5 Auto Stocks in Top Gear

NEW YORK (TheStreet) -- The U.S. auto industry posted sales of 1 million units in November, up 13.9% from a year earlier, according to statistics released by Autodata. On a seasonally adjusted annual basis, sales reached 13.6 million vehicles last month, the highest since the cash-for-clunkers program in Aug. 2009.

Acting as a major driver, the Thanksgiving holiday weekend proved to be the strongest selling period, says Hyundai Motor America's executive vice president of national sales. On the high wave of consumer durables spending by the Americans, the demand for the big pickup trucks also pushed the U.S. vehicle sales to the highest levels.
GM Sales in the U.S. totalled 180,402 vehicles in November, up 6.9% from 168,739 a year earlier.

The average price per vehicle rose 4% to $30,000 from the earlier year, according to TrueCar.com. Average industry spending on incentives such as leases and low-interest loans was $2,534 per vehicle in November, up 2.5% in October, the industry-tracking firm reports. In the final week of November 2008, auto dealers sold about 260,000 vehicles, which held steady during the recession to reach more than 340,000 this year, according to estimates from TrueCar.com.

These stocks have potential upside of 11% to 63%, based on latest quarterly results. They have buy recommendation of 72% and hold rating of 25%, according to analysts polled by Bloomberg

The stocks are listed in ascending order of upside potential.

5. Tesla Motors ( TSLA) designs, develops, manufactures and sells electric vehicles and advanced electric vehicle power train components. The company owns its sales and service network, and markets and sells its vehicles directly to consumers through the phone and Internet, in-person at its corporate events and through its network of Tesla stores. It has sold more than 2,000 Roadsters -- the world's first electric sports car -- worldwide, as of third quarter 2011.

Of the 12 analysts covering the stock, 67% recommend a buy and 25% rate a hold. The stock's average 12-month price target is $39.71, about 21.8% higher than the current price, according to a Bloomberg consensus.

Tesla Motors reported total revenue of $57.6 million for 2011 third quarter, up 84.6% from $31.2 million in the same quarter last year. Cash and cash equivalents and short-term marketable securities totaled 278.4 million at the end of September.

The company is currently selling the Tesla Roadster and is developing the Model S -- the world's first electric premium sedan -- for commercial launch in 2012. The company plans to hold a limited showing of the prototype of the Model X crossover by the end of 2011 and to launch it publicly early 2012.

In November, Tesla opened three new dealerships in the U.S. at Bellevue, Chicago and Newport Beach and is preparing groundwork to start customer deliveries of Model S next year.

4. Tata Motors ( TTM) is India's largest automobile company and the world's fourth-largest truck manufacturer. Operating through subsidiaries, the company engages in engineering and automotive solutions, manufacture of construction equipment, automotive vehicle components and supply chain activities, machine tools, factory automation solutions and automotive retailing and service operations.

Of the 53 analysts polled by Bloomberg, 77% recommend a buy and 15% suggest a hold. Seeking Alpha analysts rate the stock a value pick with a target price of $24, which is 35.7% higher than the current price.

Tata Motors reported revenue of $7.86 billion for its fiscal 2012 second quarter, up 27.8% from $6.15 billion in the same quarter previous fiscal year. Net profit for the quarter stood at $410.5 million and diluted EPS came in at 12 cents.

Cumulative sales for 2011 came in 7% higher at 642,431 units compared to the corresponding period in 2010. Consolidated sales for November. increased 40.6% to 76,823 units compared to 54,622 units in the year earlier. Global sales in Oct. rose 10% from a year earlier to 95,789 units. Tata Nano sales jumped nearly 12-fold to 6,401 units during the month, vs. 509 units in the same month last year.

Tata recently launched Tata Sumo Gold equipped with new technologies and the all new Range Rover Evoque from the Jaguar Land Rover corporate showroom in Mumbai, India.

3. Navistar International ( NAV) is a holding company operating through principal subsidiaries Navistar Inc. and Navistar Financial Corp. The company manufactures commercial and military trucks, buses, diesel engines, chassis for motor homes and step vans. NIC operates in four segments: truck, engine, parts and financial services.

Of the 20 analysts covering the stock, 70% recommend a buy and 30% suggest a hold. The stock's average 12-month price target is 46.6% higher than the current price at $56.27, according to a Bloomberg consensus.

