5 Best Car Stocks To Buy Right Now

In this article, we discuss 5 best car stocks to invest in. If you want to read our discussion on the auto industry, head directly to 13 Best Car Stocks To Buy Right Now. 

5. Aptiv PLC (NYSE:APTV)

Number of Hedge Fund Holders: 39

Aptiv PLC (NYSE:APTV) is a global company engaged in designing, manufacturing, and selling vehicle components. The company focuses on providing electrical, electronic, and safety technology solutions for the automotive and commercial vehicle markets. On January 31, Aptiv PLC (NYSE:APTV) reported a Q4 non-GAAP EPS of $1.40, beating market consensus by $0.07. The revenue increased 5.6% year-over-year to $4.9 billion, but fell short of Wall Street estimates by $170 million. 

According to Insider Monkey’s fourth quarter database, 39 hedge funds were bullish on Aptiv PLC (NYSE:APTV), compared to 38 funds in the last quarter. Ian Simm’s Impax Asset Management is the largest stakeholder of the company, with 7.2 million shares worth approximately $652 million. 

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Aptiv PLC (NYSE:APTV) in its Q3 2023 investor letter:

“In Consumer-oriented sectors, we lean towards value-oriented or specialty retailers, franchise models, as well as premium brands. We have seen challenges this quarter stemming from falling consumer confidence and sentiment measures. Another benefit came from Aptiv PLC (NYSE:APTV), a supplier of electronic automotive technology for safety and entertainment systems. Second quarter revenues, operating margins, and earnings topped consensus estimates. Its -3% return outpaced the index sector average of -6%.”

4. Carvana Co. (NYSE:CVNA)

Number of Hedge Fund Holders: 40

Carvana Co. (NYSE:CVNA) is an American company that operates an e-commerce platform for the buying and selling of used cars. Carvana Co. (NYSE:CVNA) reported Q3 results that exceeded expectations in terms of revenue, transforming a net loss in the same period last year to a net gain. The company also provided a positive outlook for Q4. In Q3, Carvana achieved a non-GAAP total gross profit per unit of $6,396, maintaining a trend of more than $5,000 for the third consecutive quarter in Q4. Additionally, Carvana anticipates positive adjusted EBITDA for the third consecutive quarter.

According to Insider Monkey’s fourth quarter database, 40 hedge funds were bullish on Carvana Co. (NYSE:CVNA), compared to 38 funds in the prior quarter. Spruce House Investment Management is the largest stakeholder of the company, with 9.5 million shares worth $502.4 million. 

Kerrisdale Capital made the following comment about Carvana Co. (NYSE:CVNA) in its June 2023 investor letter:

“We are short shares of Carvana Co. (NYSE:CVNA), a $4bn market cap online platform for buying and selling used cars. Originally hyped up as an innovative disruptor, Carvana is now recognized to be just a poorly run auto retailer struggling under the challenges of a severe industry downturn and the unsustainable burden of $6.5bn in debt. While many have shared concerns over Carvana’s business before, we voice ours at a time when shares have risen 165% in only a month on misguided optimism for profits that amount to little more than buffing the paint job on a totaled car.

Over its history of burning billions of dollars of investor capital to manufacture topline growth, Carvana has never generated sustainable profits or free cash flow. Even during the pandemic, when Carvana was virtually the only online option for scores of desperate car buyers willing to pay any price, the company failed to turn an annual profit. As the prospect of bankruptcy loomed, last year management began slashing costs, shrinking its operations and finessing working capital to try to generate positive free cash flow, and still failed. The company is pursuing a last-ditch attempt to sell markets on a new narrative, but ultimately, the business can’t escape the following reality: 1) whether a small local dealer or a tech-driven online platform, flipping used cars is a tough, capital-intensive business with lousy margins and, 2) any company can grow quickly and take share if run irresponsibly on costs, especially if capital markets are willing to foot the bill. Rather than representing true disruptive change, Carvana is a flawed player, armed with tools no better than the competition it seeks to disrupt and led by a management team which lacks seasoned automotive, operational experience. Carvana didn’t make money even when cars sold themselves, interest rates were low and used car prices were skyrocketing. Today, none of that is true anymore, and the company has no hope but to eventually restructure its massive debt load…” (Click here to read the full text)

