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In this article, we discuss 10 best auto stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Auto Stocks To Buy Now.
The automotive sector is one of the most rate-sensitive segments of the economy, and the Federal Reserve’s hawkish moves this year have left a mark on the industry in terms of higher borrowing costs for both auto suppliers and original original equipment manufacturers (OEMs). Research and development investments, as well as other capital expenditures are now more expensive. This will cut into auto margins, which were running high after the pandemic eased and pent-up consumer demand hit the markets. However, prices of automobiles are also rising simultaneously, especially as the industry shifts towards electrification of vehicles.
According to McKinsey, the automotive revenues will meaningfully increase as the market transitions towards on-demand mobility and data-driven services. This could add up to $1.5 trillion in additional revenue by 2030, compared to roughly $5.2 trillion from conventional car sales and aftermarket products/services. Although global car sales will continue to grow, the annual growth rate is forecasted to decline from 3.6% over the last five years to approximately 2% by 2030. This drop will be primarily driven by macroeconomic factors and the rise of latest mobility trends such as carpooling and e-hailing.
However, emerging trends will continue to surprise the auto sector, and some of the best stocks to pick up in the space include Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Rivian Automotive, Inc. (NASDAQ:RIVN).
Our Methodology
We selected the following auto stocks based on positive analyst coverage, strong business fundamentals, and robust dividend profiles. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.
Photo by Lenny Kuhne on Unsplash
Best Auto Stocks To Buy Now
10. Proterra Inc. (NASDAQ:PTRA)
Number of Hedge Fund Holders: 8
Proterra Inc. (NASDAQ:PTRA) is a California-based company that sells commercial vehicles in the United States, the European Union, Canada, Australia, and Japan. The company also provides battery systems and electrification solutions for commercial vehicles such as delivery trucks, school buses, coach buses, and construction and mining equipment, among other applications.
On November 2, Proterra Inc. (NASDAQ:PTRA) posted a Q3 revenue of $89.77 million, up 49.9% year-over-year, beating market estimates by $8.73 million. The company maintained its guidance for 2022 revenue of $300 million-$325 million, representing a forecasted growth of between 24%-34% year-over-year, versus a $309.31 million consensus.
BTIG analyst Gregory Lewis initiated coverage of Proterra Inc. (NASDAQ:PTRA) on October 17 with a Buy rating and a $7 price target. Proterra Inc. (NASDAQ:PTRA) is an American early mover in the commercial electric vehicle market, having distributed its initial vehicles more than a decade ago, the analyst told investors in a research note. The analyst is bullish on Proterra Inc. (NASDAQ:PTRA) in light of the passage of the Inflation Reduction Act, which he thinks will boost electric vehicle adoption across the commercial market and elevate demand for Proterra Inc. (NASDAQ:PTRA)’s e-transit bus.
According to Insider Monkey’s Q2 data, Cowen Group’s Ramius is the leading position holder in Proterra Inc. (NASDAQ:PTRA), with 10.5 million shares worth $49 million. Overall, 8 hedge funds were long Proterra Inc. (NASDAQ:PTRA) at the end of the second quarter of 2022.
In addition to Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Rivian Automotive, Inc. (NASDAQ:RIVN), Proterra Inc. (NASDAQ:PTRA) is one of the best auto stocks to invest in.
9. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 16
Lucid Group, Inc. (NASDAQ:LCID) was founded in 2007 and is headquartered in Newark, California. It is an automotive company focused on the design and manufacture of electric vehicles, EV powertrains, and battery systems. On October 13, Morgan Stanley analyst Adam Jonas said that Lucid Group, Inc. (NASDAQ:LCID) needs several billion dollars in new capital in FY23 and FY24, but he believes that the company will be able to source the funds to continue innovation and growth. Morgan Stanley also thinks investors should fully appreciate the potential for increased expansion of Lucid Group, Inc. (NASDAQ:LCID)’s relationship with Saudi Arabia and the advantages of having long-term strategic partners.
On September 27, Cantor Fitzgerald analyst Andres Sheppard assumed coverage of Lucid Group, Inc. (NASDAQ:LCID) with an Overweight rating and a $23 price target. The analyst believes Lucid Group, Inc. (NASDAQ:LCID)’s luxury and premium vehicles provide higher efficiency, longer range, quicker charging, and more space compared to its peers. The analyst expects Lucid Group, Inc. (NASDAQ:LCID) to conservatively capture a 2% market share of the Global EV market by 2026.
