10 Fastest Growing Auto Stocks to Buy
In this article, we discuss the 10 fastest-growing auto stocks to buy. To skip the latest news and detailed analysis around the auto industry, go directly to the 5 Fastest Growing Auto Stocks to Buy.
Over the last few years, the automotive industry has gone through significant changes, such as the increasing demand of electric vehicles (EVs) and the increased spending on autonomous vehicle research and deployment. However, these days, the latest strike by the United Auto Workers (UAW) is the hottest topic in the auto industry. The union is targeting Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Stellantis N.V. (NYSE:STLA) and its primary demand is a 40% wage hike with a 20% immediate increase. According to Wells Fargo analysts, the increase in demanded salaries and wages would “add an estimated $700 million to $1.2 billion in costs to each company over the four-year life of the contract.”
The vice president of the union’s GM department said on October 20 that both parties are moving toward a tentative agreement that could possibly end the 5-week strike. It has been reported that General Motors Company (NYSE:GM) is offering a 20% raise over the next four years while Ford Motor Company (NYSE:F) offered 23%. The companies are eager to put things back to normal. General Motors Company (NYSE:GM)’s management said:
"It is time for us to finish this process, get our team members back to work and get on with the business of making GM the company that will win and provide great jobs in the U.S. for our people for decades to come."
Even though UAW President, Shawn Fain, believes that there is “more to be won,” the union has not announced any further strikes yet. It is quite evident that these strikes are going to significantly affect the upcoming earnings reports of auto companies. However, Richard Hilgert, a Senior Equity Analyst for the automotive sector at Morningstar’s research arm, says that the auto manufacturers can still evade massive losses if the strikes don’t prolong.
Latest in the Auto Industry
Although the electrification of vehicles and autonomous vehicle technologies aren’t that new, their demand and sales have certainly surged remarkably in the last few years. According to our previous report, the autonomous vehicle industry is expected to increase at a compound annual growth rate (CAGR) of over 40% between 2021 and 2030. Some major companies that have introduced self-driving cars include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), and NVIDIA Corporation (NASDAQ:NVDA). Moreover, Honda Motor Co., Ltd. (NYSE:HMC) and General Motors Company (NYSE:GM), in a joint venture with GM’s subsidiary, Cruise, are planning to start a self-driving taxi service in Japan in 2026.
Compared to autonomous vehicles, EV adoption has been notably faster and EV stocks have been some of the fastest-growing vehicles stocks in 2023. In 2022, the number of alternative energy vehicles sold crossed 10 million, showing a 54% year-over-year (YoY) increase. In 2023, the International Energy Agency (IEA) believes that this number could reach 14 million.
The companies that are currently dominating the EV market include Tesla Inc (NASDAQ:TSLA) and BYD Company Limited (OTC:BYDDY). Nevertheless, automotive giants such as General Motors Company (NYSE:GM), Toyota Motor Corporation (NYSE:TM), and Stellantis N.V. (NYSE:STLA) have also started to invest heavily in the sector. In fact, Stellantis N.V. (NYSE:STLA) has already captured a noteworthy market share of the industry and is one of the top ten EV manufacturers in the world.
Despite the recent events that put a bearish light on the automotive industry, it still is poised for growth in the future. Analysts believe that the total vehicle sales will surpass 69 million units in 2023, and reach around 74 million in 2024. For the current year, some of the fastest-growing automotive stocks include Modine Manufacturing Company (NYSE:MOD), Carvana Co. (NYSE:CVNA), and Li Auto Inc. (NASDAQ:LI).
A wide view of a large auto dealership, its showroom packed with different types of cars. Editorial photo for a financial news article. 8k. --ar 16:9
Our Methodology
For this article, we made a list of companies whose main source of revenue was related to the auto industry, including auto parts and used car sales. After that, we chose the fastest-growing auto stocks according to the 1-year growth in their stock price. We only chose the stocks that are either traded on NYSE or NASDAQ. We also skipped the stocks with a market cap below $2 billion or a stock price of under $5 as of October 20, due to the high volatility of small-cap and penny stocks.
We listed the companies according in an ascending order of their stock price growth percentage as of October 20.
