The pandemic helped fuel the stock market to record highs. But in a true economic fashion, what gets overvalued has to come down… for at least a bit that is. If you missed out on one of the biggest stock market dips right at the start of the pandemic, well your time has come. Brewing economic factors have created a bullish market making it a prime time opportunity for those looking to get in on some great automotive stocks.
One industry that should be on everyone’s radar is the automotive industry. With some of the best automotive stocks undervalued and underpriced, it’s never been a better time to buy into some leading companies.
So what exactly are the best automotive stocks to buy right now? Well, with the future of EVs and more tech integration than ever, there are some stocks that are certainly catching our eyes. Read on to see which are the best automotive stocks to buy right now.
1. General Motors Company (NYSE: GM)
While stocks are down pretty much across the board, General Motors Company is an industry leader with a history of innovation that has helped propel its growth. With a market cap of nearly $70 billion dollars, this is a stock that should be one for the long haul in your portfolio.
Whether we’re ready for it, EVs are the future of vehicle design and performance. GM not only has a healthy EV lineup, but the company has announced that it will plan to be an all-electric carmaker by 2035. This impressive goal is not only in line with the trends of the automotive market, but it’s also a feat that should be no issue for a big company such as GM.
With Innovation driving GM, the future looks bright for this company. Trusted branding, a strong balance sheet, and quarterly revenue which has exceeded expectations are all factors that position GM as a strong stock to hold onto, especially for the long term.
2. Tesla (NYSE: TSLA)
As the world shifts to EVs, many makers and consumers turn to Tesla as the industry leader. The electric vehicle maker has absolutely dominated the automotive space thanks to top-tier technology integration in its Tesla models.
Tesla greatly benefited during the pandemic seeing over 100% return on investments over the past year alone. While some analysts speculate that Tesla can’t sustain such an exorbitant amount of growth in such a short period of time, others argue that the company has just barely scratched the surface and its potential. Either way, this is the company that not only has strong economic backing but it’s also got the support of everyday retail investors. The strong public support for this stock will help propel its growth both in the short-term and long-term.
One of the biggest advantages Tesla has going for it is its never-ending innovation. And even when innovative projects turn out to be duds, the company still pushes forward in its classic resilient nature. This resiliency is another feature that has helped it gain popularity in the markets by a range of investors. As the markets turn bullish, it’s one of the best times to get in while prices are on the lower side. buyers will still have to contend with a rather high price-to-earnings ratio (P/E). Some analysts argue that the stock is a bit overpriced with a PE ratio of 95, however, others contend that its high PE ratio is a reflection of the company’s investments in infrastructure, which in turn is taking away from their profits.
With the company moving its headquarters from California to Texas and the construction of several manufacturing plants including the Gigafactory, the company is certainly pouring its profits back into itself. Seeing as it’s the industry leader in EVs, it would make sense that building a solid foundation will only lead to the continued construction of state-of-the-art electric vehicles.
3. Ford Motor Company (NYSE: F)
America’s favorite truck company should also be one of your favorite automotive stocks to buy into this year. Ford has a long-standing history dating back to 1903. This history has helped it lay a solid foundation which has allowed the company to be one of America’s most trusted automotive makers. Much like GM, Ford boasts a booming market cap of over $50 billion dollars. One of the biggest factors behind Ford’s success is its continued innovation. Innovation in the EV space has been no exception.
The carmaker has slipped into the EV space with three electric models, two of which reimagine two of Ford’s most popular models. The Mustang Mach-E takes the iconic muscle car and outfits it with an electric engine. Drivers can still look forward to that undeniable power and performance all while cutting down on fuel and maintenance costs.
America’s beloved truck, the F-150 is also getting an EV counterpart. The F-150 Lightning is the brand’s first electric truck that is just as beautiful as it is powerful. With an average of over 1 million Ford F-150 sales per year, it’s a no-brainer that Ford’s pushed this model into the electric space.
