These 11 Automotive Stocks Can Be Profitable Buys
Although most analysts have lukewarm outlooks for 2024, the automotive industry harbors some growth stock opportunities that are too promising to overlook. Let's examine the significant mitigating factors and the promising auto stocks most likely to have a good year in almost any turn of events.
State of the 2024 Automotive Industry
In 2024, the automotive landscape is witnessing notable shifts in trends. While the electrification of vehicles remains a prominent focus, there's a sobering realization as consumer uptake of electric vehicles (EVs) in North America slows, suggesting a more gradual path to widespread adoption. Concurrently, advancements in autonomous technologies are progressing, notably with the integration of Level 3 conditional driving automation in select vehicles.
Also, established giants like Toyota and Volkswagen are getting robust international competition from the following automakers.
Economic uncertainties are reshaping consumer behavior, leading to heightened interest in used cars and prolonged ownership of existing vehicles.
Also, the emergence of the car-as-a-service (CaaS) model presents an alternative to conventional leasing, offering subscription-based programs with the potential for longer-term commitments. Simultaneously, micro-mobility, represented by electric scooters, bicycles, and e-bikes, is gaining traction as a cost-effective and convenient mode of transportation for short city journeys. These trends collectively underscore a transformative phase in the automotive sector.
11 Best Car Stocks to Consider This Year
These automotive stocks are most experts' choices for the best car stocks to buy this year.
1. Asbury Automotive Group, Inc. ?
Asbury Automotive Group, Inc. (NYSE: ABG) is a prominent American automotive retailer offering a comprehensive range of services, including new and used auto sales, vehicle repair and maintenance, replacement parts, and collision repair services. In its recent earnings report on February 8, Asbury Automotive Group, Inc. (NYSE: ABG) posted a Q4 non-GAAP EPS of $7.12, slightly below market expectations by $0.47. However, the company's revenue showed resilience, increasing by 2.7% year-over-year to $3.8 billion, surpassing Wall Street estimates by $100 million.
The sentiment among hedge funds remains bullish toward Asbury Automotive Group, Inc. (NYSE: ABG). Thirty-three funds hold positions, up from 30 funds in the previous quarter. David Abrams' Abrams Capital Management stands out as the largest stakeholder, holding 2.10 million shares valued at $474.35 million.
Alongside stalwarts like General Motors Company (NYSE: GM), Tesla, Inc. (NASDAQ: TSLA), and Ford Motor Company (NYSE: F), Asbury Automotive Group, Inc. (NYSE: ABG) emerges as a compelling contender in the automotive sector. This makes it a stock worth closely monitoring.
2. Gentex Corporation ?
Gentex Corporation (NASDAQ: GNTX) specializes in cutting-edge designs, development, manufacturing, and global distribution of digital vision, IoTs, dimmable glass, and fire protection products. In its recent earnings report on January 26, Gentex Corporation (NASDAQ: GNTX) posted a Q4 GAAP EPS of $0.50, surpassing market expectations by $0.05. Additionally, the company reported a robust revenue of $589.1 million, outperforming Wall Street estimates by $26.93 million. Notably, revenue for the quarter exhibited a notable uptick of 19.3% compared to the same period last year. It's worth mentioning that the income for the fourth quarter of 2023 included one-time cost recoveries totaling approximately $5 million.
There is substantial bullish sentiment among hedge funds towards Gentex Corporation (NASDAQ: GNTX), with 33 funds holding positions. John W. Rogers' Ariel Investments is leading the pack, boasting the most significant stake in the company, with holdings of 6.5 million shares valued at $214 million.
Amidst its impressive performance and investor confidence, Gentex Corporation (NASDAQ: GNTX) stands out as a notable player in its sector, making it a stock worth considering.
3. Stellantis N.V.
Stellantis N.V. (NYSE: STLA) operates globally, engaging in the full spectrum of automotive activities, from design and engineering to manufacturing, distribution, and sales of automobiles, light commercial vehicles, engines, and transmission systems. Additionally, the company offers metallurgical products, mobility services, and production systems. With its diverse portfolio, Stellantis N.V. (NYSE: STLA) emerges as a top contender in the automotive sector.
In a move that underscores its commitment to shareholders, Stellantis N.V. (NYSE: STLA) announced a substantial increase in its annual dividend to €1.55 per share, marking a notable 15.7% uptick from its previous dividend of €1.34. This dividend distribution will happen on May 3 to shareholders on record as of April 23. Furthermore, the company revealed plans to launch a €3 billion open-market share buyback program in 2024, demonstrating confidence in its financial position and future prospects.
Thirty-three funds hold long positions in STLA, compared to 27 funds in the previous quarter. Notably, Karthik Sarma's SRS Investment Management is the largest stakeholder, boasting 8.4 million shares valued at $197.4 million.
4. Lear Corporation
Lear Corporation (NYSE: LEA) is a critical player in the automotive industry, specializing in the design, development, engineering, manufacturing, and supply of automotive seating, electrical distribution systems, and related components for original equipment manufacturers (OEMs). Recognized as the 9th-best auto stock, Lear Corporation (NYSE: LEA) maintains a prominent position in the market.
