Car stocks, as represented by the S&P 1500 Automobiles Industry Index benchmark, have fallen 40% in the past 12 months compared with a 2% gain for the Russell 1000.
Here are the top three car stocks with the best value, the fastest growth, and the best performance. All numbers below are as of May 3.
Best Value Car Stocks
These are the car stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
- Stellantis NV: Formerly Fiat Chrysler Automobiles, Stellantis is a Netherlands-based automotive company. It designs, builds, and sells vehicles, components, and related systems under brands including Chrysler, Fiat, Jeep, Ram, Alfa Romeo, and Peugeot. In February, the company launched its share repurchase program of up to €1.5 billion to be purchased by Dec 31. In early May, the company reported shipments rose 7% year-over-year and net revenue 14% in the first quarter. The automaker said an increase in semiconductor fulfillment has led to an overall gain in sales.
- Porsche Automobil Holding SE: Porshe is an auto manufacturer located in Germany with brands such as Audi, Lamborghini, Porsche, and Volkswagen.
- Volkswagen AG: Volkswagen is a German-based subsidiary of Porsche Automobil Holding SE that produces and sells vehicles under Bentley, Ducati, and Scania brands. The company also offers financial leasing.
Fastest-Growing Car Stocks
These are the top car stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|Fastest Growing Car Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|BYD Co. (BYDDY)||59.07||86||371||67|
|Lucid Group Inc. (LCID)||7.41||13.6||N/A (see company description)||876|
|Fisker Inc. (FSR)||5.58||1.8||N/A (see company description)||646|
- BYD Co.: Byd develops and makes electric vehicles (EVs), rail transit equipment, and similar products. The company also sells lithium-ion and nickel batteries for phones, power tools, and EVs.
- Lucid Group Inc.: Lucid produces luxury EVs such as the flagship Lucid Air and soon-to-be-released Lucid Gravity. Note Lucid Group doesn’t have an EPS growth figure in the table above because the company reported a net loss per share in the most recent quarter.
- Fisker Inc.: Fisker is also an EV manufacturer. The company delivered its first Fisker Ocean SUV, the company’s flagship car, on May 5 to an individual in Denmark. First-quarter revenue grew by over 16-fold to $198 million from $12 million, but it posted a net loss that was practically unchanged versus the previous year’s quarter. Note that Fisker doesn’t have an EPS growth figure in the table above because of this net loss per share in the most recent quarter.
Car Stocks with the Most Momentum
These are the car stocks that had the highest total return or least decline over the last 12 months.
|Car Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Ferrari NV (RACE)||277.64||50.5||31|
|Stellantis NV (STLA)||15.89||50.0||26|
|Mercedes-Benz Group AG (MBGYY)||19.38||83||17|
|S&P 1500 Automobiles Industry Index||N/A||N/A||-40|
- Ferrari NV: Ferrari NV’s primary activity is designing, producing, and selling new and used sports cars. It operates under the Ferrari name. Its current models include the Purosangue, the first four-door, four-seater car in Ferrari’s history; the 812 GTS V12 Spider convertible; the 296 GTB two-seater sports car; and SF90 Spider open-air sports car. In the first quarter, Ferrari’s net profit increased 24% on a 20% increase in revenue. The company posted a 10% increase in overall shipments and unveiled a new high-performance car, the Ferrari Roma Spider.
- Stellantis: See company description above.
- Mercedes-Benz Group AG: Mercedez-Benz is a Germany-based vehicle manufacturer that develops, produces, and distributes cars and vans under the Mercedes-Benz brand. The company also provides financing, leasing, rental, and other related services. Mercedes reported first-quarter sales on April 12; the company’s EV sales surged to more than 51,000 units, nearly double the year before, making up 10% of their total sales. The company also posted 18% growth in its top-end vehicles and a sales increase of 27% in its entry-vehicle classes.
Advantages of Car Stocks
Low historical valuations: Car stocks have low valuations by historical standards. For example, General Motors Co. (GM) trades at 4.86 times forward earnings, below its five-year average multiple of 7.37. Similarly, Ford Motor Co.’s (F) forward price-to-earnings (forward P/E) ratio sits at 7.01, 13% lower than its five-year average multiple of 8.09. Although Tesla’s forward P/E of 51.55 is high compared with stocks in other sectors, it’s well below the EV maker’s five-year average of 117.12. The auto sector’s discounted historical valuations may help it attract bargain hunters in coming quarters.
History of government bailouts: While there are no guarantees of the government stepping in to save industries amid an economic downturn, the auto sector has a history of federal bailouts. For example, GM and Chrysler—now part of Stellantis—received $85 billion in financial assistance from the government during the global financial crisis to avoid closing. Thirty years earlier, the government lent Chrysler $1.5 billion when the automaker faced financial failure.
Risks of Car Stocks
Car sales rebound hitting the skids: Auto stocks remain vulnerable to a slowdown in U.S. car sales. Total sales had increased to around 4 million in mid-2021 from below 3 million cars per month in the early stages of the pandemic. However, sales have shown a drop-off since then due to rising interest rates, with total sales of approximately 3 million cars or fewer per month for the last two years.
Chip shortage: Car stocks remain at risk from the global semiconductor shortage. Automakers use chips in cars to support things like electrification, digital connectivity, and autonomous driving. In recent years, chip manufacturers couldn’t keep up with demand, which caused a marketwide shortage of semiconductors. In 2023 it’s projected that the auto industry will start to recover from the chip shortage. Global car production is expected to grow by 3% in the year.