In this article, we discuss the 10 best automotive stocks to invest in now. If you want to skip our detailed analysis of the automotive industry which highlights current trends and major players, you can go directly to 5 Best Automotive Stocks To Invest In Now.
Even though the automobile sector suffered the adverse effects of the COVID-19 pandemic and a worldwide semiconductor shortage, data from Statista showed that 63.8 million cars were sold in 2020, and this figure went up to 66.7 million units in 2021. While some regions were hit hard by the pandemic, particularly South America and Europe where automotive sales dropped by one-fourths year over year in 2020, other regions such as China saw a recovery in car sales by 2021 where the figure had quadrupled as compared to 2020 numbers. As we move into 2022 and break free from the shackles of COVID-19, the automotive industry is undergoing a series of ground-breaking transformations as part of the EV revolution and from advancements in IoT technology to make cars “smart”.
Global Automotive Industry Analysis
The global automotive manufacturing market was valued at $2.7 trillion in 2021 and is projected to reach $2.8 trillion in 2022. According to a market report published by Research and Markets, the global automotive market consisted of 85.32 million units in 2020 and is projected to hit 122.83 million units by 2030, growing at a CAGR of 3.71% over the forecasted period. Primary drivers for this growth are an influx in consumer demand, hefty investments being poured into R&D, government initiatives and incentives for the electrification of vehicles, and technological innovations that are being integrated into vehicles to boost consumer interest.
Photo by Marvin Meyer on Unsplash
Major players in the automotive sector include Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F).
Our Methodology
To come up with the 10 best automotive stocks to invest in now, we did a careful assessment of automobile manufacturers and identified which of them are experiencing strong product demand, hitting milestones, or bringing about innovation in the space to drive their growth.
Along with each stock, we have mentioned its analyst and investor sentiment, both of which we believe to be critical indicators of stock performance. Stocks that have reflected positive sentiments are included in this list.
Best Automotive Stocks To Invest In Now
10. Volkswagen AG (OTC:VWAGY)
Number of Hedge Fund Holders: N/A
Volkswagen AG (OTC:VWAGY) is a leading German automobile manufacturer that manufactures and sells cars in Europe, North America, South America, and the Asia-Pacific. This May, the company reported earnings for the fiscal first quarter of 2022. Volkswagen AG (OTC:VWAGY) reported earnings per share of EUR 13.11 and generated revenues of EUR 62.7 billion. The company also reported quarterly vehicle sales of 1.9 million units. Volkswagen AG (OTC:VWAGY) saw strong demand and steady profit growth amidst supply shortages, continually making efforts to expand its global footprint in all growth and sales markets worldwide, which makes it one of the best automotive stocks to invest in now.
Volkswagen AG (OTC:VWAGY) is pioneering the digital transformation of the automotive industry by working with software giants such as Microsoft Corporation (NASDAQ:MSFT) on digital solutions for vehicles. On May 5, Microsoft Corporation (NASDAQ:MSFT) revealed car-friendly features for its HoloLens 2 AR smartglasses. This feature was developed by Microsoft Corporation (NASDAQ:MSFT) in partnership with Volkswagen AG (OTC:VWAGY) to test its utility in driving. Volkswagen AG (OTC:VWAGY) plans to integrate the HoloLens 2 as a heads-up display in its cars.
Volkswagen AG (OTC:VWAGY) is gaining popularity among expert financial analysts. On May 10, Societe Generale analyst Stephen Reitman raised his price target on Volkswagen AG (OTC:VWAGY) to EUR 280 from EUR 270 and reiterated a Buy rating on the shares. Positive analyst sentiment and robust product demand make Volkswagen AG (OTC:VWAGY) one of the best automotive stocks to invest in now.
9. Honda Motor Co Ltd (NYSE:HMC)
Number of Hedge Fund Holders: 10
Honda Motor Co Ltd (NYSE:HMC) has been experiencing decreased sales volumes due to chip shortages and Covid-related aftershocks but is nonetheless making efforts to expand its operations to provide robust and reliable vehicles. On March 15, the company announced its plans to pour in CAD $1.38 billion to upgrade its manufacturing plant in Ontario. This April, Honda Motor Co Ltd (NYSE:HMC) announced a strategic collaboration with General Motors Company (NYSE:GM) to jointly develop a fleet of affordable electric vehicles powered by next-generation Ultium battery technology.
On April 13, Honda Motor Co Ltd (NYSE:HMC) released note-worthy information about the company’s EV business. Honda Motor Co Ltd (NYSE:HMC) announced that it plans to invest approximately $64 billion in the area of electrification, including R&D overheads, over the next decade. The company is planning to unveil 30 electric Honda cars globally by 2030 and aims to manufacture over 2 million units annually.
By the
end of the fourth quarter of 2021, 10 hedge funds were bullish on Honda Motor Co Ltd (NYSE:HMC). The total stakes of these hedge funds were valued at $327.80 million.
This March, Fisher Asset Management upped its Q4 2021 stakes in Honda Motor Co Ltd (NYSE:HMC) by 6%. As of March 31, 2022, the fund’s stakes in the company are valued at $243.21 million which covers 0.16% of its investment portfolio. Fisher Asset Management is the dominating shareholder in Honda Motor Co Ltd (NYSE:HMC).
Honda Motor Co Ltd (NYSE:HMC) has a strong brand image and a robust business model, making it rank among the 10 best automotive stocks to invest in now. Other automotive stocks that have upcoming growth catalysts and the potential to appreciate in the near future include Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F).
8. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 12
Toyota Motor Corporation (NYSE:TM) is steadily gaining momentum and making strides in the automotive space. As of May 10, the stock has risen 7.33% over the past twelve months, which makes it a high-momentum stock pick for investors looking into the automotive industry.
Toyota Motor Corporation (NYSE:TM) is pouring in hefty investments to achieve its green-energy targets and be an active participant in the EV revolution. On February 11, 2022, Toyota Motor Corporation (NYSE:TM ) announced that it has invested an additional $90 million in two of its U.S. manufacturing facilities to support the company’s green-energy goals and production targets of electrified vehicles. This April, the company announced a budget of $383 million for four of its U.S. manufacturing plants that build the Toyota and Lexus vehicles. Moreover, the company is also working on EV-charging solutions to provide its customers with user-friendly charging options for Toyota vehicles. On March 22, the company announced a partnership with ChargePoint (NYSE:CHPT) to offer customers home and public EV charging solutions for the all-electric Toyota bZ4X SUV which was released last month.
Toyota Motor Corporation (NYSE:TM) is being eyed by investors and analysts alike. On April 7, Jefferies analyst Takaki Nakanishi reiterated a Buy rating on Toyota Motor Corporation (NYSE:TM) and slashed his price target to $195.05 from $229.63. Moreover, at the close of Q4 2021, 12 hedge funds held stakes in the company worth $943.76 million. This is compared to 10 positions in the preceding quarter with stakes of $876.13 million. The hedge fund sentiment for the stock is positive.
As of March 31, 2022, Fisher Asset Management is the most prominent stakeholder in Toyota Motor Corporation (NYSE:TM) having stakes worth $925.65 million in the company. The investment represents 0.54% of Ken Fisher’s hedge fund portfolio.
7. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 23
Stellantis N.V. (NYSE:STLA) is an emerging European automaker and is involved in the design and manufacturing of automobiles and light commercial vehicles, engines, transmission systems, and production systems worldwide. Stellantis N.V. (NYSE:STLA) is attracting bullish views from expert analysts. On May 5, Berenberg analyst Adrian Yanoshik initiated coverage of Stellantis N.V. (NYSE:STLA) with a Buy rating and EUR 21 price target on the shares.
Stellantis N.V. (NYSE:STLA) is becoming a popular name in the automobile industry and is reporting profitable results. This May, Stellantis N.V. (NYSE:STLA) reported Q1 2022 revenues of EUR 41.5 billion, up 12.2% year over year from EUR 37 billion, and also reported a new vehicle inventory of 807 thousand units as of March 31, 2022. Robust and profitable earnings even amidst a challenging operating environment make Stellantis N.V. (NYSE:STLA) a compelling automotive stock option.
By the end of the fourth quarter of 2021, 23 hedge funds were long Stellantis N.V. (NYSE:STLA) with stakes worth $1.25 billion. This is compared to 24 positions in the previous quarter with stakes of $1.17 billion. The hedge fund sentiment around Stellantis N.V. (NYSE:STLA) is positive.
According to Insider Monkey’s database, Qtron Investments is the top shareholder in Stellantis N.V. (NYSE:STLA) as of the end of Q1 2022. The fund’s stakes were valued at $214,000.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 30
NIO Inc. (NYSE:NIO) is a leading Chinese designer and manufacturer of smart electric vehicles. The company offers five, six, and seven-seater electric SUVs, as well as smart electric sedans. At the end of the fourth quarter of 2021, 30 hedge funds held stakes worth $813.67 million in NIO Inc. (NYSE:NIO).
On March 24, NIO Inc. (NYSE:NIO) reported earnings for the fiscal fourth quarter of 2021 in which it outperformed market estimates. The company saw a 51.37% year over year growth in quarterly revenues which came in at $1.55 billion, outperforming revenue estimates by $22.76 million.
This April, UBS analyst Paul Gong slashed is price target on NIO Inc. (NYSE:NIO) to $32 from $42, but upgraded the stock to Buy from Neutral. Gong contended that while NIO Inc. (NYSE:NIO) has been losing momentum and is experiencing bearish trading volumes, three new model launches in 2022, based on its NT2.0 platform, could be critical to accelerating its sales growth and add further strength to NIO Inc.’s (NYSE:NIO) brand recognition in the market. The UBS Evidence Lab electric vehicle consumer survey shows the company’s brand recognition is improving, positioning the company to benefit from strong sales of new products. NIO Inc. (NYSE:NIO) is the sixth-best automotive stock to invest in now.
On May 1, 2022, NIO Inc. (NYSE:NIO) announced that it has delivered 5,074 vehicles in April 2022. As of April 30, 2022, cumulative vehicle deliveries have reached approximately 198,000 vehicles. While the COVID-19 situation in China and chip shortages have negatively impacted production, NIO Inc. (NYSE:NIO) is making unparalleled efforts to recover production to full capacity. On April 29, 2022, the company reportedly started manufacturing the Nio ET5 at its new manufacturing plant at NeoPark in Hefei. NIO Inc. (NYSE:NIO) expects to start delivery of the ET5 by the third quarter of 2022.
Aubrey Capital Management is the most bullish hedge fund on NIO Inc. (NYSE:NIO) as of the end of this March. The fund’s stakes in NIO Inc. (NYSE:NIO) currently sit at $10.78 million, which represents 6.15% of its Q1 2022 13F portfolio.
Other automotive stocks that are being bullishly eyed by investors include Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F).
Click to continue reading and see 5 Best Automotive Stocks To Invest In Now.
Suggested Articles:
Disclose.
None. 10 Best Automotive Stocks To Invest In Now is originally published on Insider Monkey.