Tag Archive | "Investing In The Auto Rebound"

Cashing In On The Auto Rebound


Why Buy Auto Stocks Now?

Auto ManufacturingThe auto rebound has kicked into high gear, and it is time for investors to take a serious look at stocks associated within the automobile industry. There is always a bull market somewhere, and right now the bull market appears to be in automobile stocks and related automobile parts stocks.

There are no signs that the strong performance in the automobile stock sector is going to let up any time soon. This is because the Great Recession of 2008 / 2009 set automobile sales back so much and caused so many people to hold onto their cars for so long, that there is unprecedented pent up demand for automobiles and automobile parts.   Growth in the developing world and an improving jobs picture in the Unites States are primarily responsible for the strong rebound by consumers’ for automobiles and automobile parts.

In 2015, the average automobile on the road in the United States is eleven years old. This is by far the oldest the automobile fleet that has ever been plying the streets and highways of the United States. With the economy improving, more people working, and automobiles aging, the perfect storm has developed for a surge in new car sales. It has also sparked high demand for automobile parts by automobile owners trying to keep their aging automobiles running as long as possible before they buy a new car. Eventually, older cars can no longer be fixed and have to be replaced. This has been driving huge new automobile sales during recent years.

After bottoming at just over ten million new sales per year during the depth of the Great Recession in 2009, new automobile sales have skyrocketed to over sixteen million sales annually in 2015, an increase of over 60% from the 2009 lows. The sales pace during 2015 might be helped further by the drop in gasoline prices, as consumers trade in the cars they have been driving for years for a new set of wheels that is now within their reach, since the gasoline they need to run them has come down in price.

Auto Stocks To Cash In On The Auto Rebound

Rav4If you are looking to cash in on the auto rebound that is ongoing and is likely to continue for several more years, consider these mainstays of the automobile sector. They are not only benefiting from a surge in sales across the United States, but also from fast growing demand for their products in emerging countries, such as China and India.

Ford Motor Company (NYSE: F) is the only major American automobile manufacturer that did not need government assistance to get through the 2008 /2009 financial crisis. The company has earned a loyal following among Americans and is experiencing rapidly growing sales overseas.

General Motors (NYSE: GM) has reinvented itself since the 2008 /2009 financial crisis and the large government bailout that it received. With a much leaner cost-structure and growing sales both within the United States and abroad, General Motors appears to be on track to have some great years ahead.

Fiat Chrysler Automobiles (NYSE: FCAU) is a combination of the former American automobile manufacturer Chrysler and Italian automobile manufacturer Fiat. The new company, which is based in England, is focused on taking the best technologies from both former companies and producing superior cars that the public demands.

Toyota Motor Corporation (NYSE: TM) remains one of the leading automobile manufacturers in the world, and is well positioned to benefit from the strong rebound in automobile sales. With a Price to Earnings ratio (P/E ratio) of just over twelve, Toyota offers a compelling investment from a valuation perspective.

Honda Motor Company (NYSE: HMC) is also positioned well to benefit from the strong rebound in automobile sales.   Honda’s reputation for quality and durability continue to make Honda a leading automobile company throughout the world. Honda has an even more compelling Price to Earnings ratio (P/E ratio) under twelve, which makes it appealing to value investors.

If you would rather spread the risk of investing in the automobile industry among numerous companies, consider an Exchange Traded Fund (ETF) known as Trust NASDAQ Global Auto Index (NYSE:   CARZ). CARZ maintains holdings in many of the large automobile manufacturing companies located throughout in the world, including the ones listed above. If the automobile sector does well in coming years, so will the CARZ Exchange Traded Fund.

Auto Parts Stocks That Benefit From The Auto Rebound

GoodyearWhile the dynamics that are driving the revenue and earnings gains for automobile parts companies are different than automobile companies, the result is the same. Demand for automobile parts is growing as the economy recovers and drivers try to keep their aging automobiles running. Consider the following automobile parts stocks.

Goodyear Tire & Rubber Company (NASDAQ: GT) is an iconic name in the automobile tire industry. After having some tough years dealing with foreign competition, Goodyear has reinvented itself as a manufacturer of high-end tires, which has greatly enhanced its top and bottom lines.

Cooper Tire & Rubber Co. (NYSE: CTB) is another well-known company in the automobile tire industry. The surge in new car sales and demand for tires for aging cars should boost the company’s sale of tires for all kinds of automobiles.

TRW Automotive Holdings Corp. (NYSE: TRW) is a diversified supplier of automobile components and systems to automobile companies throughout the world. The company also sells components and systems in the aftermarket to those that need parts to repair cars. Demand for their products should remain high, as long as new car sales and car repairs continue at their brisk pace.

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