3. Ford Motor Company (NYSE:F)

Number of Hedge Fund Holders: 40

Ford Motor Company (NYSE:F) is a global automotive company that develops, manufactures, and services a diverse range of vehicles, including trucks, commercial cars, vans, SUVs, and luxury vehicles under the Ford and Lincoln brands. It is one of the best auto stocks to consider. On February 6, Ford Motor Company (NYSE:F) reported a Q4 non-GAAP EPS of $0.29, beating market estimates by $0.17. The revenue of $46 billion increased 4% year-over-year. 

According to Insider Monkey’s fourth quarter database, 40 hedge funds were bullish on Ford Motor Company (NYSE:F), compared to 43 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the leading stakeholder of the company, with 59 million shares worth $721 million. 

Here is what Leaven Partners has to say about Ford Motor Company (NYSE:F) in its Q3 2022 investor letter:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6% from 7.2% in early August and slashing full-year profit growth to 4.5%.”

2. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 82

Tesla, Inc. (NASDAQ:TSLA) ranks 2nd on our list of the best auto stocks. On February 14, Tesla, Inc. (NASDAQ:TSLA) gained in post-market trading after Elon Musk revealed in an SEC filing that he held a 20.5% stake in the company as of December 31, 2023. The reported value of Musk’s stake is just over $120 billion, surpassing the combined market caps of General Motors and Ford Motor. Musk has expressed a desire to increase his voting position in Tesla to 25% to play a more significant role in shaping the future of the company’s AI business.

According to Insider Monkey’s fourth quarter database, 82 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), compared to 81 funds in the last quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with a $1 billion position. 

O’keefe Stevens Advisory stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its fourth quarter 2023 investor letter:

“In my Q4 2022, l made three predictions: 1. One of our top 25 holdings gets acquired 2. TSLA is a sub $200B market cap by the end of 2023 3. Crypto, the final blow.

Tesla, Inc. (NASDAQ:TSLA) is a sub $200B market cap by the end of 2023. Grade: D. TSLA performed contrary to expectations, appreciating approximately 100% in 2023 and ending the year with an $880 billion market cap. We were “just a bit outside,” but I’m not convinced our reasoning was flawed.

The typical strong correlation between earnings estimates and stock prices did not hold for TSLA during the year. Positive revisions suggest a company outperformed expectations, resulting in a higher price/valuation. Negative revisions suggested estimates were too high, and the stock should decline to meet a weaker outlook…” (Click here to read the full text)

1. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 83

General Motors Company (NYSE:GM) is a global automotive company that designs, manufactures, and sells trucks, crossovers, cars, and automotive parts. The company operates through GM North America, GM International, Cruise, and GM Financial segments. It is one of the best auto stocks to invest in. On January 29, General Motors Company (NYSE:GM) declared a $0.12 per share quarterly dividend, a 33% increase from its prior dividend of $0.09. The dividend is payable on March 14, to shareholders on record as of March 1. 

According to Insider Monkey’s fourth quarter database, 83 hedge funds were bullish on General Motors Company (NYSE:GM), up from 66 funds in the last quarter. Harris Associates is the largest stakeholder of the company, with 35.75 million shares worth $1.28 billion. 

Diamond Hill Large Cap Strategy made the following comment about General Motors Company (NYSE:GM) in its Q3 2023 investor letter:

“Several of our bottom contributors were in the consumer area, including auto retailer CarMax and auto manufacturer General Motors Company (NYSE:GM). In general, rising interest rates have priced out a large portion of the population who simply can’t afford to buy a car given where financing costs stand today. These challenges have weighed on both companies. General Motors was also impacted by the UAW strike, which put a damper on the automotive industry in general.”

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