This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

[video] Auto Stocks Won't Stall in Coming Year

NEW YORK (TheStreet) -- Keep the pedal to the metal on automaker stocks in 2014.

"I think we are going to have another good year in 2014," says Efraim Levy, equity analyst for S&P Capital IQ. "Even if interest rates increase, I don't think it will have a large impact on demand because the economy is improving and a slight increase in car payments won't stop you from buying a car, especially if you have a new job and you need to get to work."

Levy sees 16.1 million new light vehicles hitting the road in the coming year, a 3.3% rise from last year's estimate of 15.6 million. He expects GM (GM) to lead the way in the next 12 months. GM made huge strides in 2013 with the appointment of Mary Barra as its new CEO, as well as Uncle Sam finally selling its stake in the company. Shares of GM finished up 41% in 2013, a full 12 percentage points better than the benchmark S&P.

"We are talking about a company that's solidly in recovery mode," says Levy. "There will be a lot of continuity, but there will also be her imprint going forward, so we expect good things."

Levy is also bullish on GM rival Ford (F) which saw its shares rise around 19% in 2013. And he believes Ford CEO Alan Mulally will finish the year at the company, despite rampant rumors that he is a candidate to replace Steve Ballmer at Microsoft (MSFT).

"I'm making the bet that he will be there through the end of year," says Levy. "But even if he leaves, Ford has the bench strength in my opinion to continue their progress and growth."

And while Tesla (TSLA) had the best year of any auto manufacturer with its shares rising over 340%, Levy is cautioning investors to hold off on buying the heavily shorted stock due to its nosebleed multiple.

"We like the fundamentals, the story is there and the growth will be there, but right now the valuation is also very much there at over 100 times their 2014 earnings estimate it's kind of pricey."

-- Written by Gregg Greenberg

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs