Is NIO Inc. (NIO) the Best Low Priced Stock to Invest in For the Long Term?

We recently published a list of 10 Best Low Priced Stocks to Invest in For the Long Term. In this article, we are going to take a look at where NIO Inc. (NYSE:NIO) stands against other best low priced stocks to invest in for the long term.

As per AllianceBernstein, tariffs and trade wars have impacted investors of late. While some asset classes were spared, the US small-cap stocks have been hard hit. Over the past 6 months, the Russell 2000 Index has witnessed a decline of over ~10%. That being said, the investment firm opines that equity markets continue to show signs of broadening, which can work in favor of small-caps over time. The small-caps have underperformed in part since they are perceived as being more economically sensitive as compared to their larger-company counterparts.

What Lies Ahead?

The current circumstances are unique, says AllianceBernstein. Trade tensions can have a more significant impact on the broader US economy, but robust companies can still see earnings growth. The small-cap investors can also take a sigh of relief from the broadening market. The investment firm highlighted that, over the previous 30 years, small-cap performance remained particularly robust over the last 2 cycles of unwinding large-cap growth concentration, i.e., when markets start to broaden.

The 10 largest stocks accounted for over half the market capitalization of the Russell 1000 Growth Index by 2024 end, exhibiting a record high in the market concentration. Despite the trend reflecting the signs of unwinding, the concentration remains much higher as compared to the previous peaks. As per AllianceBernstein, small-caps are well-placed to benefit from the declining market concentration.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Amidst Uncertainties, Focus on Quality Companies

AllianceBernstein opines that, while broadening markets have resulted in improved small-cap returns, timing the turn can be a difficult task. Typically, economic recoveries have fueled such transitions. In a bid to capitalize on the broadening market with an uncertain beginning, the firm believes that the best approach is to emphasize higher-quality companies. High-quality stocks tend to see reduced drawdowns when there is a contraction in the economy, and more upside when it sees expansion.

The firm also opines that small-cap stocks trade at extremely depressed valuations as compared to the larger companies, based on P/E ratios. Notably, the geopolitical tensions and macroeconomic worries have impacted the small companies. Without considering the company fundamentals, the investors have discounted potential hazards for such companies. Investing in firms exhibiting resilient business models can benefit along the road to recovery.

Our Methodology

To list the 10 Best Low Priced Stocks to Invest in For the Long Term, we sifted through financial media reports to make a list of 40 potential long term stocks. We focused on companies with a market cap of at least $2 billion with a share price below $10. We further refined our list to include stocks that had bullish analyst sentiment. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

NIO Inc. (NYSE:NIO)

Stock Price as of May 6: $3.92

Market cap as of May 6: $8.64 billion

Number of Hedge Fund Holders: 20

NIO Inc. (NYSE:NIO) is engaged in designing, developing, manufacturing, and selling smart EVs. Citi analyst Jeff Chung has maintained the bullish stance on the company’s stock. The analyst’s rating is backed by a combination of factors demonstrating a favourable outlook for NIO Inc. (NYSE:NIO)’s future performance. As per the analyst, the launch of new vehicle models and improved cost control measures are expected to support its earnings. The analyst believes that increased brand awareness and an efficient sales network can support its volumes.

NIO Inc. (NYSE:NIO)’s expanded product lineup positions it well to capture a broad range of market segments. The company delivered 23,900 vehicles in April 2025, reflecting an increase of 53.0% YoY. The deliveries consisted of 19,269 vehicles from its premium smart EV brand NIO, 4,400 vehicles from its family-oriented smart EV brand ONVO, and initial deliveries of the small smart high-end electric car brand firefly, which was started in late April 2025. The diversification strategy enables NIO Inc. (NYSE:NIO) to leverage technology and brand reputation throughout different price points and consumer preferences. After the product launch, firefly began deliveries in China in late April 2025 and has plans to gradually reach global markets.

Overall, NIO ranks 8th on our list of best low priced stocks to invest in for the long term. While we acknowledge the potential of NIO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than NIO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.