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The 4 Best Auto Stocks to Buy Now in July 2022

best automotive stocks - The 4 Best Automotive Stocks to Buy Now in July 2022

With oil prices plummeting, rate hikes poised to slow down, supply chains improving, China’s lockdowns unwinding and the electric vehicle (EV) revolution accelerating, now is a very good time to buy the best auto stocks. Also helping the outlook for the automotive sector is the extremely exaggerated downturn it has experienced in recent months.

The recent sharp drop in oil prices should drastically lower inflation, allowing the Federal Reserve to cut interest rates much more slowly in the future and make new vehicles more affordable. Lower gasoline prices will also encourage more Americans to buy large vehicles.

Tesla (NASDAQ:TSLA) recently indicated that supply chain issues have improved. In addition, a Forbes columnist last month reported that car manufacturers global supply chain recovered. Those changes should increase automakers’ margins and allow them to meet demand more easily.

Finally, in the US, China and Europe, the EV revolution is gaining momentum and continues to open up huge new opportunities for investors.

Here are my top picks for the four best auto stocks to buy in the current environment:

ticker Company Price
GM General Motors Company $30.80
VLKAF Volkswagen AG $108
ARVL Arrival $1.50
RIVN Rivian Automotive, Inc. $30.78

Best Auto Stocks: General Motors (GM)

Source: Jonathan Weiss / Shutterstock.com

General engines (NYSE:GM) recently reported thatamid “ongoing supply chain disruptions,” it had sold 15% fewer vehicles in the US in the second quarter (Q2) than in the same period a year earlier. But analysts had expected a larger year-over-year decline from 16% to 17% on average, according to alpha search† In addition, the automaker’s market share in the US increased by one percentage point in the second quarter compared to the first quarter.

Meanwhile, despite very high gas prices, GM’s large, high-margin trucks sold very well, as it “gained its best-ever market share in the first half of retail sales.” In the EV space, the automaker sold more than 7,000 vehicles in the first quarter, which was an encouraging development.

As I’ve noted in the past, GM has plenty of promising EVs waiting in the wings, while the Cruise unit recently took “a big step forward by offering paid rides in driverless vehicles for the first time.”

Despite all these strong, positive catalysts, GM’s stock has a price-to-earnings (P/E) ratio of just 4.6.

Volkswagen (VLKAF)

the Volkswagen logo on the grille of a car

Source: Helmut Seisenberger / Shutterstock.com

The highly respected European car manufacturer Volkswagen (OTCMKTS:VLKAF) recently got a great honor that makes his stock quite intriguing. specifically, Bloomberg intelligence wrote that Volkswagen would sell more EVs than Tesla in just 18 months.

Currently, Volkswagen is supplying more EVs than Elon Musk’s company in the massive European EV market, but Volkswagen is starting to make a big splash in America, where it sold more than 37,000 EVs last year.

Bloomberg believes that the first public offering of Volkswagen’s Porsche unit will deliver Volkswagen with a significant amount of funds, allowing it to make the necessary investments in its EV business. The EU’s recent decision to try to ban the sale of conventional vehicles by 2035 will also help VLKAF stock in the long run.

In 2021, the European the operating profit of the car manufacturer came at a very strong $26 billion, up from $22.75 billion in 2020. Despite all these positive catalysts, VLKAF shares has a forward P/E ratio from just 5.16.

Best Car Stocks: Arrival (ARVL)

Next to a row of blue electric buses is a charger for electric vehicles.

Source: BigPixel Photo / Shutterstock.com

As I pointed out in my June 24 column, Arrival (NASDAQ:ARVL), an EV start-up, “continues to achieve impressive feats.” This includes a recently announced alliance with a major company — Enel† Under the agreement, the companies are ready to work together to sell Arrival’s electric buses.

In addition, in May the EU certified arrival bus† In the current quarter, the car manufacturer expects to actually start producing its van.

A major reason for the massive drop in ARVL stock this year is likely fears that the automaker is out of cash, as Arrival had a relatively small amount of cash at the end of its last quarter — $796 million. But in addition to the alliances with UPS (NYSE:UPS) and Uber (NYSE:UBER), Arrival has received significant investment from several major financial institutions, including black rock (NYSE:BLKMorgan Stanley (NYSE:MRS), and the State of Wisconsin Investment Board. That’s why I’m convinced that the automaker can easily raise extra money if needed.

Rivian (RIVN)

The back of a silver Rivian (RIVN) pickup truck.

Source: Miro Vrlik Photography / Shutterstock.com

Validate my statement that the market underestimates Rivian’s (NASDAQ:RIVN) production capabilities, the EV start-up 4,401 EVs assembled during the second quarter and distributed 4,467 EVs over the same period.

The automaker has added that is it still “on track to meet the 25,000 annual production guidelines previously provided.”

Like Arrival, you don’t have to worry about Rivian going bankrupt. The company had a huge amount of cash — $116.4 billion — on the balance sheet at the end of the first quarter. In addition, in the unlikely event that it needs more money, I’m sure its top customer, Amazon (NASADAQ:AMZN), would be willing to buy more RIVN stock if needed.

Another important achievement for Rivian was: the automaker’s recent launch of the first three charging stations. The company plans to launch its own charging network, which should give it a significant advantage over many of its rivals in the EV sector.

At the date of publication, Larry Ramer owned shares of RIVN Shares and ARVL Shares. The views expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.

Larry Ramer has been researching and writing articles on US stocks for 15 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry started writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks were GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer.