Private Kandi Board since the Fool has consistently gotten this one wrong

  • Report this Comment On July 15, 2014, at 12:15 AM, spfmf14 wrote:

    Sean, looking forward to all those car share garages packed with $130,000 Teslas in them, and my Chinese in-laws getting my mail delivered to them by a mailperson driving a $130,00 Tesla as well....nobody can make EVs on the ecomony of scale of Kandi. I guess when you become a believer Kandi will already be a $45 stock (and it will still be a great buy at that price, BTW).

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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