In this article, we discuss the 5 best automotive stocks to invest in now. If you want to read our detailed analysis of the automotive industry which highlights current trends and major players, you can go to 10 Best Automotive Stocks To Invest In Now.
5. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 34
Only a handful of automobile companies have managed to navigate through major headwinds that the automotive sector has been facing lately, and Ferrari N.V. (NYSE:RACE) is one of them. This May the company released its earnings report which presented the company’s earnings for the fiscal first quarter of 2022. Ferrari N.V. (NYSE:RACE) reported earnings per share of $1.37 and beat EPS estimates by $0.12. Moreover, the company’s revenues grew 3.56% year over year and totaled $1.26 billion, beating market estimates by $6.99 million.
This April, UBS analyst Susy Tibaldi raised her price target on Ferrari N.V. (NYSE:RACE) to $263 from $260 and maintained a Buy rating on the share. Tibaldi contended that Ferrari N.V. (NYSE:RACE) is one of the best-positioned companies to remain resilient and actually remain profitable during inflationary periods given the company’s strong demand and pricing power.
Robust earnings, strong demand, and bullish analyst and investor sentiment make Ferrari N.V. (NYSE:RACE) an attractive automotive stock option to invest in now.
At the end of the fourth quarter of 2021, 34 hedge funds held long positions in Ferrari N.V. (NYSE:RACE) with stakes worth $1.42 billion in the company. This is compared to 27 positions in the previous quarter with stakes of $1.17 billion. The hedge fund sentiment for the stock is positive.
As of March 31, 2022, Ako Capital is the most prominent shareholder in Ferrari N.V. (NYSE:RACE) owning more than 0.95 million shares of stock, which equate to a stake value of $209.10 million.
Here is what Ensemble Capital had to say about Ferrari N.V. (NYSE:RACE) in its first-quarter 2022 investor letter:
“Ferrari (7.3% weight in the Fund): As WE DESCRIBED a year ago in this letter, Ferrari’s chief marketing officer’s hardest job is not getting people to buy a Ferrari, but to tell some of them no. The company is in the business of selling rare, luxury products and so by design they greatly limited the number of vehicles they sell. This extreme constraint has led to a wait list of well over a year with a customer base so devoted to the company that even in the midst of the Financial Crisis of 2008-09, the number of vehicles they sold only declined by 4%. Their customers are so price insensitive, that the company often sells out of their limited edition super cars that sell for millions of dollars before they even announce the price. For a Ferrari collector the high prices are a feature, not a bug, as it is the price that makes Ferrari ownership so exclusive.”
4. Rivian Automotive Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 47
Rivian Automotive, Inc. (NASDAQ:RIVN) designs, develops, manufactures, and sells electric vehicles and accessories. The company offers five-passenger pickup trucks and sports utility vehicles. Analysts are showing keenness for the stock and see a significant upside to it, driven by multiple growth catalysts. This May, Morgan Stanley analyst Adam Jonas highlighted that Rivian Automotive, Inc. (NASDAQ:RIVN) is currently trading just above his $20 “bear case”, but exhibits the potential to soar 300%. Jonas sees two primary growth catalysts for the stock, one being the company’s demand for on-shore battery manufacturing in the U.S. to surge, and the other being its strategic partnership with Amazon.com, Inc. (NASDAQ:AMZN) to help electrify its logistics services. The analyst reiterated an Overweight rating on the shares and gave the stock an $85 price target.
Rivian Automotive, Inc. (NASDAQ:RIVN) is advancing its efforts in electrification and is also being waved in while at it. On May 3, Rivian Automotive, Inc. (NASDAQ:RIVN) announced that it will receive $1.5 billion in incentives to build an EV manufacturing plant in Georgia, The project will generate up to 7,500 jobs for the residents of Georgia, and once the factory is operational, it is expected to deliver up to 400,000 vehicles per year by 2024. Rivian Automotive, Inc. (NASDAQ:RIVN) has several upcoming growth catalysts, which justifies its inclusion in the best automotive stocks to invest in now.
Rivian Automotive, Inc. (NASDAQ:RIVN) is not only gaining popularity among expert financial analysts but is also being bullishly viewed by elite hedge fund investors. Insider Monkey identified that 47 hedge funds initiated positions in the emerging EV automaker in the fourth quarter of 2021. The total value of their stakes was estimated at $9.08 billion.
ClearBridge Investments, an investment management firm, published its “Select Strategy” fourth quarter 2021 investor letter in which it mentioned Rivian Automotive Inc. (NASDAQ:RIVN). Here is what experts at ClearBridge think about the stock:
“We are willing to take some risk on IPOs but need to be convinced on the opportunity and manage these exposures carefully, as was the case with electric truck maker Rivian. While the company went public without revenues, it offered us a chance to look out further into the future for a business with a potentially attractive long-term upside. We believe Rivian has a great product in the right area of the market: pickup trucks and SUVs. Its commercial relationship with Amazon will help fund growth as it begins to execute in an increasingly competitive area of the electric vehicle market.”
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 53
Ford Motor Company (NYSE:F) is experiencing bullish trading volumes and is becoming a top automotive stock pick among investor circles. At the close of Q4 2021, 53 hedge funds were long Ford Motor Company (NYSE:F). These funds held collective stakes worth $1.70 billion, up from $1.64 billion in the third quarter of 2021 when 51 hedge funds held stakes in the legendary automobile manufacturer. The hedge fund sentiment for the stock is positive. Moreover, as of May 10, the stock’s trailing-twelve-month returns have surged 15.28%, making it a high momentum automotive stock to invest in now.