Lastly, Ford introduced its first electric commercial van as well. The E Transit is the perfect vehicle for business owners, workers, and those who simply want a bigger van with the benefit of electric power. While Ford has hit a stunt in growth over the past couple of years, it’s not entirely the fault of the carmaker. The global semiconductor shortage has impacted Ford just as it has impacted all other automakers. Semiconductor chips are used in almost every element in a vehicle and without them, production of new vehicles has stalled. Despite this downturn, Ford remains to be a strong stock to hold onto. Its long-standing history of continued innovation and strong presence position it as a great stock to add to your portfolio.
4. Honda Motor Company (NYSE: HMC)
Honda Motor Company joins the shortlist of iconic household names that are not going anywhere anytime soon. Honda absolutely revolutionized the automotive market with its powerful long-lasting engines that have powered some of the longest-running cars in automotive history. Honda has become a staple not only in Japan but across the globe.
Honda’s undeniable presence should not be the sole reason to buy into this stock. Great performance, year-over-year growth, and strong balance sheets position the Honda Motor Company as one of those stocks you want to hold on to for the long term and buy as much of as you can when the dips hit.
Currently, the stock is trading with a PE ratio of 5.97, this is nearly half of its average PE ratio of 9. This low P/E ratio positions Honda to be an undervalued stock at the moment meaning it’s a great buy for you. Value investors might especially want to look into this stock if they are not quite sure what to buy into but know they want to hold on to a great company for the long run.
One of the biggest factors that have poised Honda to be a great buy is its innovation and its reach. Honda has expectedly shifted to the EV space and offers some of the best charging capabilities in the industry right now. With quick charging speeds that can get your car’s battery up to 80% in just under 30 minutes, the company has been an industry leader not just with EVs, but in the application and practicality of electric power. The company has also moved in the right direction when it comes to climate change. Honda has pledged to shift two-thirds of its fleet to zero-emission vehicles by the year 2030. Not only is Honda an industry leader in the automotive space, but it’s really taking a stand on sustainability too. When it comes to its expansive reach, Honda is one of those makers that offer a model for virtually every type of driver. From its off-roading vehicles to its convertibles, to its SUVs, and of course, its much-loved sedans, Honda has its roots in every part of the automotive market making it an industry leader that is set up for success.
5. Toyota Motor Corporation (NYSE: TM)
Toyota has become synonymous with industry leaders including Honda and Ford. The name alone holds so much weight in terms of being a strong stock to buy into. In today’s bullish market, it’s as good a time as ever to get into Toyota.
The company has high hopes of making its mark in the EV space. The brand was one of the first to establish sustainability and environmental impact with its fleet of hybrid vehicles. Year after year, Toyota has been releasing more energy-efficient vehicles which have helped fuel its success.
Toyota is pushing into the all-electric vehicle space too with its first all-electric SUV, the bZ4X. a panoramic sunroof, a sleek design, and the latest tech features will make the bz4x a vehicle to contend with. Seeing as how Toyota has a strong base, to begin with, this all-electric SUV is sure to be met with open arms by Toyota lovers.
In the past couple of years, Toyota sales have also skyrocketed, positioning Toyota on an open path of continued success. The brand is a household name throughout the nation and the globe with many government agencies, business owners, and everyday drivers turning to the brand’s dependable fleet. Like all automotive makers, Toyota did see a downturn in sales due to the global semiconductor shortage during the pandemic, but income growth has continued helping to offset those losses.
Pro Tip: Invest in an Automotive ETF
If you’re not ready to buy into a single automotive stock, and would much rather have the comfort of diversification on your side, then you may want to look into an automotive ETF.
Much like mutual funds, ETFs offer diversity with a number of different stocks in one fund. Unlike mutual funds, you can look forward to very low if any fund fees or expense ratios. You also have the flexibility to buy into them at a much lower cost than traditional mutual funds.
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