5 Auto Stocks to Watch

NEW YORK (TheStreet) -- U.S. industrial output recorded its best gain in seven months in July as the auto sector bounced back from supply disruptions caused by the Japanese quake in March. July industrial output rose 0.9%, doubling economists' expectations. Manufacturing activity was up 0.6%, led by a 5.2% surge in motor vehicles production.

Consumer spending expanded 0.8% in July to $88.4 billion -- the highest increase in two years after declining in the prior month. Savings fell to 5% in July from 5.5% earlier. Notably, spending increased in the durable-goods category such as cars and electronic appliances. For July, orders for motor vehicles and parts surged 11.5%, the highest since January 2003.

U.S. car and truck sales for August, to be reported Sept.1, could lift auto stocks as total vehicles sales are expected to come in at 12.1 million vehicles, as per Bloomberg estimates.

Analysts polled by Bloomberg foresee potential upside of 58% to 82% for these stocks with buy rating of 61% and hold rating of 36%.

We have listed the stocks in ascending order of potential upside.

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