On April 27, Ford Motor Company (NYSE:F) released its earnings for the fiscal first quarter of 2022 in which it beat both EPS and revenue estimates. The company registered an EPS of $0.38 and beat estimates by $0.01. The company’s quarterly revenues amounted to $32.11 billion and outperformed market consensus by $457.31 million. Moreover, the company reported April sales volume with truck sales of roughly 79,000 units and SUV sales of about 92,000 units. Ford Motor Company’s (NYSE:F) sales for April outperformed the industry by 13.8%.
This May, Benchmark analyst Michael Ward trimmed his price target on Ford Motor Company (NYSE:F) to $25 from $29 but maintained a Buy rating on the shares in light of the company’s Q1 2022 earnings. The analyst remains conservative on the stock to reflect lower than expected earnings and supply-chain constraints but sees potential upside driven by improved balance sheets and positive demand trends.
As of the end of Q1 2022, Aequim Alternative Investments is the leading shareholder in Ford Motor Company (NYSE:F) owning more than 1.1 million shares of the stock. The fund’s stakes came in at roughly $20 million, representing 0.52% of its 13F portfolio.
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 90
General Motors Company (NYSE:GM) is experiencing an influx in its vehicle demand and is topping the charts in 2022, which makes it the runner-up automotive stock to invest in now. This March, the company reportedly secured more than 65,000 reservations for its electric GMC Hummer pickups and SUVs, beating its initial expectations. General Motors Company (NYSE:GM) is making efforts to meet this demand with increased production activity but remains conservative about the fulfillment of new orders until 2024, due to chip shortages among other reservations. On April 12, General Motors Company (NYSE:GM) announced that it has signed a multi-year sourcing agreement with Glencore Plc (OTC:GLNCY) for the supply of cobalt, which is an essential component in EV batteries.
At the end of April, General Motors Company (NYSE:GM) released its earnings report for the fiscal first quarter of 2022. The company reported earnings per share of $2.09, beating estimates by $0.43. Moreover, the company generated revenues of $35.98 billion, up 10.79% year over year from $32.47 billion.
Some analysts are holding bullish outlooks on General Motors Company (NYSE:GM) and dismissing the impact of near-term tightening market conditions and supply constraints on the automotive industry. This May, Berenberg analyst Adrian Yanoshik initiated coverage of General Motors Company (NYSE:GM) with a Buy rating and a $55 price target.
At the close of Q4 2021, 90 hedge funds were bullish on General Motors Company (NYSE:GM) and held stakes worth $7.13 billion in the company. This is compared to 77 positions in the preceding quarter with stakes worth $6.41 billion. The analyst and investor sentiment for the stock is positive.
As of March 31, 2022, Skylands Capital is the dominating stakeholder in General Motors Company (NYSE:GM) having stakes of more than $36.59 million in the automaker. The investment covers 4.42% of Skylands Capital’s Q1 2022 investment portfolio.
Oakmark Funds mentioned General Motors Company (NYSE:GM) in its “Oakmark Global Fund” first-quarter 2022 investor letter. Here is what the firm said:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 91
Tesla, Inc. (NASDAQ:TSLA) is one of the few automobile companies that has managed to steer through massive supply disruptions and emerge stronger than ever, having reported market-beating earnings for the fiscal first quarter of 2022 this April. The company’s revenues grew by 80.54% year over year and came in at $18.76 billion, outperforming market consensus by $917.76 million. Tesla, Inc. (NASDAQ:TSLA) reported earnings per share of $3.22, beating EPS estimates by $0.95. Moreover, as of May 10, Tesla, Inc. (NASDAQ:TSLA) shares have gained 29.62% over the past twelve months. Robust earnings and skyrocketing momentum make Tesla, Inc. (NASDAQ:TSLA) the best automotive stock to invest in now.
On April 22, 2022, Deutsche Bank analyst Emmanuel Rosner raised his price target on Tesla, Inc. (NASDAQ:TSLA) to $1,250 from $1,200 and reiterated a Buy rating on the shares, shortly after the company released its strong Q1 2022 earnings. Rosner contended that Tesla, Inc. (NASDAQ:TSLA) has yet again delivered industry-leading profitability despite a challenging operating environment and has managed to make inroads from strong demand and pricing while optimizing operational costs.
Hedge funds are betting bullishly on Tesla, Inc. (NASDAQ:TSLA). Insider Monkey found that by the end of the fourth quarter of 2021, 91 hedge funds were long Tesla, Inc. (NASDAQ:TSLA). The total stakes of these funds were valued at $12.91 billion, up from $10.64 billion in the third quarter of 2021 with 60 positions. The hedge fund sentiment for the stock is positive.
ARK Investment Management is the top shareholder in Tesla, Inc. (NASDAQ:TSLA) as of this March. According to Insider Monkey’s data, Catherine D. Wood’s hedge fund owns over 1.59 million shares of the leading EV maker, which amount to a stake value of $1.71 billion. The investment covers 7.17% of ARK Investment Management’s 13F portfolio.
Here is what Fiduciary Management had to say about Tesla, Inc. (NASDAQ:TSLA) in its “Small-Cap Equity” first-quarter 2022 investor letter:
“Remarkably, the Nasdaq-100 and Russell 2000 indices are up 6.25% and 3.90% through 3/31/22, respectively, since the war started. Tesla, Inc. (NASDAQ:TSLA) went up 57% from its low on February 24 ($700) to the close on March 29th ($1099), which equates to an advance of $413 billion. To put that in perspective, the 24-trading day gain in Tesla was greater than the entire market value of Walmart, Inc.! Tesla trades for 120 times estimated 2022 GAAP2 earnings, compared to Walmart’s (NYSE:WMT) 21.8 multiple (1/2023 fiscal year).”
You can also look at 10 Best Auto Stocks to Buy Now and 11 Best Autonomous Vehicle Stocks To Buy Now.
