The auto industry, like many of its peers, had a volatile year with many companies in the sector seeing a sharp decline in its prices during the first half of 2020. But as the country rebounds from its pandemic lows, autonomous vehicle stocks are experiencing new highs. While this surge does not imply that the industry is back to pre-pandemic levels, it is a good time to invest in this industry.
Electric vehicles in particular saw remarkable growth as investor enthusiasm for this type of technology increased in recent months. Traditional automakers are racing full speed ahead to get in on the EV action.
At the same time, low fuel costs coupled with cheap financing also has many customers buying larger trucks and SUVs. Automakers responded with new models. Some even brought back the classics.
As the auto industry makes its much-awaited comeback, here are the top autonomous vehicle stocks worth placing your bets on:
Autonomous Vehicle Stocks: Ferrari (RACE)
The Italian luxury automaker, Ferrari, uses the power of scarcity to keep its cars in high demand and there was no change to this sentiment in the global pandemic. In its last quarter, the company reported some lackluster results with a 42% decrease in revenue and a 95% decline in earnings per share.
But while the numbers pointed to a bleak future, the reality was anything but. As reported by The Wall Street Journal, morale among the rich is higher with many viewing a Ferrari purchase as “rewarding one’s self in a time of difficulty.” This boost in demand gave Ferrari the confidence to increase guidance for the year and estimates its EBITDA will only be down 13%.
The decrease in the number of cars produced due to plant closures earlier this year also means that the company can increase production capacity later. The luxury automaker is also set to make its debut in China, which could be a huge boost for its share value.
With its order books filled to the brim, the only thing holding Ferrari back is its production levels. Once the automaker picks up the slack, there’s no stopping the growth of this autonomous vehicle stock. Place your bets now and reap its benefits in the future.
Ford (F)
Ford, also used this downtime to make some moves of its own. While many traditional car companies are making a gradual shift toward electric vehicle adoption, it was Ford that set this trend in motion. Back in 2019, the company announced its partnership with Rivian to create an electric SUV and truck.
Pickups have always been Ford’s area of expertise and the success of a zero-emission vehicle could be a major huge boon for its stock price. Ford has also announced that it will spend an estimated $11 million through 2022 to develop its own line of electric vehicles, including an electric version of its classic F-150 pickup.
In addition, Ford is bringing back its Bronco after 24 years off the market. The goal behind this release is to discontinue its less profitable consumer vehicles and make a mark in the off-road market largely dominated by Jeep. The new Bronco has the same classic look with a retro vibe.
Ford’s turnaround efforts blend the old with the new. While the company wants to stay true to its roots with the revival of classic vehicles, the need to evolve its brand and stay relevant is just as important. The new line of zero-emissions and electric cars will help this push. Make sure to invest in this autonomous vehicle stock before prices soar again.
Tesla (TSLA)
A slew of new electric car companies debuted this year but Tesla still remains the leader of the pack. During 2020, the automaker’s stock value increased six-fold and by another 80% when it announced a stock split. It’s safe to say that Tesla’s growth margins aren’t slowing down anytime soon.
The company, once considered the underdog of the vehicle industry, quickly shed its nickname this year when it became the industry sweetheart. Tesla’s growth can be attributed to its high production capacity, despite plant closures and increasing consumer demand for clean energy.
The auto giant surpassed Toyota to become the most valuable car company in the world. This can be attributed to Tesla’s first-mover advantage in electric vehicles, which has created massive gains for the company. Analysts expect the automaker to hit a revenue target of 38% in 2021.
Although this autonomous vehicle stock is definitely on the pricier side, Tesla is well-poised to generate high returns in the next few years.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.