On February 20, the company announced a quarterly dividend of $0.77 per share, consistent with previous payouts. Shareholders on record as of March 8 can anticipate receiving this dividend payment on March 27.
There is a bullish sentiment among hedge funds towards Lear Corporation (NYSE: LEA), with 34 funds holding positions, up from 32 funds in the preceding quarter. Richard S. Pzena's Pzena Investment Management emerges as the largest stakeholder, with 6.25 million shares valued at over $833 million.
With its solid fundamentals and widespread investor confidence, Lear Corporation (NYSE: LEA) continues to be an attractive investment opportunity in the automotive sector, offering the potential for growth and stability.
5. AutoNation, Inc
AutoNation, Inc. (NYSE: AN) is a prominent American automotive retailer operating across Domestic, Import, and Premium Luxury segments. Offering a diverse array of Automotive products and services, including:
In its latest financial report on February 13, AutoNation, Inc. (NYSE: AN) unveiled a robust performance, with a Q4 non-GAAP EPS of $5.02 and revenue reaching $6.8 billion. These figures exceeded Wall Street estimates by $0.15 and $120 million, respectively, underscoring the company's strength and resilience in the market.
Analysts report continued bullish sentiment among hedge funds toward AutoNation, Inc. (NYSE: AN). 34 funds maintained positions, slightly down from 38 funds in the previous quarter. Notably, Anand Parekh's Alyeska Investment Group is the largest stakeholder, holding 604,684 shares valued at $90.8 million.
Amidst its impressive performance and investor confidence, AutoNation, Inc. (NYSE: AN) remains a stock worth monitoring closely because it has the potential to deliver strong returns in the dynamic automotive industry.
6. Ferrari N.V.
Ferrari N.V. (NYSE: RACE) is a renowned global manufacturer of luxury performance sports cars, famous for its iconic designs, engineering prowess, and unparalleled performance. The company specializes in designing, engineering, producing, and selling various car models, ranging from special series to limited edition supercars and track cars. Positioned as one of the premier auto stocks to watch, Ferrari N.V. (NYSE: RACE) commands attention in the automotive world.
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In its recent financial update on February 1, Ferrari N.V. (NYSE: RACE) reported a strong performance, with a Q4 non-GAAP EPS of ?1.62 and revenue reaching ?1.52 billion, marking a notable 10.9% increase year-over-year. Despite a slight dip in shipments, totaling 3,245 units for the fourth quarter of 2023, reflecting a 2% decrease compared to the same period in 2022, Ferrari N.V. (NYSE: RACE) maintains its reputation for excellence and luxury.
Market sources confirm continued bullish sentiment among hedge funds towards Ferrari N.V. (NYSE: RACE), with 34 funds holding positions, up from 31 funds in the previous quarter. Notably, Paul Marshall and Ian Wace's Marshall Wace LLP emerged as the largest stakeholder, boasting 345,009 shares valued at $116.3 million.
With its legendary brand heritage and ongoing innovation, Ferrari N.V. (NYSE: RACE) remains a captivating investment opportunity in the automotive sector. Its potential for growth and continued success is promising.
7. CarMax, Inc.
CarMax, Inc. (NYSE: KMX) stands out as a leading retailer of used vehicles in the United States, operating through two core segments – CarMax Sales Operations and CarMax Auto Finance. CarMax caters to a wide array of consumer preferences by offering a diverse range of used vehicles, including domestic, imported, luxury, hybrid, and electric models.
In its recent December 21, 2023 financial report, CarMax, Inc. (NYSE: KMX) announced a Q3 GAAP EPS of $0.52, surpassing market estimates by an impressive $0.11. However, the company's revenue of $6.1 billion fell short of the Street consensus by $200 million. Despite this, CarMax continues demonstrating resilience and competitiveness in the used vehicle market.
Many analysts' fourth-quarter assessments reflect growing confidence among hedge funds in CarMax, Inc. (NYSE: KMX). 38 funds held positions, up from 35 funds in the previous quarter. Ric Dillon's Diamond Hill Capital is the largest stakeholder, holding 6.7 million shares valued at over $514 million.
8. Carvana Co.
Carvana Co. (NYSE: CVNA) is a pioneering American company revolutionizing the used car market through its innovative e-commerce platform. In its recent quarterly report, Carvana Co. (NYSE: CVNA) exceeded expectations, marking a significant turnaround from last year by transforming a net loss into a net gain. Moreover, the company provided a promising outlook for the upcoming quarter.
During Q3, Carvana achieved remarkable success, boasting a non-GAAP total gross profit per unit of $6,396, consistently surpassing $5,000 for the third consecutive quarter in Q4. Additionally, Carvana projects positive adjusted EBITDA for the third quarter, underlining its sustained growth trajectory and financial stability.
There is a bullish sentiment among hedge funds towards Carvana Co. (NYSE: CVNA), with 40 funds holding positions, up from 38 funds in the previous quarter. Notably, Spruce House Investment Management emerges as the company's largest stakeholder, with 9.5 million shares valued at $502.4 million.
