Forget Tesla, Buy These 3 Auto Manufacturers Instead

NASDAQ: TSLA | Tesla, Inc. News, Ratings, and Charts

TSLA – While Tesla (TSLA) may get all the headlines, there are other auto manufacturers worth a look. Car companies such as Ferrari (RACE), Volkswagen (VWAGY), and Tata Motors (TTM) are seeing strong sales and should even have a better year in 2021 as car production resumes again.

When it comes to electric and autonomous automobiles, most people think of Tesla (TSLA). TSLA is certainly deserving of attention and acclaim, yet several other auto manufacturers are worthy of your investing dollars.

Instead of sorting through the entirety of the auto sector stocks on your own, let me do the work on your behalf. After all, the quickest way to learn something is to ask someone in-the-know.

Below, we provide an insightful look at some of the best automotive stocks not named TSLA. Let’s delve into the merits of Ferrari (RACE), Volkswagen (VWAGY), and Tata Motors (TTM).

Ferrari (RACE)

RACE doesn’t produce affordable vehicles, yet the company does not target those who work on Main Street. Rather, RACE targets wealthy individuals with money to burn, and there is nothing wrong with that. Headquartered in Italy, RACE primarily operates in Europe, the Americas, Asia, and the Middle East.

Overlook RACE’s somewhat elevated forward P/E ratio of 42.87 for a moment. Instead, focus on the stock’s POWR Ratings. RACE has B grades in the Quality, Sentiment, and Stability components. If you are curious about RACE’s grades in the remainder of the POWR Ratings components such as Momentum, Value, and Growth, you can find out more by clicking here.

All in all, RACE has a B POWR Rating, indicating it is a Buy. Of the 50+ publicly traded companies in the Auto & Vehicle Manufacturers industry, RACE is ranked 17th. You can find other top stocks in this industry by clicking here.

Analysts have established an average price target of $213.36 for RACE. The stock is currently trading around $207, meaning if it hits the analysts’ average price target, it will have increased by 2% to 3%.

Though RACE vehicles are certainly expensive, there is a lengthy wait for them. RACE executives have stated buyers have to wait upwards of a year or longer for their order to be fulfilled. However, this wait is not reducing the demand for RACE vehicles. RACE’s business is healthy, with ever-expanding margins, jumping from 47% to nearly 53% across the past seven years. 

Furthermore, the number of RACE vehicles shipped per year has soared 45% between 2013 and 2019. The simple truth of the matter is that RACE could easily raise its prices and expand its customer base as wealthy individuals covet its vehicles worldwide.

Volkswagen (VWAGY)

Now that VWAGY’s emissions scandal is in the rearview mirror, it is time to focus on the automaker’s future. VWAGY is Europe’s top automobile manufacturer. Featuring nine independent brands, VWAGY offers a wide variety of auto models for all demographics. Add in the fact that VWAGY’s uber-popular electric vehicle dubbed the ID.3 has sold an impressive 56,500 units, and investors have even more reason to consider adding this automaker to their portfolio. 

VWAGY’s willingness to expand its horizons is intriguing enough in and of itself. The stock looks even juicier considering its incredibly low forward P/E ratio of 8.10. Even if VWAGY were to inch up to its 52-week high of $22.19, the stock would still have a forward P/E ratio less than 10, making it one of the most attractive auto stocks around.

The icing on the cake is VWAGY’s overall A grade in the POWR Ratings. VWAGY also has B grades in the Value, Sentiment, and Stability components of the POWR Ratings. You can learn more about VWAGY’s grades in Quality, Growth, and Momentum by clicking here. If you still aren’t convinced VWAGY is a winner, consider the fact that the stock is ranked second of more than 50 stocks in the Auto & Vehicle Manufacturers industry. 

Perhaps most important is the fact that VWAGY is shifting its attention away from motorsports to electric vehicles. Every single VWAGY employee in the company’ s motorsports division has been reassigned to its EV business. It is clear that VWAGY wants to be a power player in the EV space that competes with the likes of TSLA.

Tata Motors (TTM)

TTM is India’s top automaker. It owns the Range Rover and Jaguar brands. The company designs, makes and sells vehicles as well as other machine-related items. TTM has A grades in the Sentiment and Growth components of the POWR Ratings. The stock also has a B grade in the Value component. You can find out TTM’s grades in the Quality, Stability, and Momentum components by clicking here.

Of the 51 stocks in the Auto & Vehicle Manufacturers industry, TTM is ranked 10th. This high ranking is partially attributable to the fact that TTM’s domestic sales spiked more than 20% in a year’s time. The company’s global sales of its Land Rover vehicle are up more than 13% on a year over year basis.

India’s version of our cash for clunkers program will bode well for TTM as that many older vehicles will be sold in favor of new TTM vehicles. Furthermore, there have been some rumors that TSLA will enter the Indian market at some point in 2021 and possibly partner with an auto manufacturer such as TTM to provide the ever-expanding Indian population with comparably green electric vehicles.

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TSLA shares rose $5.18 (+0.64%) in premarket trading Thursday. Year-to-date, TSLA has gained 14.71%, versus a 4.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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