NEW YORK (TheStreet) -- Sales at major automakers are up and down. General Motors (GM) sold 3% more cars in May 2015 than in May of last year, while Ford (F) sold 1.3% fewer cars in the same period, and Fiat Chrysler (FCAU) sold 4% more cars over the same period.
U.S. auto industry sales may reach the elusive 17 million cars in 2015 based on sales through May; quite a remarkable turnaround since the recent recession, when just 5.7 million cars were sold in 2009. A brightening job outlook, relatively cheap gas prices, and moderate price increases for new cars may contribute to making 2015 the best year in car sales since 2001.
So, what are the best automobile manufacturers should be buying? Here are the top six, according to TheStreet Ratings,TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Check out which automobile manufacturers made the list. And when you're done, be sure to read about which volatile aerospace and defense stocks to buy now. Year-to-date returns are based on June 23, 2015, closing prices. The highest-rated stock appears last.WGO data by YCharts
6. Winnebago Industries, Inc. (WGO)
Rating: Buy, B
Market Cap: $590 million
Year-to-date return: -6.8%
Winnebago Industries, Inc. manufactures and sells recreation vehicles primarily for use in leisure travel and outdoor recreation activities.
"We rate WINNEBAGO INDUSTRIES (WGO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WGO's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- WGO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to -$14.43 million or 18.17% when compared to the same quarter last year. Despite an increase in cash flow, WINNEBAGO INDUSTRIES's average is still marginally south of the industry average growth rate of 23.55%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Automobiles industry and the overall market, WINNEBAGO INDUSTRIES's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- WINNEBAGO INDUSTRIES's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WINNEBAGO INDUSTRIES increased its bottom line by earning $1.65 versus $1.13 in the prior year. For the next year, the market is expecting a contraction of 4.2% in earnings ($1.58 versus $1.65).
- You can view the full analysis from the report here: WGO Ratings Report