5 Best Automotive Stocks to Buy for Q4 2024
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The automotive sector is one of the largest industries on the planet, weighing in at over $3.5 trillion. As a result of this scale, it is one of the most popular markets to invest in and many of the best stocks in the sector continue to grow. This page guides you through the best automotive stocks and explains why automotive shares may be a good investment.
What are the top automotive stocks to buy?
Copy link to sectionOur analysts have compiled their list of the top 5 automotive stocks below. You can click on the company’s ticker to find out its latest price information or keep scrolling to learn more about each company.
| # | Stock ticker | Company name | Learn more |
|---|---|---|---|
| 1 | TSLA | Tesla | Learn more > |
| 2 | F | Ford Motor Company | Learn more > |
| 3 | RACE | Ferrari NV | Learn more > |
| 4 | GM | General Motors Company | Learn more > |
| 5 | TM | Toyota Motor Company | Learn more > |
1. Tesla (NASDAQ: TSLA)
Copy link to section- Market Cap: $554 billion
- 2023 Revenue: $96.7
- Forward Revenue Growth: 13%
- P/E Ratio: 43
- Stock Price: $170
Tesla is one of the best automotive stocks to buy. It is a company that revolutionised the electric vehicle industry by making EVs cool.
Tesla has been in a strong growth over the years. Its revenue has jumped from over $24 billion in 2019 to over $96 billion in 2023 and the estimate is that it will soar to over $100 billion this year. It has also become a highly profitable company as its net income has soared to over $13 billion.
Tesla is a good investment because of its market share in the EV industry, its advanced technology like self-driving, and artificial intelligence. It also targets all types of customers ranging from the wealthiest to the mass market.
However, there are risks for investing in Tesla like its stretched valuation and the substantial competition from American and Chinese companies. This competition has led to lower margins and revenue growth.
2. Ford Motor Company (NYSE: F)
Copy link to section- Market Cap: $50 billion
- 2023 Revenue: $176 billion
- Forward Revenue Growth: 5.7%
- P/E Ratio: 6
- Stock Price: $12
Ford is another quality automotive stock to invest in. It is one of the top Detroit automakers, which sold over 4.4 million vehicles. The company is well-known for its SUV vehicles lile the Bronco, F150, and Expedition.
Ford’s business has been growing as demand for vehicles has jumped in the past few years. Its annual revenue has jumped from over $155 million in 2019 to over $176 billion in 2023. It is also a highly profitable company that makes a net profit of over $4 billion.
The company has been slashing its investment in the electric vehicle industry as it goes through a slowdown. It has then channeled these funds into paying its dividends and share buybacks. Ford has a dividend yield of about 4.95% and a low payout ratio of 31%.
Ford’s biggest challenge is that its wages have continued rising in the past few years, which is affecting its profits. Also, there are concerns about the rising competition from China, which has become a leading player in the vehicle industry.
3. Ferrari NV (NYSE: RACE)
Copy link to section- Market Cap: $73 billion
- 2023 Revenue: $6.5 billion
- Forward Revenue Growth: 11%
- P/E Ratio: 48
- Stock Price: $410
Ferrari has become one of the best automobile stock in the world. Its stock has jumped by 165% in the past five years, giving it a market cap of over $73 billion. Ferrari’s revenue has jumped from over $4.2 billion in 2019 to over $6.5 billion in 2023.
It also has some of the highest margins in the industry as it generates over $1.8 billion in profits. The company is a good investment because it is the biggest player in the luxury vehicle market. Also, unlike other automobile companies, it always has a lot of demand.
Ferrari’s demand has continued growing in the past few years as the number of wealthy people has grown rapidly in the past few years.
However, there are signs that the stock has become highly overvalued as it is trading at a price-to-earnings ratio of 48. This means that the management will need to continue generating strong financial results to justify the valuation.
4. General Motors Company (NYSE: GM)
Copy link to section- Market Cap: $54 billion
- 2023 Revenue: $171 billion
- Forward Revenue Growth: 4.5%
- P/E Ratio: 5
- Stock Price: $48
General Motors is also another great company in the EV industry. It is a leading company that creates tens of brands that target all customers. It owns brands like Chevrolet, Buick, GMC, and Cadillac.
General Motors generates substantial amount of money. Its revenue rose from $137 billion in 2019 to over $174 billion in the trailing twelve months. Its net income has jumped to over $10 billion.
Like Ford, the company has started scaling back its EV investments as it seeks to cash in the Internal Combustion Engine (ICE) vehicles. This strategy is important since demand for electric vehicles has not been all that strong recently.
