New vehicle sales last year leapt almost 12% in the U.S., making 2023 one of the best years on record for some companies in the sector. And while the growth rate is more subdued this year, the auto sales market is still expanding here at home — and other markets, particularly China, also offer opportunity.
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The following seven car stocks are different ways to play the potential upside of the automotive sector in 2024 and beyond. Like other “cyclical” industries, however, it’s important to remember that outside factors, including broad consumer spending trends or inflationary pressures on raw materials, can impact the prospects of these stocks. Keep that in mind, and always make sure you’re looking at the latest news and analysis before diving into any investment.
With that said, here are the seven best car stocks to buy now:
— Carvana Inc. (ticker: CVNA)
— Ford Motor Co. (F)
— General Motors Co. (GM)
— Genuine Parts Co. (GPC)
— Stellantis NV (STLA)
— Toyota Motor Corp. (TM)
— Tesla Inc. (TSLA)
Carvana Inc. (CVNA)
Let’s start with a company that is not the most obvious play on the sector, but one that has been on an absolute tear lately. Carvana is primarily an online merchant looking to disrupt the dealership model altogether with digital tools that rethink the way Americans buy and sell cars. This includes online purchase and appraisal along with door-to-door delivery options. There’s a lot of potential here, but also a lot of risk — as evidenced by the fact that almost two years ago, some thought CVNA would burn through its cash altogether and be forced into bankruptcy.
But the company aggressively restructured its debt and operations, and the cost cutting has paid off. Wall Street has bid up shares more than 100% so far in 2024 as a result of renewed optimism, hinting that investors may want to give CVNA stock another look. Keep in mind that the stock is still operating in the red and that competition is fierce, so past performance may not match future returns.
Ford Motor Co. (F)
One of the most iconic vehicle brands out there, Ford has had quite a wild ride in recent years. After briefly dipping below $5 a share during the worst of the pandemic, the stock raced back up to $20 per share at the beginning of 2022 thanks to big margins on its best-selling F-Series pickup truck. Then, it fell back to the $10 range in part because of fears over United Auto Workers strikes in 2023 that the automaker said cut about 100,000 vehicles from its sales figures.
Despite this recent volatility, investors should take comfort in the fact that the company has been around the block and has a great brand that continues to connect with consumers. Furthermore, it offers a nearly 5% dividend yield and is pretty fairly valued at just 6.1 times next year’s earnings and less than 30% of revenue. This automaker isn’t a slam dunk and faces slow growth in the year ahead, but does seem to offer staying power over the long haul.
General Motors Co. (GM)
Another old-school automaker, General Motors has been winning over investors lately, rallying more than 25% in the early days of 2024. That’s in part because of its slow but steady move into the growing electric vehicle market that is starting to pay off, with its Chevy Bolt mass-market plug-ins topping 60,000 units last year to be the No. 3 best-selling EV last year.
The rally is also because of structural improvements in operations that resulted in a great first-quarter report that featured strong numbers on both the top and bottom line. The company recently raised its full-year guidance as a result, and is trading at the highest levels since the start of 2022. The future of the automotive market is indeed uncertain, but the rich history and recent success of GM makes this firm one of the best automaker stocks to watch.
[SEE: 7 Dividend Stocks to Buy and Hold Forever]
Genuine Parts Co. (GPC)
Unlike most of the other stocks on this list, GPC is not an automaker itself but rather provides replacement parts — primarily through its well-known NAPA nameplate. There’s admittedly not a ton of growth here, but there is incredibly consistent revenue for the firm as a leading supplier.
That in turn leads to reliable income for shareholders, as Genuine Parts has paid a cash dividend to shareholders every year since going public in 1948 and boasts an amazing track record of 68 consecutive years of dividend increases. There’s less upside potential as this stock is fundamentally removed from new vehicle sales and related trends. If you want to play the automotive sector but in a low-risk and dividend-friendly way, GPC may be the pick for you.
Stellantis NV (STLA)
Multinational auto manufacturing conglomerate Stellantis is a mashup of several other mashups, formed via the 2021 merger of Fiat Chrysler and French brand PSA Group, which owned the nameplates Peugeot and Citroën. The combined company is now valued at some $65 billion, and produced more than 6.2 million vehicles last year. Many of its nameplates are bigger in Europe than in the U.S., but its Dodge and Jeep brands are not only recognizable at home but also big-margin vehicles for STLA when compared to its cheaper compacts that sell well on the other side of the Atlantic Ocean.
What’s more, Stellantis said last October it was buying a 21% stake in Leapmotor worth $1.6 billion — a joint venture that gives it an inroad to China, the world’s biggest vehicle market by units. The biggest isn’t always the best, but the global scale of STLA does give it some benefits over smaller auto stocks out there.
Toyota Motor Corp. (TM)
Speaking of global scale, Japanese auto giant Toyota ranks as the No. 1 automaker in the world by volume, with more than 10 million vehicles sold last year. With operations in every market and a wide product portfolio, this leader in the industry has both the know-how as well as the capital to remain relevant in an evolving environment thanks to the rise of EVs. That said, not all investors have been pleased with the fact that Toyota leaned more heavily on its iconic Prius hybrid instead of electric-only cars — and in many ways is still playing catch-up. However as the industry leader with roughly $270 billion in annual revenue, it’s hard to argue there’s a more direct way to play the auto market than Toyota.
Tesla Inc. (TSLA)
With a decline of about 30% thus far in 2024 and a recent wave of layoffs that tallied more than 16,000 workers, EV leader Tesla has definitely fallen out of favor recently. But longer term, it’s hard to argue with the growth of this company. The firm put up strong numbers in 2023, with vehicle deliveries growing by 38% over the prior year to 1.81 million units — making it the runaway leader globally in electric vehicle sales. And while the stock is down over the last several months, it is up more than tenfold in the last five years. If you can look past the volatility lately, this may still be a leading car stock to consider.
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7 Best Car Stocks to Invest in Now originally appeared on usnews.com
Update 05/10/24: This story was previously published at an earlier date and has been updated with new information.