10 Fastest Growing Auto Stocks to Buy
10. Toyota Motor Corporation (NYSE:TM)
1-year stock price growth as of October 20: 28.75%
Toyota Motor Corporation (NYSE:TM) is one of the biggest automotive manufacturers in the world and achieved this status in 2008. The company manufactures cars, trucks, hybrids, minivans, and more and they are sold in 170 countries and territories.
In Q2, hedge funds were substantially more bullish on the company stock as 13 hedge funds owned Toyota Motor Corporation (NYSE:TM)’s stock, compared to 7 in the previous quarter.
The Japanese automaker experienced a good month in September in the U.S. sales-wise as the total vehicle sales saw a 13.9% YoY increase at 203,904 units sold while Q3 sales figures showed a 12.2% YoY growth with 590,296 units sold.
To catch up with its rivals, Toyota Motor Corporation (NYSE:TM) announced a deal with Idemitsu Kosan (OTCPK:IDKOY) on October 12 for the production of solid-state batteries to bring about innovation for the future of electric vehicles. The automotive giant expects massive-scale production of solid-state batteries to start around 2027 or 2028.
Toyota Motor Corporation (NYSE:TM) is one of the fastest-growing auto stocks to buy along with Modine Manufacturing Company (NYSE:MOD), Carvana Co. (NYSE:CVNA), and Li Auto Inc. (NASDAQ:LI).
9. PACCAR Inc (NASDAQ:PCAR)
1-year stock price growth as of October 20: 32.97%
PACCAR Inc (NASDAQ:PCAR) is a Washington-based multinational automotive company that is famous for designing and manufacturing trucks. The company also operates a parts division called PACCAR Parts, and a financial services division called PACCAR Financial and produces and distributes industrial winches under the names of Braden, Carco, and Gearmatic. Meanwhile, it sells its vehicles under the brand names, Kenworth, Peterbilt, and DAF. With a 1-year stock price growth of 32.97%, PACCAR Inc (NASDAQ:PCAR) takes the 9th spot on our list of fastest-growing auto stocks.
In Q2, 37 out of 910 elite hedge funds tracked by Insider Monkey were bullish on PACCAR Inc (NASDAQ:PCAR) with a total stake worth $951 million. Among them, Ken Griffin’s Citadel Investment Group increased its holding in the company by 13% and owned nearly 3.825 million company shares worth $319.95 million, making it the biggest stakeholder in the company.
On October 16, JP Morgan analyst Tami Zakaria maintained an Overweight rating on PACCAR Inc (NASDAQ:PCAR)’s stock and raised its price target to $105 from $97.
Madison Investments mentioned PACCAR Inc (NASDAQ:PCAR) in its second quarter 2023 investor letter. Here is what it said:
“In the second quarter, the top five contributors to performance were Alphabet, Copart, Alcon, Parker-Hannifin, and PACCAR Inc (NASDAQ:PCAR). At truck manufacturer PACCAR, operating margins remain strong, supported by new truck models, improved manufacturing efficiency, and a growing aftermarket parts division.”
8. Stellantis N.V. (NYSE:STLA)
1-year stock price growth as of October 20: 40.79%
Stellantis N.V. (NYSE:STLA) is a well-known car manufacturer that came into being as a result of a merger between the Italian-American giant, Fiat Chrysler Automobiles (FCA) and the French PSA Group. One of the fastest-growing automotive stocks, Stellantis N.V. (NYSE:STLA) sells automobiles under various brands, including but not limited to, Alfa Romeo, Citroën, Dodge, Fiat, Jeep, Chrysler, and Vauxhall. It distributes accessories, parts, and related services through its brand, Mopar while its Spoticar brand is responsible for selling used cars.
In Q2, Stellantis N.V. (NYSE:STLA) expanded its portfolio by making multiple massive investments. On October 5, the company announced that it made a $90 million investment in Argentina Lithium & Energy Corp. (OTCQB:PNXLF), acquiring a nearly 20% stake. On October 11, the company made an investment in McEwen Copper Inc., a subsidiary of McEwen Mining Inc. (NYSE:MUX), of 42 billion Argentinian pesos (1 ARS = $0.0029) and this was in addition to its ARS 30 billion investment that it made in February 2023. Lastly, on October 19, it was reported that Stellantis N.V. (NYSE:STLA) purchased 12.3 million shares of Archer Aviation (NYSE:ACHR) for $5.68 per share and now owns a total of 31.04 million shares of the company.
Stellantis N.V. (NYSE:STLA) was mentioned in Miller Value Partners’ second-quarter 2023 investor letter. Here is what it said:
“We initiated a starter position in Stellantis N.V. (NYSE:STLA), which makes Jeep, Dodge and Fiat cars. The company has a nearly 8% dividend yield with enough net cash (cash minus debt) on the balance sheet to cover the dividend for almost five years. The company trades at 1.7x operating profits, which means the market is already expecting a likely drop in cash flow. Still, the shares appear to be worth meaningfully more than where they trade, and management is heavily aligned with stockholders with a 14% stake. They share our view that the valuation is compelling, as the company plans on repurchasing ~3% of shares outstanding this year.”
7. Honda Motor Co., Ltd. (NYSE:HMC)
1-year stock price growth as of October 20: 47.28%
Honda Motor Co., Ltd. (NYSE:HMC) is a Tokyo-based automotive corporation that is famous for producing motorcycles and automobiles while also selling power products. It is one of the fastest-growing car stocks and has a foothold in North America, Europe, the Middle East, Africa, and Asia.
Earlier in 2023, Honda Motor Co., Ltd. (NYSE:HMC) announced its plan to go full electric by 2040 and has been taking steps to fulfill that goal. The sales of the company’s new EV models are set to be in 2024 in the U.S. and Japan. On September 28, it announced that it will be collaborating with EVgo Inc. (NASDAQ:EVGO) to provide various perks to eligible Honda and Acura EV drivers like access to EVgo’s 900 public fast charging locations, charging credit, and more. Furthering its efforts to achieve its goal, on October 12, Honda Motor Co., Ltd. (NYSE:HMC) announced a partnership with Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) to monitor and improve energy management by optimizing the usage of Honda Motor Co., Ltd. (NYSE:HMC)’s mini-EV model battery.
Honda Motor Co., Ltd. (NYSE:HMC) did exceptionally well in the U.S. as it sold more than 115,000 units in September and 339,143 vehicles in Q3, marking a growth of 45.5% YoY and 52.7%, respectively.
ClearBridge Investments mentioned Honda Motor Co., Ltd. (NYSE:HMC) in its fourth quarter 2022 investor letter. Here is what it said:
“We elected to exit Honda Motor Co., Ltd. (NYSE:HMC), a manufacturer of cars, motorcycles, general-purpose engines, and a range of other power products in the consumer discretionary sector. The company has struggled to make progress in improving its recent mediocre sales trends while its current plan for transitioning to electric vehicles and motors is less compelling than its more transparent peers. Given the risk of the Japanese yen strengthening as yet another headwind to the company’s intermediate performance, we elected to close the position in favor of other opportunities.”
6. Allison Transmission Holdings, Inc. (NYSE:ALSN)
1-year stock price growth as of October 20: 48.48%
Allison Transmission Holdings, Inc. (NYSE:ALSN) is an Indiana-based company that manufactures automatic transmissions and hybrid propulsion systems. The company’s primary clients are vehicle manufacturers but its products are used across several sectors, including construction and military. Most recently, Allison Transmission Holdings, Inc. (NYSE:ALSN) announced that it will provide propulsion solutions for the Hanwha Defense System’s infantry fighting vehicle, Redback. The Redback was selected for Australia’s latest armored vehicle project.
In the second quarter, 33 out of 910 elite hedge funds tracked by Insider Monkey held a stake in Allison Transmission Holdings, Inc. (NYSE:ALSN), up from 26 in the first quarter. AQR Capital Management was the company’s most prominent hedge fund holder in Q2 with over 3.3 million shares worth nearly $188.499 million.
Modine Manufacturing Company (NYSE:MOD), Carvana Co. (NYSE:CVNA), and Li Auto Inc. (NASDAQ:LI) are some of the fastest-growing auto stocks to buy along with Allison Transmission Holdings, Inc. (NYSE:ALSN).
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Disclosure. None. 10 Fastest Growing Auto Stocks to Buy is originally published on Insider Monkey.
