Car Stocks Picking Up Speed: Making Sense Of The IPOs

James Dennin, Kapitall: Chrysler is one of many companies trying to capitalize on the hot stock market by filing Initial Public Offerings. 

There's a lot of IPO talk these days. Everyone's tweeting about Twitter, and companies from Re/Max to Burlington Stores are looking to take advantage of a sizzling stock market by going public.  However one of the really interesting stories amongst all the IPO drama that's unfolding this fall is about one company whose CEO doesn't even want to bring his company public at all: Chrysler. 

Chrysler CEO Sergio Marchione has been trying to consolidate his stake in the car manufacturer within his other company -  Fiat (OTCPINK:FIATY) – a somewhat cash-strapped Italian automaker. Analysts have downgraded Fiat's stock, and its average target price is about half of what it's trading today. They argue that Marchione needs full control of Chrysler (along with access to its revenues) to revive Fiat's sales and create a global competitor in the car market. 

Chysler has been one of the biggest successes of President Obama's controversial bailout of the automobile industry. The company was losing almost $17 billion a year in 2008, but now is  highly profitable.

Sales are up, and Chrysler is even trying to diversify. It owns General Electric Vehicles, which develops residential, "neighborhood cars" that are entirely electric. It has also been making inroads in China for one of its most successful and recognizable brands: The Jeep.

Chrysler mostly makes bigger cars - Jeeps alone represent a whopping 33% of its global sales - and that number is expected to grow. Marchione has brought the company a long way in only a few years, although now his plans for the company's next stage of development may be  stymied by talks with the United Auto Workers.

The Union took a huge risk when it accepted Chrysler shares as part of a settlement (considered close to worthless at the time) to create a fund for Chrysler retiree's healthcare. Now that those shares are valuable again the Union is (understandably) trying to cash in for top dollar.

But Marchione (also understandably) does not want to pay top dollar for a firm which still seems to have some problems. Chrysler has lower brand recognizability than Ford (F) or  General Motors (GM), especially abroad, and is famous for building larger SUVs and trucks in an era when the market is focusing more on fuel-efficiency and electric cars. Chrysler gets about 86% of its revenue domestically in an age when emerging markets are seen by most as key. 

In addition, a flurry of electric car companies are gearing up for their own IPOs after they saw how Tesla's (TSLA) turned out. Many of these firms, from the Atlanta-based Wheego to the California-based Fisker, would face heavy competition from the big names. This makes it important to pay attention to any big-name partnerships. For instance, a new start-up called Coda is in talks to provide electric cars for the car rental giant Hertz (HTZ).

If all this talk of IPOs and new ventures isn't enough to rev the engines of auto enthusiasts – I don't know what is. 

Click on the interactive chart below to see data over time. 

Do you invest in the auto industry? Use the list below as a starting point for your own analysis. 

1. Hertz Global Holdings, Inc. ( HTZ): Engages in the car and equipment rental businesses worldwide. Market cap at $10.27B, most recent closing price at $25.63.
 

 

2. Tesla Motors, Inc. ( TSLA): Designs, develops, manufactures, and sells electric vehicles and advanced electric vehicle powertrain components. Market cap at $21.41B, most recent closing price at $181.11.
 

 

3. Ford Motor Co. ( F): Develops, manufactures, distributes, and services vehicles and parts worldwide. Market cap at $67.65B, most recent closing price at $17.20.
 

 

4. General Motors Company ( GM): Operates as a global automaker. Market cap at $51.09B, most recent closing price at $37.13.
 

 

 

( List compiled by James Dennin, a Kapitall Writer. Additional research by Megan Ong. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)

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