Auto Stocks Shine Bright
Amidst the vast ocean of auto stocks, a few gems are starting to glitter in the market, earning a spot in the coveted Zacks Rank #1 (Strong Buy) list this week.
These shining stars boast positive earnings estimate revisions that hint at a future full of promise and potential. Not only are they raking in optimism from investors, but their value proposition is as attractive as a gleaming vintage car at a classic car show.
Cummins Roars Ahead
First in line is Cummins, a standout player in the Zacks Automotive-Internal Combustion Engines Industry, which finds itself perched in the top 1% among nearly 250 Zacks industries.
The roaring success of Cummins can be attributed to its prowess as a leading global provider of diesel and natural gas engines, along with powertrain-related components. To add fuel to its fire, the strategic acquisition of Meritor has not only accelerated its growth but has also expanded its offerings in mobility, braking, and electric powertrain solutions for various vehicle markets.
In recent times, Cummins closed the deal to acquire Meritor for a hefty $3.7 billion, a move that has already paid off handsomely. The company has shattered records in operating cash flow, EBITDA, and sales, notching up remarkable figures. With its stock up an impressive +15% year-to-date, Cummins’ robust financial performance is projected to scale new heights in the coming years, painting a shiny picture for investors.
Ford Motor: The Sleeper Pick
Another intriguing candidate in the auto stock race is Ford Motor, a classic favorite that seems to have slipped under the radar of many investors.
Despite its lower stock price of $11, Ford Motor stands out as a bargain buy at just 5.8X forward earnings. Analysts project annual earnings to rev up to $2.02 per share in fiscal years 2024 and 2025, with sales expected to hover around the $170 billion mark. More notably, Ford Motor is strongly positioned among domestic automakers vying for a slice of the burgeoning EV market against the likes of Tesla.
Adding allure for income-oriented investors, Ford Motor currently boasts an annual dividend yield of 5.09%, a stark contrast to many of its peers who choose to reinvest in internal growth rather than rewarding shareholders with dividends.
Suzuki Motor: The Wildcard Entry
Unveiling the wildcard entry in the auto stock roulette is Suzuki Motor, a foreign player making waves in the market.
Despite its stock price jumping +8% this year, Suzuki Motor is a compelling option trading at a modest 11.7X forward earnings. The company’s recent spike in earnings estimates for fiscal year 2025, coupled with ambitious plans to foray into the EV market and introduce innovative electric-powered vehicles, has sparked fervor among investors.
Suzuki’s ambitious strategy includes plans to launch a compact electric-powered “flying car” with dual capabilities for both land and air travel by 2025, captivating the imagination of the market with its futuristic vision.
The Road Ahead
As the road opens up to a myriad of opportunities, Cummins, Ford Motor, and Suzuki Motor emerge as the front runners in the ongoing auto stock marathon.
Backed by rising earnings estimates and sporting appealing P/E valuations, these top-tier auto stocks are more than just temporary fads; they represent enduring investment prospects for 2024 and beyond.