For the fourth quarter of fiscal 2011, net income is expected at $246.36 million, or $3.18 per share as compared to $44.2 million, or 61 cents per share, in the year-ago quarter. Sales are seen rising 33% to $4475.2 million. Operating profit is likely to surge to $350.89 million from $145 million in the year-ago quarter. Gross margin is pegged at $19.15 million, up 6% from the year-ago period. Guidance for cash flow per share is $4.34.

Daily build rates for North American Class-8 trucks increased 9% in Oct. to 1,220 vehicles, the highest level in this replacement cycle, according to data compiled by Bloomberg. Year-to-date, Class-8 build has increased 66% to 205,310 units. Additionally, the truck backlogs increased 2% in Oct for the North American Class 8. As per historic data, backlogs in the fourth quarter increased by 7% on an average.

The company has sold $224 million of wholesale floor plan notes in a two-year 144-A transaction to support its dealer inventory funding. This transaction will replace a $250 million deal that matures in January 2012.

Going forward, net income for fiscal 2011 is expected to rise 84% year-over-year to $392.91 million or $5.12 diluted earnings per share. Sales are seen rising 16% to $14.056 billion from $12145 million in the previous year.

2. Ford Motor ( F) is a global automotive manufacturer of cars and trucks. Along with subsidiaries, it also engages in other businesses, including financing vehicles. It operates under two segments: automotive and financial services. It has 70 plants worldwide with brands including Ford and Lincoln. The company provides financial services through Ford Motor Credit Company.

Of the 21 analysts covering the stock, 71% recommend a buy and 29% rate a hold. The stock's average 12-month price target is 58.2% higher than the current price at $16.75, according to a Bloomberg consensus.

Ford reported total revenue of $33.04 billion for 2011 third quarter, up 10% from $29.9 billion in the same period prior year. Net income for the quarter was steady at $1.6 million or 41 cents per share, from the same quarter last year. Cash and cash equivalents increased to $8.08 billion from $6.30 billion in the same quarter a year earlier.

Retail sales for Ford in the U.S. were 166,865 units, up 13% from the same period last year, led by small SUVs. During the 2011 China Touring Car Championship (CTCC), Ford achieved yet another milestone reaching the 800,000-unit mark in China on Nov. 11.

Ford unveiled the 2013 Cobra Jet Mustang at the performance racing industry show in Orlando, Florida. The company plans to build 675,000 vehicles in the first quarter of 2012, up 3% or 18,000 vehicles, compared with the same period last year.

1. General Motors ( GE) develops, produces and markets cars, trucks and parts in more than 30 countries worldwide. It also provides automotive financing services through General Motors Financial Company. The company operates in five segments: GM North America, GM Europe, GM International Operations, GM South America and GM Financial. GM's brands include Chevrolet and Cadillac.

Of the 20 analysts covering the stock, 75% recommend a buy and 25% affirm a hold. The stock's average 12-month price target is $34.14, about 62.9% higher than the current levels, according to data compiled by Bloomberg

GM reported total revenue of $36.7 billion for 2011 third quarter, up 7.62% from $34.1 in the same quarter previous year. Net income attributable to common shareholders stood at $1.7 billion, or $1.03 per fully-diluted share. GM ended the quarter with strong liquidity of $38.8 billion.

GM Sales in the U.S. totalled 180,402 vehicles in November, up 6.9% from 168,739 a year earlier. For the Indian market, GM reported a marginal increase in November sales at 8440 units, vs. 8376 units sold in the same month last year. The company's CEO said that GM would buy Chevrolet Volts from any owner who is concerned about a government investigation of two post-crash-test fires in the car's battery.

Based on the current industry outlook, the company expects adjusted EBIT for the fourth quarter of 2011 to be at the levels of fourth quarter of 2010 (around $2,056 million), due to seasonal trends in North America and weakness in Europe. Also, GM expects to record a special item in the fourth quarter recognizing an $800 million non-cash settlement gain related to a Canadian Health Care Trust settlement.

>>To see these stocks in action, visit the 5 Auto Stocks in Top Gear portfolio on Stockpickr.

More from Stocks

Danica Patrick's Final Race at 2018 Indianapolis 500: What She Thinks About Cars

Danica Patrick's Final Race at 2018 Indianapolis 500: What She Thinks About Cars

Why The FANG Stocks' Dominance May Not Be So Bad For The Market

Why The FANG Stocks' Dominance May Not Be So Bad For The Market

At End of May, Investors Signalling They May Stay Away

At End of May, Investors Signalling They May Stay Away

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever