The 3 Best Auto Stocks To Invest In Right Now And The Worst


The auto industry has recovered from the slowdown caused by a pandemic. Global car sales grew from a low of 63.80 million units in 2020 to about 66.70 million in 2021. In addition, technological advances in this area are expected to drive further growth in the coming years.

Car manufacturers are now increasingly moving towards cleaner and more sustainable technologies. The global electric vehicle (EV) market is expected to exceed $980 billion by 2028, with growth of CAGR of 24.5% between 2022 and 2028.

Against this background, the fundamentally strong auto stocks Volkswagen AG (VWAGY), Stellantis NV(STLA), and Honda Motor Co., Ltd. (HMC) can now be solid buys.

However, supply chain problems still pose a threat to the automotive industry. The delivery issues are: expected to continue next year. Therefore, it may be ideal to buy Mullen Automotive Inc. auto shares. to avoid (MULN), given the weak fundamental positioning.

Shares to buy:

Volkswagen AG (VWAGY)

VWAGY, headquartered in Wolfsburg, Germany, manufactures and markets automobiles through four segments: Passenger cars; commercial vehicles; Energy engineering and financial services. It supplies its products under the Volkswagen Passenger Cars, Audi, KODA, SEAT, Bentley, Porsche, Lamborghini, Ducati and Bugatti brands.

In September, VWAGY announced its decision to initial public offering (IPO) process of the preferred stock in Dr. eng. hc F. Porsche AG, for an installation price of € 76.50 to € 82.50.

In August, VWAGY signed an agreement with the Canadian government on battery value creation and raw material safety. Battery company PowerCo SE plans to ramp up its business, which is expected to support VWAGY’s growth strategy.

VWAGY sales revenue increased 3.3% year-over-year to €69.54 billion ($69.03 billion) for the second quarter ended June 2022. After-tax profit improved 25.8% year-over-year to €3. 91 billion ($3.77 billion) over the period . The company’s earnings per share rose 27.1% from a year ago to €20.51.

The consensus revenue estimate of $78.22 billion for the fiscal fourth quarter ended December 2022 represents a 12.3% year-over-year increase.

The stock has risen marginally in the past month, closing its last trading session at $18.33.

VWAGYs POWR ratings reflect these promising prospects. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings rate stocks on 118 different factors, each with its own weighting.

VWAGY is rated a B in value, stability and sentiment. Within the Auto and Vehicle Manufacturers industry, it ranks number 2 out of 70 stocks.

In addition to what we mentioned above, we also provided VWAGY numbers for growth, momentum and quality. Get all VWAGY reviews here.

Stellantis NV(STLA)

STLA designs, engineers, manufactures, distributes and markets automobiles and light commercial vehicles, engines, transmission systems, metallurgical products and manufacturing systems. The head office is located in Hoofddorp, the Netherlands.

On September 20, STLA and its joint venture partner Punch Powertrain signed a new agreement to increase production of the future generation electrified dual clutch transmission for STLA hybrid and plug-in hybrid electric vehicles. The agreement aims to drive the company’s transformation of its global electrification value chain and support its decarbonisation goals.

STLA’s net revenue increased 21.2% year-over-year to €88 billion ($88.12 billion) for the first half ended June 30, 2022. The company’s adjusted operating income increased 46.6% year-over-year to €12.37 billion ($12.39 billion), while year-over-year net profit increased 37.2% to €7.96 billion ($7.97 billion).

STLA’s revenue is expected to grow 7.7% year-over-year to $41.03 billion in the third fiscal quarter ending September 2022.

The stock has edged up marginally over the day to close out its latest trading session at $12.24.

It’s no surprise that STLA has an overall rating of A, which translates to a strong buy in our proprietary rating system. It has an A rating for value and a B for stability, sentiment and quality. STLA is number 1 in the same industry.

In addition to the POWR ratings mentioned above, we have also provided STLA numbers for growth and momentum. Get all STLA ratings here.

Honda Motor Co., Ltd. (HMC)

HMC, headquartered in Tokyo, Japan, designs, manufactures and markets motorcycles, automobiles, power and other products. It operates in four segments: Motorcycle Business; car company; Financial services; and Life Creation and other companies.

HMC’s sales revenue was ¥3.83 trillion ($26.73 billion) for the first quarter ended June 30, 2022, an increase of 6.9% year over year. The company’s operating profit was 222.20 billion ($1.54 billion), while profit for the period attributable to owners of the parent company was ¥149.20 billion ($1.03 billion) for the same quarter.

Analysts expect HMC’s revenue to grow 343.2% year-over-year to $118.39 billion in fiscal 2023. In addition, HMC’s earnings per share are expected to increase 18.8% from the same period last year to $3.26 in fiscal 2023.

HMC is down 3% intraday to close its last trading session at $22.81.

The promising outlook is reflected in HMC’s POWR Ratings. HMC’s overall B rating translates into a buy in our own rating system.

It has an A rating for Value and a B for Quality and Stability. In the same industry, it ranks #7. To see additional POWR ratings for growth, momentum, and sentiment, click here.

Stock to Avoid:

Mullen Automotive Inc. (MULN)

MULN is an electric vehicle company that manufactures and distributes electric vehicles. It also operates CarHub, a digital platform that uses AI to provide interactive solutions for buying, selling, and owning a car, along with other related solutions.

On September 21, Bollinger Motors, a majority company of MULN, announced that it had partnered with Wabash, a manufacturer of truck bodies and trailers, to develop an electric chassis truck body. However, it may take some time for the benefits of the new product to become apparent.

During the fiscal third quarter ended June 30, 2022, MULN’s operating loss grew 184.5% year over year to $18.22 million. Net loss increased 289.9% year-over-year to $59.47 million. Net loss per share was $0.16.

The stock is down 96.2% in the past year and 14.7% intraday to close its last trading session at $0.34.

MULN’s POWR Ratings reflect this bleak outlook. The company’s overall F rating translates into strong sales in our proprietary rating system.

MUL has an F grade for Value and Stability and a D for Feel and Quality. It is ranked #57 in the D-rated auto and vehicle manufacturers industry. click here to view the growth and momentum ratings for MULN.

The VWAGY share remained unchanged in after-hours trading on Tuesday. Year-to-date, VWAGY is down -36.01%, versus a -22.61% rise in the benchmark S&P 500 index over the same period.

About the author: Kritika Sarmaho

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She received her bachelor’s degree in commerce and is currently enrolled in the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More…

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