Auto stocks are closely tied to the economic cycle, implying that their performance is reflected in the economy’s health. With the U.S. economy seeing almost a 3% rise in inflation over the last 12 months and only a 1% fall in June, this only means one thing for the automotive industry: reduced demand.
These three auto stocks, however, saw impressive performance in the just-concluded Q2 period, and all are set to soar even higher in Q3. These three stocks outperformed delivery estimates, increased sales revenue and even made a profit in areas such as EVs, where other companies have yet to break even.
If you don’t have your money in any of these three stocks yet, it’s time to consider pulling out your wallet to start investing if you don’t want to miss out on these three auto stocks popping off.
Thanks to economies of scale and robust, cutting-edge innovations, you can now look at these three auto stocks to buy now and ride your way to a healthy financial end of 2024.
BYD Auto (BYDDY)
BYD (OTC: BYDDY) is now the leading seller of EVs globally, having overtaken Tesla (NASDAQ:TSLA) to claim this spot. The company now claims almost 18% of the total EV market, most of which are domestic sales. However, BYD is rapidly expanding into the Western markets and is anticipated to make big entry moves with its newly introduced high-performance hybrids.
The company’s sales outside China jumped over 268% in May, recording a massive shipping of over 37,499 units. Its total Q2 sales jumped 21% YOY to reach 426,039 units, even sanction rows with the EU and the slow growth of the global EV market.
BYD is aggressively expanding into new markets, leveraging its cutting-edge R&D capabilities to enhance EV performances. This has enabled it to charge up to triple the MSRP it charges for its domestic cars, earning a huge profit margin.
Recently, BYD announced the introduction of its new hybrid powertrain system into its Seal 06 DM-i model, allowing these cars to travel over 1,200 miles without charging or refueling. Completed, this will be the first time an EV reaches such a milestone, and it will be a major revolution in the EV industry as most EVs currently have a range of about 300 miles.
Analysts believe that BYD is grossly undervalued. with a price-to-revenue ratio of 0.7X, and has considerable revaluation potential. The company’s books are also not that bad off either, recording a profit margin of 4% at a time when most EVs are struggling to break even and even losing money.
With these strong financial indications and the potential upsurge in demand for the hybrid powertrain Seal 06 DM-i model, BYD is one of the best auto stocks to buy now as the market enters Q3.
General Motors (GM)
General Motors (NYSE:GM) is a giant auto stock riding high on its economies of scale to outpace its competitors. The company also thrives on its diverse product portfolio, making both ECs and traditional gasoline cars and manufacturing cars, trucks, and automobile parts globally.
General Motors shares have moved 24.99% YTD, beating revenue estimates for both Q1 and Q2 and recording some of the best figures in recent history. The company reported Q2 revenue of $44,7 billion, compared to $43.01 billion in Q1.
GM’s trick is simple: the company is increasingly investing in its EV value chain, increasing its annual delivery year after year. It projects to deliver up to 300,000 EV cars in 2024, a staggering increase from the 75,000 it delivered in 2023.
This increase is supported by a considerable investment in their EV production facilities, with the company projecting to invest over $35 billion in EV production in 2024. This will further enhance its economies of scale, potentially catapulting it to the EV major league players.
With a substantial profit margin of about 7% and accounting for almost 7.1% of the global automobile market, GM can’t be bullied out of the market any time soon. The company has all it takes to invest in its R&D capabilities to improve its position in the industry even further. GM is perhaps the best auto stock you can buy in Q3.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is the largest EV manufacturer and seller in the US and the second largest EV seller globally. The company is known for its self-sustaining product cycles, which include EVs, charging stations and solar panels. Recently, Tesla also entered the AI sector with its Tesla bot, intended to improve efficiency with Tesla production units.
Tesls recorded a surprising bounce back in Q2 2024 despite the dwindling performance in recent years. The electric vehicle (EV) giant delivered 443,956 cars in Q2, beating the Wall Street estimates of 438,019 units. While this marked a decrease from the Q2 2023 figures of 466,000 vehicals, the figures still mark a recovery from Q1 2024 units.
The company’s energy storage unit also doubled in Q2, recording 9.4 GWh from the 4.053 MWh record set in Q1. The improvement in Tesla’s energy production projects a healthy business line for the company, with the growth of the EV sector expected to come with an increase in EV demand and charging resources.
Investors are looking forward to Tesla’s Q2 financial report, anticipated on July 23, 2024. All indications point to a slight recovery from last year’s slowdown.
However, even as we wait, if the sales records are anything to go by, the Q2 financial reports will be positive.
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
