3 ‘Buy Rated’ Automakers Not Named Tesla

The pandemic forced countries around the world to shut down for two to four weeks, and even longer in some cases. As a complete halt in the manufacturing sector resulted in widespread unemployment, people shied away from buying new cars. The trend has not reversed yet, as reduced income, higher savings levels, and high healthcare costs are still holding people back from buying new cars…

According to the IHS Markit survey, Global auto sales are expected to fall by 22% this year, with the United States witnessing a decline of 26.6%. The economy has started showing early signs of recovery, but it might take longer for car buyers to feel confident spending the money. However, one company defying all challenges is Tesla, Inc. (TSLA). With a stock up more than 375% year-to-date, TSLA is one of the best performing stocks of 2020. The recent soaring share prices of TSLA can be attributed to the announcement of a 5-for-1 stock split, expected demand for its Model 3 vehicles in China, and high expectation related to its battery development.

There are other car companies aside from TSLA are worth looking at. While the car market gradually recovers, companies such as Toyota Motor Corporation (TM), Ferrari N.V. (RACE), and Winnebago Industries, Inc. (WGO) are expected to see stronger growth  by the end of 2020 due to their strong brand value and financial flexibility.

Toyota Motor Corporation (TM)

As one of the most sought-after car manufacturers in the United States, TM is known for its passenger cars, commercial vehicles, minivans, and hybrid cars. It operates under three segments — Automotive, Financial Services and All other segments. Financial services operations constitute retail and wholesale leasing and financing, insurance, etc.

On August 14th, TM and Mazda Motor Corporation pledged an additional $380 billion to introduce cutting edge production technologies in the car manufacturing industry. This joint venture was originally announced in 2018 and is currently worth $2.31 billion.

The car industry has slowed down since the onset of the coronavirus, as the demand for new vehicles plummeted. However, TM has managed to survive this recession owing to its huge market valuation of over $186 billion. The stock has gained more than 25% since hitting its 52-week low of $108.01 in March.

How does TM stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

B for Industry Rank

A for Overall POWR Rating.

You can’t ask for better. It is also ranked #2 out of 28 in the Auto & Vehicle Manufacturers industry.

Ferrari N.V. (RACE)

As one of the most famous luxury sports car manufacturing brands around the world, RACE gained more than 55% since its March lows, to hit its 52-week high in August. On August 18th, RACE signed two agreements with FIA and Formula One, under the Concorde Agreement. This deal provides a regulatory guidance of the highest-level motorsport series from 2021 to 2025.

The pandemic has adversely affected car sales, causing RACE’s net profits to fall year-over-year in the first fiscal quarter ended June 2020. However, despite lower sales and…

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