The auto industry has bounced back well in June after many stocks fell in May due to tariff and trade war fears. With that being said, here are a few stocks that may outperform their peers and continue to add to their recent gains.
All these auto industry stocks currently hold a Zacks Rank #2 (Buy) or better.
Asbury Automotive Group Inc. ABG
Zacks Rank #2 (Buy)
Atlanta-based Asbury Automotive Group is a Fortune 500 company that owns and operates over 90 automobile retailers across 10 states. Asbury currently boasts an overall “A” VGM (Value, Growth, and Momentum) grade in our Style Score system, along with its Zacks Rank #2 (Buy). Asbury’s PEG ratio of 0.64 is significantly below the industry average, which is currently 1.49. Over the past 5 years, ABG has traded with a PEG significantly closer to industry average than its current value. Asbury over the past 5 years had a median PEG of 0.78, compared to the industry median of 0.96. Over the past 8 months, the gap between ABG’s PEG and that of the industry has widened significantly. These numbers suggest that ABG is currently somewhat undervalued and is part of the reason it earns an “A” for Value.
Additionally, Asbury is expected to have some solid growth. Zacks Consensus Estimates call for revenue growth of 3.85% in fiscal 2019, which will fuel 7% earnings growth. Looking further ahead, fiscal 2020 is projected to bring further revenue and earnings growth, 0.83% and 2.20%, respectively, on top of their fiscal 2019 numbers. This projected growth would bring 2020 EPS to $9.19 compared to just $8.41 in 2018. YTD, ABG is up 24.3%, significantly outperforming the S&P 500.
Valeo S.A. VLEEY
Zacks Rank #1 (Strong Buy)
Valeo is a French-based company that supplies products to automakers and the aftermarket. Valeo’s stock has had a very poor past 12 months, falling 40.6%. With that being said, the stock has gained 25% since the start of June and the company’s projected growth could help to continue this bounce back. Zacks Consensus Estimates call for fiscal 2019 earnings to fall 6%, while revenue are set to grow 6%. But, fiscal 2020 looks much better, with earnings expected to surge 30.94%, along with 5.68% revenue growth on top of their respective fiscal 2019 figures. In terms of P/E, VLEEY is currently trading at an 8% discount to its industry average.
Ferrari N.V. RACE
Zacks Rank #2 (Buy)
Headquartered in Maranello, Italy, Ferrari is a luxury sports car manufacturer. Ferrari’s stock has performed extremely well YTD, with a 60.7% gain. RACE has significantly outperformed its industry’s 21.5% average and done even better when compared to the S&P 500, which has gained 14.9% YTD. Ferrari is expected to have strong growth over the next two years. Our Zacks Consensus Estimates call for fiscal 2019 revenue growth of 4.94%, which is set to help boost bottom line growth by an estimated 2.49%. On top of these numbers, fiscal 2020 is expected to see earnings growth of 9.47%, on the back of 7.84% revenue expansion. Based on these estimates, fiscal 2020 EPS is expected to be $4.51 per share, $0.49, or 12%, higher than 2018’s EPS. Ferrari stock has been on a tear of late and the expected growth could help drive RACE stock higher.
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Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
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