Auto stocks appear to be reversing a long-term trend.
Ford and General Motors’ stocks have each climbed nearly 30% year to date, versus a 20% gain for 2020 outperformer Tesla, as optimism builds around the legacy companies’ electric vehicle projects.
Ford reported fourth-quarter and year-end 2020 earnings after the market closed Thursday. The company handily beat earnings per share expectations but missed on revenue. It also said it plans to invest $29 billion in electric and self-driving vehicles through 2025.
Ford shares climbed about 3% in after-hours trading in response to the report. The stock closed off its highs of the day after the automaker announced it would cut production of its popular F-150 pickup truck on account of a global semiconductor shortage, a day after GM cut production at four of its plants for the same reason.
The latest bounce in the traditional auto names is likely just that — a bounce, said Delano Saporu, founder and CEO of New Street Advisors Group.
“It’s a rebound with these stocks,” he said Thursday on CNBC’s “Trading Nation,” noting that auto sales haven’t been hit as hard during the Covid-19 pandemic as sales in other consumer areas.
“We’re seeing companies like Ford and GM — what they’re doing as far as their balance sheet, their strong financials — trying to make a push in this race in a shifting industry when it comes to traditional automaking,” Saporu said.
“I think some of these companies will survive this and will come out stronger than this, but it’s something that investors have to watch and something that we’re watching really closely.”
GM’s stock looks particularly appealing from a technical perspective, TradingAnalysis.com founder Todd Gordon said in the same “Trading Nation” interview.
With GM near its all-time highs, “any pullback is buyable,” said Gordon, who holds the stock and pointed to the $47 level as the name’s new prospective floor of support.
GM shares fell slightly to around $53.92 in late Thursday trading.
“I love what they’re doing with the EV push in 2035 to go all electric. Tesla obviously has the first-mover advantage, but GM is moving quickly. Obviously, there’s a lot of tail wind with the new administration. And with these EVs … whoever can catch up to Tesla’s going to win,” Gordon said.
“GM has a good presence in China,” he added. “They’re not as big as Nio, which is an EV over there, but they are gaining ground. They just recently signed a deal with Qualcomm for various AI functions. They have a deal with Microsoft for self-driving. So, GM’s really trying to catch up to Tesla. We hold it. We like it.”
Disclosure: Gordon owns shares of General Motors.
