Chinese electric car manufacturer NIO Limited (NIO) just may be one of the hottest stocks in an already overheated stock market. In the past 52 weeks alone, NIO stock has gained 2,138%, and according to J.P. Morgan analyst Nick Lai, NIO's run isn't done yet.This $44 stock might even go as high as… $46.Now, we know what you're thinking. $46 a share — isn't that just a couple bucks more than the $44 NIO stock costs today? And isn't that kind of a piddling profit to be racing after? The answer is "yes" to both questions.And yet, Lai still wants to explain why he thinks you should buy NIO stock, so let's let him go ahead and make his case. (To watch Lai's track record, click here)Even in a Chinese car market where generous government subsidies (extended into 2022 by the way) have given investors a case of "Tesla fever," says Lai, and even in a market where electric car companies of all stripes are being bid up to "likely overshot" valuations, NIO stock "will be a long-term winner in the premium EV space, with ~30% market share by 2025." Helping with this will be a new electric sedan model (the EC6) that NIO is debuting in December, joining the company's current offerings of two electric SUVs and one electric crossover vehicle.Additionally, Lai argues that NIO is more than just a car company selling cars "direct" to customers. It's also a "pioneer among Chinese EV peers leading a business model transformation from a conventional carmaker to a combination of smart mobility provider with business monetization opportunity."And yes, there's a lot of corporate babble-speak in that statement, but roughly translated, what Lai is saying here is that he thinks NIO has the ability to not just sell cars to consumers, and collect money from making those sales. NIO is also offering "various types of content (e.g. entertainment)" and also services such as battery replacement, both of which may provide incremental revenue above and beyond the revenue from selling the cars in the first place.These potential "various types of content" may also carry higher than average profit margins — in Lai's view, high enough to raise the company's gross profit margin from 8% in Q2 2020 to as high as 12% to 13% as soon as Q3 2020.True, even Lai doesn't expect any of this to translate into actual net (or even operating) profits before 2023 at the earliest. But he seems to think that profits will come, eventually. And with projected revenues rising from $7.8 billion last year to perhaps as high as $65.2 billion by 2022 (the last year for which he provides estimates), Lai believes the stock is worth at least its current valuation of about 7.7 times last year's sales — and perhaps a bit more.Is the rest of the Street in agreement? As it turns out, the analyst consensus is more of a mixed bag. 6 Buy ratings, 3 Holds and 1 Sell were assigned in the last three months, giving NIO a Moderate Buy status. However, with a $26.96 average price target, there's nearly 39% downside from current levels. (See NIO stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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