Best Automotive Stocks To Buy Now
- Automotive stocks haven been under pressure since the start of this year.
- Shares of legacy automakers have declined to attractive levels.
- Current problems may have been already priced in by the market.
Automotive stocks have been moving lower in recent months. Legacy automakers, speculative EV stocks like NIO and Rivian, and even Tesla found themselves under pressure due to worries about supply chain problems and the negative impact of rising commodity prices. This pullback has pushed the stocks of legacy automakers to attractive levels.
General Motors has recently released its first-quarter report. The company reported revenue of $35.98 billion and adjusted earnings of $2.09 per share, missing analyst estimates on revenue and beating them on earnings.
The report did not provide much support to the stock, which continued to trade near yearly lows due to general market sentiment.
Analysts expect that General Motors will report earnings of $6.89 per share in the current year and earnings of $6.88 per share in the next year, so the stock is trading at less than 6 forward P/E.
While analysts do not expect that General Motors will be able to grow its profits in the near term, current valuation levels look attractive.
Ford is also valued at less than 6 forward P/E, so the market is somewhat skeptical about the near-term financial performance of legacy automakers.
However, there is room for multiple expansion, as higher interest rates will likely force investors to search for cheap companies with solid fundamentals.
Inflation and supply chain problems will remain the key bearish catalysts for Ford and other automotive stocks, but these problems may have been already priced in by the market.
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