Self-driving cars are on the way — and investors are looking to profit. One popular choice in self-driving car stocks has been Tesla Inc (NASDAQ:TSLA), a potential play on the shift to both electric automobiles and autonomous driving. But with TSLA stock looking a bit shaky at the moment, investors might benefit from looking toward less well-covered — and less volatile — autonomous driving car stocks.
After all, the technology certainly is coming. Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) unit Waymo is launching a commercial service in Phoenix this year. Legacy automobile manufacturers have their own efforts going.
And so there are opportunities in the space — even if I don’t think TSLA stock is one of them. Here are five autonomous driving car stocks, all of which look like buys — and all of which have at least some exposure to coming trend.
5 Self-Driving Car Stocks: Ford (F)
We’ll see whether Ford Motor Company (NYSE:F) actually winds up being a winner in autonomous driving. But it has a shot. CEO Jim Hackett ran the company’s self-driving car unit before taking the top spot a year ago. But he’s already signaled some caution toward the pace of those efforts, which has raised fears that Ford will be left behind.
Still, there’s room for multiple winners — and no reason yet why Ford can’t be one of them. In the meantime, I think Ford stock looks much more impressive coming out of last month’s earnings report, and a 7x forward P/E and a 5%-plus dividend yield both show that F stock has some value.
5 Self-Driving Car Stocks: BlackBerry (BB)
BlackBerry Ltd (NYSE:BB) has mostly moved on from the phone business — and has become an autonomous driving car stock. BlackBerry, in fact, is a partner with Ford, with its QNX system powering that company’s “infotainment” capabilities.
But BlackBerry is using QNX to also aggressively move into the autonomous driving space. It inked a partnership with China’s Baidu Inc (ADR) (NASDAQ:BIDU) back in January. The company is applying its reputation for security to the space, laying out a framework to tackle cybersecurity challenges related to the technology.
BlackBerry has plenty of cash to support its ambitions — and patent cases against Snap Inc (NYSE:SNAP) and Facebook, Inc. (NASDAQ:FB) could add value as well. If QNX becomes an integral part of autonomous driving, there’s huge potential upside in BB stock.
5 Self-Driving Car Stocks: Toyota (TM)
Toyota Motor Corp (ADR) (NYSE:TM) seems to be forgotten when it comes to automotive stocks — but it shouldn’t be. Toyota is far and away the world’s most valuable, and most profitable, automaker.
And the company will be a formidable competitor in the autonomous driving space. Its history of technology development is impressive. It remains the only manufacturer to profitably make electric hybrids thanks to the runaway success of the Prius.
And Toyota is going big into autonomous driving. It created a standalone $2.8 billion company just to develop software for its efforts. A new test car launched in January appears to represent a notable step forward in Toyota’s development.
Toyota historically has been the most successful automaker in the world. And while past performance doesn’t guarantee future success, investors seem too quick to assume that newcomers like Waymo and Uber will overcome the immense amount of technical knowledge and institutional history that could give Toyota an edge going forward.
5 Self-Driving Car Stocks: AVX Corporation (AVX)
AVX Corporation (NYSE:AVX) is an under-the-radar play on autonomous driving — and more broadly, the increasing amount of electronics in automobiles. The maker of electrical components boosted its exposure to the space with an acquisition of a business unit from TT Electronics plc (OTCMKTS:TTGPF) last year. AVX now gets 40% of its revenue from the industry — and every technology advance requires more of the capacitors manufactured by AVX.
Meanwhile, AVX stock has pulled back after a pair of post-earnings declines that didn’t seem justified by the company’s results. AVX has bounced off a 52-week low of late — but more upside is ahead.
The company still has a huge cash balance, and more acquisitions could be on the way. With automotive technology boosting organic growth, and a nearly 3% dividend providing income, AVX looks like a buy here.
5 Self-Driving Car Stocks: American Tower (AMT)
A somewhat stealthy play on autonomous driving is American Tower Corp (NYSE:AMT). Self-driving cars are going to communicate endlessly. Infotainment systems will be upgraded so that passengers can access media content or surf the internet while they ride.
All of that data will require more robust networks — and that would seem to be good news for AMT. The company owns over 150,000 sites worldwide — which should become more profitable as traffic needs grow.
AMT looks like it’s pricing in growth, with a forward P/E around 37x. But as an REIT, the stock is better judged on FFO (funds from operations). And on that basis, AMT looks very reasonable, trading at under 20x the midpoint of 2018 guidance for adjusted FFO.
Given that the company is growing nicely as it is, and has long-term traffic tailwinds behind it, that seems too cheap. AMT’s real estate likely is only going to become more valuable — even if self-driving cars take a bit longer than planned.
As of this writing, Vince Martin has no positions in any securities mentioned.
