New car sales fell in November despite robust consumer demand for automobiles due to higher-than-expected private payrolls and technical breakthroughs. Automobile sales in the United States fell 0.7% month-over-month to $12.9 million last month. Automotive companies struggled to meet the rising demand due to shortages of semiconductor chips, tight inventories, and delivery delays.

However, Tesla, Inc. (TSLA) was able to slough off the supply chain challenges. The company dominated electric vehicle (EV) sales in November. In addition, TSLA topped the month with 1,013 for Tesla Model Y cars registered and 771 Tesla model 3 cars registered. Its stock has gained more than 90% in price over the past year, and we think looks overvalued at its current price level.

Happily, we think there are a few automotive companies other than Tesla that are worth considering. For example, due to their excellent brand value and financial flexibility, Isuzu Motors Limited (ISUZY) and Mazda Motor Corporation (MZDAY) are expected to deliver returns that match TSLA’s in the near term. Thus, these stocks could be solid bets now.

Click here to check out our Automotive Industry Report for 2021

Isuzu Motors Limited (ISUZY)

Headquartered in Tokyo, Japan, ISUZY is an automobile manufacturer that markets commercial vehicles and diesel engines and components worldwide. Heavy- and medium-duty trucks and buses, and light-duty trucks, sport utility vehicles, and marine and industrial engines are some of the company’s products.

ISUZY’s net sales increased 44.4% year-over-year to ¥1.15 trillion ($10.13 billion) in its fiscal second quarter, ended September 30, 2021. The company’s gross profit grew 90.5% from its year-ago value to ¥215.57 billion ($1.91 billion). Its operating income rose 479.3% from the prior-year quarter to ¥97.29 billion ($860.5 million). Also, the company’s interest income increased 7.8% year-over-year to ¥1.65 billion ($14.59 million).

ISUZY’s $22.15 billion consensus revenue for the fiscal period ending March 2022 represents a 162.7% increase year-over-year. The stock has gained 29.8% in price over the past nine months and 38.9% over the past year.

ISUZY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an A grade for Value and a B grade for Stability and Quality. We have also graded ISUZY for Growth, Sentiment, and Momentum. Click here to access all ISUZY’s ratings.

ISUZY is ranked #6 of 64 stocks in the F-rated Auto & Vehicle Manufacturers industry.

Mazda Motor Corporation (MZDAY)

Formerly known as Toyo Kogyo Co., Ltd. MZDAY is headquartered in Hiroshima, Japan and manufactures and sells passenger cars and commercial vehicles in Japan, North America, Europe, and internationally. Four-wheeled vehicles, gasoline reciprocating engines, diesel engines, and automatic and manual transmissions for vehicles are some of the company’s principal products.

Last month, MZDAY premiered its Mazda CX-50 crossover SUV, which will be released for the North American market in the coming months. With the vehicle’s  launch, the company should meet the needs of customers mainly from the U.S., who favor an SUV-like presence and off-road performance in their vehicles.

MZDAY’s net sales increased 34.1% year-over-year to ¥1.5 trillion ($13.23 billion) in its fiscal second quarter, ended September 30, 2021. The company’s gross profit grew 42.3% from its year-ago value to ¥321.89 billion ($2.85 billion). Its operating income came in at ¥39.74 billion ($351.48 million), compared to a ¥52.86 billion ($467.54 million) operating loss in the prior-year quarter. Also, the company’s interest income amounted to ¥1.52 billion ($13.4 million).

MZDAY’s $29.2 billion consensus revenue estimate for its fiscal period ending March 2022 represents an increase of 49.5% year-over-year. The stock has gained 31.5% in price over the past year and 19% year-to-date.

MZDAY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The stock also has an A grade for Value and a B grade for Growth and Quality.

In addition to the POWR Rating grades I have just highlighted, one can see MZDAY’s ratings for Stability, Momentum, and Sentiment here. The stock is ranked #2 in the Auto & Vehicle Manufacturers industry.

Click here to check out our Automotive Industry Report for 2021

ISUZY shares were unchanged in premarket trading Friday. Year-to-date, ISUZY has gained 41.70%, versus a 23.54% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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