Ranked 6th on the list of best auto stocks, CarMax, Inc. (NYSE: KMX) garners attention alongside hedge fund favorites like General Motors Company (NYSE: GM), Tesla, Inc. (NASDAQ: TSLA), and Ford Motor Company (NYSE: F). With its robust performance and widespread investor interest, CarMax remains a compelling choice in the automotive sector.
9. Ford Motor Company
Ford Motor Company (NYSE: F) is a global automotive powerhouse renowned for developing, manufacturing, and servicing a diverse spectrum of vehicles. Ford Motor Company (NYSE: F) offers a comprehensive lineup under the esteemed Ford and Lincoln brands, from robust trucks and commercial cars to versatile vans, SUVs, and luxury vehicles. Positioned as one of the premier auto stocks to consider, Ford Motor Company (NYSE: F) continues to captivate investors with its enduring legacy and forward-thinking approach.
In its recent financial disclosure on February 6, Ford Motor Company (NYSE: F) delivered impressive results. Its Q4 non-GAAP EPS of $0.29 surpassed market estimates by a noteworthy margin of $0.17. Additionally, the company reported revenue of $46 billion, marking a solid 4% increase year over year, further validating its resilience and adaptability in the dynamic automotive market.
Market observers note heavy hedge fund interest in Ford Motor Company (NYSE: F). Forty funds remain positions, albeit slightly down from 43 funds in the previous quarter. Notably, Ken Fisher's Fisher Asset Management emerges as the company's leading stakeholder, boasting holdings of 59 million shares valued at $721 million.
Amidst its stellar performance and widespread investor interest, Ford Motor Company (NYSE: F) remains a top contender in the automotive sector. It offers investors a compelling opportunity for growth and value appreciation. With its solid fundamentals and esteemed brand reputation, Ford Motor Company (NYSE: F) continues to drive innovation and shape the future of mobility.
10. Tesla, Inc:
Tesla, Inc. (NASDAQ: TSLA) secures the 2nd spot on our top auto stocks list. On February 14, Tesla, Inc. (NASDAQ: TSLA) experienced an uptick in post-market trading following Elon Musk's disclosure in an SEC filing. Musk revealed his substantial 20.5% stake in the company as of December 31, 2023, sending ripples through the market. The reported value of Musk's stake eclipses $120 billion, exceeding the combined market caps of automotive giants General Motors and Ford Motor. In an ambitious move, Musk intended to boost his voting position in Tesla to 25%, aiming to wield more significant influence in steering the company's AI business toward the future.
With its visionary leadership, groundbreaking innovations, and relentless pursuit of excellence, Tesla, Inc. (NASDAQ: TSLA) remains at the forefront of the automotive industry. Investors are keenly attuned to Tesla's trajectory, recognizing its potential to redefine the landscape of transportation and technology. As Tesla continues to push boundaries and defy expectations, it stands as a beacon of innovation and disruption in the ever-evolving world of automobiles.
11. Aptiv PLC
Aptiv PLC (NYSE: APTV) operates as a leading global entity specializing in designing, manufacturing, and distributing cutting-edge vehicle components. With a strategic focus on delivering innovative electrical, electronic, and safety technology solutions, Aptiv caters to both automotive and commercial vehicle markets, driving advancements in mobility and safety.
In its latest financial report on January 31, Aptiv PLC (NYSE: APTV) showcased impressive performance, posting a Q4 non-GAAP EPS of $1.40. This figure surpassed market consensus by $0.07, underscoring Aptiv's solid operational execution. Despite a commendable 5.6% year-over-year revenue increase to $4.9 billion, the revenue fell short of Wall Street estimates by $170 million, indicating areas for potential growth and optimization.
Hedge funds continue to be bullish about Aptiv PLC (NYSE: APTV), with 39 holding positions compared to 38 funds in the previous quarter. Notably, Ian Simm's Impax Asset Management emerges as the company's largest stakeholder, boasting holdings of 7.2 million shares valued at approximately $652 million.
Aptiv PLC (NYSE: APTV) continues to innovate and drive advancements in vehicle technology, making it a compelling investment opportunity in the automotive sector. With its robust fundamentals and strategic positioning in critical markets, Aptiv is a strong candidate for sustained growth and value creation in the dynamic mobility solutions landscape.
Final note
In 2024, investing in the auto industry presents a compelling opportunity as the sector undergoes transformative shifts. With advancements in electric and autonomous vehicle technologies, companies like Tesla, Inc. (NASDAQ:TSLA) and General Motors Company (NYSE: GM) lead the charge, attracting investors with their innovative approaches to mobility.
Additionally, traditional automakers such as Ford Motor Company (NYSE: F) and Stellantis N.V. (NYSE: STLA) are embracing electrification and digitalization to stay competitive in a rapidly evolving landscape.
Beyond vehicle manufacturing, ancillary sectors like automotive suppliers and used car retailers offer diversified investment options. Companies like Aptiv PLC (NYSE: APTV) and CarMax, Inc. (NYSE: KMX) demonstrate resilience and growth potential. Amidst economic uncertainties and shifting consumer preferences, strategic investments in the auto industry in 2024 can yield promising returns for savvy investors positioning themselves for the future of transportation.
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