Automotive stocks are getting lots of interest from investors amid the electric vehicle (EV) revolution. The rise of electric cars has given rise to unique investment opportunities that investors have started taking advantage of. The race to deliver the most advanced autonomous vehicle affirms the level of innovation in the sector.
Below are the top automotive stocks for anyone eyeing exposure around electric and automotive cars.
As the pioneer of electric cars, Tesla (NASDAQ: TSLA) has revolutionized the auto industry in ways few people could imagine. From giving industry juggernauts a run for their money, the EV giant continues to send shockwaves.
Tesla has become the largest automaker by market cap, surpassing General Motors Company (NYSE: GM) Motors and Toyota Motor Corp (NYSE: TM). Its rise to prominence comes from its market-leading credentials in electric vehicles and autonomous cars. Consequently, it has emerged as one of the best stocks for gaining exposure amid the ongoing transition in the sector. Tesla’s edge stems from its ability to leverage state of the edge technology to develop sleek electric vehicles that are appealing to the eye and autonomous.
In addition to leading the sector in innovation, Tesla is also sending shockwaves on sales growth and expansion on the international scene. Expanding to Europe and China with the unveiling of gigafactories continues to strengthen its growth metrics. In addition, the automaker has also diversified its empire with a focus on batteries and other energy storage systems.
Tesla has yielded more than 100% in returns over the past year, affirming its credentials in generating shareholder value. Share price gains have been the order of the day, with each pullback providing an attractive buying opportunity whereby institutions have come into the fold and helped steer the stock higher.
However, the stock is not cheap, trading with a price to earnings multiple of 114. While the stock is pricey, it is expected of a company with solid growth metrics.
A household name in the US, General Motors Company (NYSE: GM) has what it takes to take on Tesla, thus one of the best stocks for gaining exposure in the automotive sector. With a market cap of over $70 billion, GM is constantly innovating as it also eyes opportunities around electric and autonomous cars.
General Motors is fully committed to electrifying its portfolio, having announced plans to launch up to 30 new electric vehicles in every style by2025. The company already produced Chevy Bolt, which is an electric car. It has also started working on an all-electric light commercial vehicle under the BrightDrop unit.
The automaker is also working on self-driving technology as it looks to rival other advanced systems already in the market.
In addition, the company also boasts of prolific brands such as Chevrolet, Buick GMC, and Cadillac that continue to generate shareholder value. Despite Tesla’s dominance, general motors still command more than 13% market share in the US auto industry. The company is fairly valued with a price-to-earnings multiple of 6.
While most automotive companies’ business model revolves around developing cars, Rivian Automotive (NASDAQ: RIVN) provides exposure to the actual technology. The company has carved a niche for itself in developing a platform that makes hardware and software at the heart of emerging electric vehicle technology.
Rivian develops chassis that includes an electric drive system with fittings for battery units. The chassis can support different vehicle types. The company has already received more than 70,000 pre-orders for the drive system, affirming the strong demand in the market.
The company has also inked a strategic partnership with Amazon to develop an electric delivery van optimized for urban environments. The order is for 100,000 cars. The company raising more than $3 billion in funds affirms the strong investor interest in the market.
Consequently, the unit is increasingly becoming an exciting play for investors eyeing exposure to the actual electric vehicle and autonomous technology.
Autoliv Inc. (NYSE: ALV) is another exciting play for diversifying investment in the automotive sector. While the company does not produce cars like other plays, it is a key player in developing ancillary systems and accessories that other automakers rely on to develop the final product.
The company has made a name for itself in developing safety systems such as seat belts, passive electronics, and airbags. With a 30% plus market share, Autoliv is a Tier-1 supplier for the safety features of the automotive industry. The company boasts of a massive network that supports its operations, with 10% of its workforce involved in Research and Development.
The company reported an 18% increase in same-store sales in the third quarter, affirming strong demand for unit solutions. While supply chain issues have affected its operations in the recent past due to semiconductor shortages, the company is well-positioned to post stellar results going forward. Increasing emphasis on safety in driverless cash presents a tremendous opportunity for Autoliv going forward.
While the stock is trading with a price-to-earnings multiple of 12, it is still an attractive stock for long-term investors eyeing exposure away from car production.
Magna International Inc. (NYSE: MGA) is an auto product and systems company that boasts of who is who in the auto industry as its biggest customers. The company offers various products and solutions ranging from body exterior structures and power systems.
It is an attractive investment in the automotive sector as the company is increasingly investing in electrical vehicle-friendly products. It is already working on advanced driver assist systems and electric drive units. It is also developing electric vehicle battery enclosures.
Magna is an attractive long-term play as it is poised to benefit as automakers ramp up production of electric and autonomous cars. Its margins and earnings are expected to increase significantly as light vehicle production increases.
With the stock trading at a price to earnings multiple of 14, it is an excellent value option for investors eyeing exposure amid the electric vehicle revolution.