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TheStreet Open House

You Need to Buy This Kind of Car Stocks: Stockpick Whiz Kid

NEW YORK ( MainStreet) -- Automotive companies throughout the world are changing due to the evolving trend toward sustainability. Whereas a gas guzzler was once commonplace, hybrid cars are taking over the road. Companies like Ford (F), General Motors (GM), Honda (HMC), Nissan (NSANY) and Toyota (TM) are monopolizing the market with hybrid and electric vehicles.

There is large competition brewing between automobile companies to create fuel efficient cars that are less expensive than their competitors. As these cars are made en masse, the profit margins are fetching huge returns for the producers. These vehicles are in huge demand currently. In fact, this May's U.S. sales of hybrids, battery-electric, plug-in hybrid and diesel vehicles jumped 30% from May 2012 numbers to more than 60,000. This effect is pushing automobile company stock prices even higher.

  • Ford Motor Co. (F)- 52 week low of 9.23 and a current price of 16.98
  • General Motors Co. (GM)-52 week low of 19.98 and a current price of 35.76
  • Nissan Motor Co. Ltd (NSANY)- 52 week low of 16.44 and a current price of 21.57
  • Toyota Motor Corp. (TM)- 52 week low of 74.27 and a current price of 127.58

SUVs of yore commonly earned 10 MPG, while the new hybrid and electric vehicles can get as much as 150 MPG, in the case of the Fisker Karma. With typical hybrid and EV prices ranging from $20,000 to $50,000, companies and the common person can't get enough.

What stocks are a good investment in the automotive industry? Well, the largest car producers are Ford, Toyota, Volkswagen, and General Motors--with each company taking different strides to enhance its position in the given field to become a BUY for the future.

Ford Motor Co. (F)- Ford generates most of its profit off its F-series but has gained tons of recognition and credibility from its hybrid and small fuel efficient cars. With this addition, Ford is analyzed to have great quarterly earnings come October 28.

Toyota Motor Corp. (TM)- Toyota released its quarterly earnings: "Operating income increased by 310.2 billion yen. Major factors contributing to the increase include currency fluctuations of 260.0 billion yen, cost reduction efforts of 70.0 billion yen, and marketing activities of 30.0 billion yen." Toyota's new models include the  Camry Hybrid, Prius, RAV4EV, Avalon Hybrid and the Highlander Hybrid. The best selling hybrid in history is the Prius which gains recognition for its prestige throughout the hybrid world. The Prius is sold in almost 80 countries including its largest which happens to be Japan and the United States. Its sales reached the 2 million mark in June of 2013. Toyota's stock has been in the wake of a tsunami, but because of the annual strong growth with its vehicles and the current market sector, we believe Toyota is a buy for the future.

Toyota is creating new opportunities in emerging markets and re-structuring their pipeline with lost customers.

Volkswagen AG (YLKAY)- Volkswagen is recommended as a strong buy and was upgraded by both JP Morgan and HSBC Securities. With the new releases of the XL1 and the e-up!, Volkswagen is analyzed to fetch a large return.

The Volkswagen Beetle and Passat keep fetching large returns for the company, with Volkswagen's Passat receiving last year's " Motor Trend car of the year."

General Motors Co. (GM)- General Motors owns Buick, GMC, Chevrolet, and Cadillac, which are their largest distributors. These car giants are pumping out cars rapidly to meet demand. After an unfortunate slight loss in July`s quarterly earnings report, they are said to be coming back strong in the third quarter.One of their most popular vehicles is the Chevy Volt which could get 380 miles on a full charge and tank of gas, on average costing its user $1.60 per day.

The transition in the automobile industry is happening faster than ever. Some car makers are in the black, while other automobile producers are getting left in the dust. As investors, we need to pick the specific stocks that we believe have a future in the evolving automobile markets.

 

As a reverse psychology proposition, if the electric and hybrid sectors continue to rise, an investment in charging stations and renewable energy is evident. It might not be a short-term proposition, but if you invest in the right product, you can net huge returns.

--Written by Max Levin for MainStreet

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