Have I been making stock-picking more complicated than it needs to be? Probably. That's one of the hazards of doing a job that I love so much that I'd do it as a hobby anyway ... analyzing investments and making sense of the market. Fortunately, Warren Buffett has once again put me back on the right path. I recently restumbled across one of his less-circulated nuggets of wisdom that hit me like a ton of bricks: "If a business does well, the stock eventually follows."
In an instant, a company I've had on my mental radar was ushered to the very top of my watch list. It may soon end up in my portfolio. That's BYD (BYDDY 1.31%). Here's why.
Image source: Motley Fool.
What's BYD?
Never heard of it? You might be more familiar with it than you realize. The company that's now selling more electric vehicles than Tesla? is BYD. It predominantly serves the Chinese market (where it's based) and its neighbors, although it's got a small but growing presence in Europe. Notably, it doesn't sell EVs in North America. Then again, why would it? U.S. drivers appear to be less interested in electric vehicles lately.
That's far from being the case in BYD's home market of China, though. While sales of electric vehicles slowed somewhat from June to July, China's Association of Automobile Manufacturers reports 27% year-over-year sales growth for electric vehicles, accounting for 48.7% of all automobile sales. Perhaps more important, BYD continues to dominate this growth. Its 27% share of China's EV sales in July is more than twice the next-nearest Geely.
And for what it's worth, the International Energy Agency believes electric vehicles will make up 80% of China's total vehicle sales by 2030.
In short, BYD is doing well. The stock should eventually follow. Not complicated.
The kicker
Still not convinced? This might do the trick. You know who already owns $2.3 billion worth of BYD shares? Warren Buffett's Berkshire Hathaway. Clearly, he's a believer, too.
