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The auto industry is comprised of companies that manufacture passenger and commercial vehicles, such as Ford Motor Co. (F) and General Motors Co. (GM). There are also newer companies, such as Tesla Inc. (TSLA), which only makes electric vehicles. Aside from those that make cars, trucks, and other vehicles, there are companies that supply parts to these companies.
Car stocks, as represented by the First Trust Nasdaq Global Auto ETF (CARZ), have dramatically outperformed the broader market in the past 12 months. CARZ, which is comprised of 33 vehicle manufacturers, posted a 74.8% total return in the last 12 months compared to the 30.5% return of the Russell 1000. These performance figures are as of March 2 and all statistics in the tables below are as of March 3.
Here are the top 3 car stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Car Stocks
These are the car stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Toyota Motor Corp.: Toyota is a Japanese-based company that makes and sells a range of passenger and commercial vehicles, including cars, trucks, and minivans. This generates most of the company’s revenue, although there is also a financial services business that provides lease and purchase financing to customers. A month ago, Toyota reported Q3 FY 2021 (ended Dec. 31) earnings. Net income rose by 48.0% on a 7.1% year-over-year (YOY) increase in revenue.
- Honda Motor Co., Ltd.: Honda, based in Japan, primarily manufactures and sells cars and light trucks. This business generates the most revenue, but there are also motorcycle, financial services, and life creation/other (e.g. power products like generators and lawn motors) segments. Last month, it reported Q4 FY 2021 ended Dec. 31, 2020 results, showing a 0.6% year-over-year revenue increase. Profit before income taxes rose 86.9% and operating profit increased 66.7%. Additionally, Honda promoted Toshihiro Mibe, who leads R&D, to CEO effective April 1. He is replacing Takahiro Hachigo.
- General Motors Co.: General Motors makes and sells vehicles around the world. According to GM’s latest year-end numbers, for calendar 2020 the company sharply boosted its market share in North America to 16.5% from 15.9% a year earlier. Worldwide, GM’s market share edged up to 8.7% from 8.5%.
Fastest Growing Car Stocks
These are the car stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Workhorse Group Inc.: Workhorse Group designs and builds all-electric delivery trucks and aircraft. It also develops cloud-based telematics performance monitoring systems.
- BYD Co. Ltd.: BYD Co., headquartered in China, builds automobiles including commercial vehicles, passenger cars, and other vehicles. The company also provides rail transportation construction services, automotive batteries, and related products.
- Honda Motor Co.: See above for company description.
Car Stocks With the Most Momentum
These are the car stocks that had the highest total return over the last 12 months.
Source: YCharts
- GreenPower Motor Company Inc.: GreenPower Motor Company is a Canada-based electric vehicle maker. The company designs, engineers, builds, and sells zero-emission vehicle city transit electric buses as well as bikes. For Q3 FY 2020 ended Dec. 31, GreenPower’s revenue was $2.4 million, down from $5.0 million in the same quarter a year earlier. Its quarterly loss widened dramatically compared to a year earlier.
- NIO Inc.: NIO is a Chinese company that builds and sells electric vehicles and parts. It also offers a range of battery services, including battery charging and battery swapping. On March 1, NIO reported that Q4 2020 vehicle deliveries more than doubled to 17,353 vehicles compared to last year. This boosted quarterly revenue by 133.2% YOY to $1.0 billion.
- Workhorse Group Inc.: See above for company description.
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