GM is a generaous payer of dividends and share repurchases. It is also one of the cheapest automakers in the US as it trades on a P/E ratio of just 5, which is lower than the S&P 500 average’s 21.
5. Volkswagen Group (FRA: VOW)
Copy link to section- Market Cap: $279 billion
- 2023 Revenue: $297 billion
- Forward Revenue Growth: 3.5%
- P/E Ratio: 10
- Stock Price: $205
Toyota is a great stock to invest in for several reasons. First, it is one of the best-known brands in the automobile industry, which explains why it generates almost $300 billion in annual revenues.
Second, Toyota is also one of the most profitable as it makes over $33 billion in annual profits. Third, unlike other companies, it was slow in the transition to electric vehicles, which has proven to be right.
Further, the company leads in hybrid vehicles, which are having the best revenue growth. Also, Toyota has made a breakthrough in the solid-state battery. This means that its future EVs will be able to charge faster and travel for longer distances.
Where to buy the best automotive shares
Copy link to sectionYou can purchase automotive shares through an online broker. We have listed our favourite ones below, and you can simply click on one of the link to sign up immediately. Otherwise, keep scrolling to find out more about automotive stocks.
We found 4 online brokers for users based in
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What is an automotive stock?
Copy link to sectionAn automotive stock is a publicly traded company’s shares in the auto or automotive industry. This includes car manufacturers and auto companies that produce passenger cars, light trucks, pickup trucks, commercial vehicles and related auto parts.
Major automotive stocks include legacy carmakers like Ford, GM, and Toyota and new companies like Tesla and Rivian, focusing on electric vehicles. The performance of auto stocks depends on factors like car sales, car production volumes, and demand from consumers and commercial customers.
Are car shares a good investment?
Copy link to sectionWhether car stocks are a good investment depends on the outlook for the automotive industry. Car sales are cyclical and tied to economic conditions. However, many analysts see opportunities, especially in electric vehicle stocks, as electrification disrupts the industry.
Car manufacturers are investing heavily in EVs and autonomous driving technology. This could benefit the share prices of companies leading these trends. Traditional carmakers face risks from falling demand for new vehicles with internal combustion engines. But major auto companies like Toyota and Volkswagen, which have hybrid and EV models, may be resilient.
Our analysts recommend selectively investing in auto stocks with solid exposure to emerging segments like EVs while avoiding companies primarily relying on gas car production.
Methodology: How we choose the best automotive stocks
Copy link to sectionAt Invezz, our mission is to empower our readers with the most accurate and reliable financial information. Our curated selection of the best stocks in specific industries is designed to provide investors with well-researched, expertly reviewed stock recommendations. Our team follows a rigorous process to ensure our readers receive high-quality, trustworthy stock selections.
- Initial screening. Our team of experienced stock market analysts conducts an initial screening of stocks within the chosen industry. This involves analyzing a broad range of companies based on key financial metrics such as revenue growth, profitability, debt levels, and market capitalization.
- Earnings reports and financial analysis. Analysts review the latest earnings reports of shortlisted companies. This includes a detailed assessment of financial statements, looking for consistent earnings growth, strong balance sheets, and positive cash flow trends. Special attention is given to year-over-year performance and quarterly results.
- Sector analysis. A comprehensive sector analysis is conducted to understand the macroeconomic factors affecting the industry. This includes examining market trends, competitive landscape, regulatory changes, and technological advancements. Our analysts utilize industry reports, market research, and economic forecasts to gain a holistic view of the sector.
- Analyst recommendations. We consider recommendations from reputable sources such as Barron’s and Zacks. These sources provide expert opinions and ratings on stocks, which serve as an additional layer of validation for our selections. Incorporating external analyst recommendations ensures that our curated stocks are backed by a consensus of expert views.
- Internal review. After the initial selection by our analysts, the chosen stocks are reviewed by a sub-editor. The sub-editor ensures that the analysis is clear, concise, and adheres to Invezz’s editorial guidelines. This review process helps maintain the quality and readability of our content, making it accessible to a broad audience.
- Quarterly updates. To ensure our stock recommendations remain relevant and up-to-date, we update the curated section quarterly. Each update cycle involves re-evaluating the stocks based on the latest financial reports, industry developments, and market conditions. This regular update process ensures that our recommendations reflect the most current information available.
Our approach combines expert analysis, comprehensive research, and regular updates to deliver reliable and insightful investment recommendations. Read more about our review process and editorial policy.
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