According to Insider Monkey’s second quarter database, 16 hedge funds were long Lucid Group, Inc. (NASDAQ:LCID), with combined stakes worth $173.7 million, compared to 16 funds in the prior quarter worth $159 million.
8. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 25
Stellantis N.V. (NYSE:STLA) is a Netherlands-based company that designs, manufactures, and distributes commercial and passenger automobiles, engines, transmission systems, metallurgical products, and production systems worldwide. Stellantis N.V. (NYSE:STLA) is one of the best auto stocks to monitor.
On November 3, Stellantis N.V. (NYSE:STLA) reported a Q3 revenue of $42.1 billion, up 29.1% year-over-year. Global BEV sales increased 41% versus Q3 2021. For FY2022, Stellantis N.V. (NYSE:STLA) expects double digit growth in adjusted operating income margin and industrial free cash flow to be positive.
Nomura analyst Anindya Das upgraded Stellantis N.V. (NYSE:STLA) on October 20 to Buy from Neutral with a price target of EUR 19.80, up from EUR 15.70. The analyst cited better-than-expected year-to-date net pricing strength in Stellantis N.V. (NYSE:STLA)’s primary North America and Europe markets, less risk of margin pressure from EV battery material prices in 2023, and advantages from post-merger platform consolidation in Europe starting in 2023.
According to Insider Monkey’s data, 25 hedge funds were bullish on Stellantis N.V. (NYSE:STLA) at the end of June 2022, compared to 29 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the largest stake in the company, comprising 37 million shares worth nearly $457 million.
7. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 25
NIO Inc. (NYSE:NIO) is a Shanghai-based manufacturer of smart electric vehicles in China. The company also provides power solutions, including Power Home, Power Swap, Power Charger, Power Mobile, and Power Map. On November 1, NIO Inc. (NYSE:NIO) announced that it delivered 10,059 vehicles in October 2022, up 174.3% from the prior-year quarter. On a year-to-date basis, the company has delivered 92,493 vehicles, up 32% year-over-year. NIO Inc. (NYSE:NIO) is one of the premier auto stocks to invest in.
On October 28, Barclays analyst Jiong Shao reiterated an Overweight rating on NIO Inc. (NYSE:NIO) but lowered the price target on the stock to $19 from $34. The analyst updated estimates and 12-month price targets for all the Chinese tech and internet companies heading into year-end 2022.
According to Insider Monkey’s data, 25 hedge funds were bullish on NIO Inc. (NYSE:NIO) at the end of June 2022, compared to 26 funds in the earlier quarter. Jim Simons’ Renaissance Technologies held the largest position in the company, with 17.8 million shares worth $386 million.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE:NIO) was one of them. Here is what the fund said:
“At the beginning of April the CSRC (China Securities Regulatory Commission) announced possible changes in its regulation that would allow this inspection by foreign auditors, provided that the companies previously communicate to this body the state secrets that would be exposed, as well as the sensitive information that they might have to hand over, and the subsequent audit is carried out in a framework of collaboration with the CSRC. In short, a move in the direction desired by the SEC, although still far from the optimal result, that is, unrestricted access to information. While these negotiations between the two regulatory bodies are progressing, Chinese companies have to decide how best to preserve their interests. Other entities, such as the electric vehicle manufacturer NIO Inc. (NYSE:NIO), have just started trading on this stock market.”
6. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 28
Li Auto Inc. (NASDAQ:LI) is a Beijing-based company that designs, manufactures, and sells new energy vehicles in the People's Republic of China. On November 1, Li Auto Inc. (NASDAQ:LI) reported that it has delivered 10,052 vehicles in October 2022, up 31.4% year-over-year. On a year-to-date basis, the automaker delivered 96,979 vehicles, up 54.13% year-over-year.
On October 28, investment advisory Barclays maintained an Overweight rating on Li Auto Inc. (NASDAQ:LI) but lowered the firm's price target on the shares to $25 from $40. Analyst Jiong Shao issued the ratings update.
According to the second quarter database of Insider Monkey, 28 hedge funds held stakes worth $1.40 billion in Li Auto Inc. (NASDAQ:LI), compared to 28 funds in the prior quarter worth $1.25 billion. Chase Coleman’s Tiger Global Management is the biggest position holder in the company, with 12.8 million shares valued at $490 million.
Like Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Rivian Automotive, Inc. (NASDAQ:RIVN), Li Auto Inc. (NASDAQ:LI) is one of the favorite auto stocks of elite investors.
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Disclosure: None. 10 Best Auto Stocks To Buy Now is originally published on Insider Monkey.
