Saturday, December 2, 2023
Stocks To Buy

The 3 Most Undervalued Auto Stocks to Buy in September 2023

When it comes to identifying undervalued auto stocks, the obvious option is to zoom in on the renowned titans of the automotive world. Yet, the electric vehicle (EV) sector is reshaping our perception, emphasizing stalwart brands and emerging contenders offering compelling investment narratives.

With a robust 79.4 million units sold globally last year and the semiconductor supply chain showing a promising resurgence, auto stocks are emerging as a cornerstone for savvy portfolio diversification.

Amid this backdrop, the global pivot towards EVs is impossible to ignore. On top of that, companies are channeling billions into cutting-edge battery technology, competitive pricing mechanics, and leadership reconfigurations. As this transformative journey for the automotive industry continues at breakneck speed, here are three auto stocks primed for substantial growth while trading at attractive valuations.

Ford Motor (F)

Ford Motor (NYSE: F), is shifting into high gear with impressive finesse. Despite the ongoing temporary setbacks, such as the dispute with the United Auto Workers (UAW), a glance at its latest quarterly report reveals a stellar performance, revealing an 11.9% surge in sales to $45 billion and a net income leap of $1.9 billion. Further bolstered by a compelling $3.8 billion EBIT and a $30 billion cash, Ford distinctly steers forward.

Moreover, particularly noteworthy is that Ford slashed the base price of its electric F-150 Lightning pick-up by an eye-catching $10,000. Additionally, the buzz suggests further price reductions of at least $6,000 on other models and a strategy to triple the F-150 Lightning production by fall.

Yet, the stock trades at just 0.28 times forward sales estimates, more than 65% lower than the sector median. Furthermore, with F stock dipping about 20% over the past year, TipRanks Analysts now forecast a gleaming 22% upside potential. It seems the road ahead for Ford is paved with promise.

Toyota Motor (TM)

With a history steeped in prowess, Toyota Motor (NYSE: TM) has not just carved out a notable share in the American auto space but is also steering attentively toward an electric future.

Using its formidable legacy as a launchpad, Toyota’s current fundamentals exude promise, trading at an appealing 0.8 times forward sales estimates. Additionally, its enticing forward yield of almost 3% continues to lure savvy investors.

As 2025 approaches, all eyes are set on Toyota’s unveiling of a pioneering solid-state battery, positioning them at the forefront of affordable EV innovation. Additionally, the company is set to witness a surge in global EV sales, with battery EVs expecting a whopping 137% sales boost in 2024. Additionally, by 2030, Toyota aspires to roll out 3.5 million battery-powered marvels annually, underlining its vigorous growth trajectory. Furthermore, TM stock has risen by a commendable 28% this year, reflecting investor confidence.

General Motors (GM)

Despite the year’s tribulations, General Motors (NYSE: GM) is gearing up for a strong comeback. With supply chain hiccups, labor tensions, and shrinking household wallets, GM’s stock dipped a mere 2.5% since January. Yet, the second quarter showcased a promising earnings-per-share of $1.91, surpassing Wall Street’s $1.85 estimate and an impressive $44.75 billion sales, outdoing a predicted $42.13 billion. This robust performance still makes the stock seem undervalued, trading at just 0.26 times forward sales, more than 65% below the sector’s average.

However, GM is revving its electric ambitions. Targeting a doubling of EV production by year’s end is noteworthy; after all, 50,000 EVs have already rolled off GM’s lines this year. With enthusiasts eagerly eyeing releases like the Silverado EV and Blazer EV, the automaker continues to impress. This make it one of those undervalued auto stocks.

Moreover, a strategic pivot towards in-car software will generate a staggering $25 billion annually by 2030. This diversification elevates the driving experience and promises shareholders a diversified revenue fountain.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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