In this article we will take a look at the 5 best automotive stocks to invest in now. For a detailed analysis of these stocks, go directly to the 10 Best Automotive Stocks to Invest in Now.
5. General Motors Company (NYSE: GM)
Number of Hedge Fund Holders: 70
General Motors Company (NYSE: GM) is a Michigan-based multinational automotive manufacturer. The company makes and sells cars, trucks, crossovers, and automobile parts globally. Some of the famous products of the firm include the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, and Wuling brands. The firm also offers financial and security services for automotive to individuals and businesses. It was founded in 1908 and is placed fifth on our list of 10 best automotive stocks to invest in now.
On April 16, General Motors Company (NYSE: GM) announced that it had signed an agreement with electronics firm LG to build an electric vehicle battery manufacturing plant in the US worth $2.3 billion. Earlier that week, retail giant Walmart had invested in Cruise, a self-driving unit owned by the Michigan carmaker that plans to run self-driving taxi fleets in the Middle East.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in the firm with 72.5 million shares worth more than $3 billion.
4. Baidu, Inc. (NASDAQ: BIDU)
Number of Hedge Fund Holders: 51
Baidu, Inc. (NASDAQ: BIDU) is a Beijing-based multinational technology firm with stakes in the electric vehicle, artificial intelligence, and internet service businesses. Baidu markets self-driving services, including maps, automated valet parking, autonomous navigation pilot, electric vehicles, and robo-taxi fleets. Baidu has teamed up with Chinese carmaker Geely to spend more than $7.7 billion in the next five years on the development of smart cars. The joint venture has been named Jidu Auto and thousands of new workers have been hired to work on it.
Baidu, Inc. (NASDAQ: BIDU) was founded in 2000 and is ranked fourth on our list of 10 best automotive stocks to invest in now. It has a market cap of more than $78 billion and posted an annual revenue of more than $16 billion in December 2020, up from $15 billion reported in the previous year.
At the end of the fourth quarter of 2020, 51 hedge funds in the database of Insider Monkey held stakes worth $4.6 billion in the firm, up from 43 in the preceding quarter worth $2.8 billion.
Longleaf Partners International Fund, in their Q1 2021 investor letter, mentioned Baidu, Inc. (NASDAQ: BIDU). Here is what Longleaf Partners International Fund has to say about Baidu, Inc. in their Q1 2021 investor letter:
“Baidu (3%, 0.70%), the dominant artificial intelligence (AI) company in China, was another top contributor for the quarter. Baidu reported fourth quarter results ahead of the market’s expectation. The advertising business saw gradual recovery compared to the first half of the year. A key area of outperformance was the non-advertising revenue, which grew 52%y year-over-year (YoY) and now comprises 18% of Baidu Core. The total addressable market value of Baidu’s non-advertising business (ex-autonomous driving) is 10x the size of online advertising, and the expected compound annual growth rate (CAGR) to 2025 for non-advertising is three times faster than that of online marketing. The recent YY Live acquisition should help to further boost the non-advertising mix. Baidu’s cloud business grew 67% YoY in the quarter with an annualized run rate of US$2 billion. Baidu also made progress in Apollo, the company’s autonomous driving platform. Apollo has been granted the first driverless testing permit and received the first qualifications for commercialized autonomous driving operations in China. Baidu has set up an EV joint venture with automotive maker Geely, which could accelerate Apollo’s adoption in the industry. In March, Baidu completed a secondary listing in Hong Kong, hedging any potential risks from a forced delisting in the US. The significant investment and market leadership in Chinese autonomous vehicles and AI are material underappreciated sources of value for the company. Baidu issued 10-year bonds at 2.375% last October, which implies a cash flow multiple of 42x. Baidu currently trades at 21x earnings, but excluding cash, listed securities, and investments, and assigning zero value for their loss-making Cloud and A.I. businesses, Baidu trades at 13.4x free cash flow (FCF), equivalent to a FCF yield of 7.5%. In December, the company upsized its buyback program from $3 billion to $4.5 billion to take advantage of its severe undervaluation.
In one of the more dramatic price moves we have seen this year, Baidu’s share price spiked by 57% in the first seven weeks through late-February, after adding 71% in 2020. Taking advantage of this February strength, we cut the Baidu position in half. However, towards the end of the quarter, Baidu’s price plummeted as a result of forced liquidation sale of Archegos Capital Management’s substantial holdings in Baidu by their lenders. On March 26th, banks liquidated their margin collateral in Baidu stock through a series of block trade transactions. A massive $23.7 billion and $12 billion worth of Baidu traded on March 26th and 29th. This huge margin call is completely unrelated to Baidu’s fundamentals and our investment thesis.”
3. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 68
Tesla, Inc. (NASDAQ: TSLA) is a San Carlo-based electric vehicle and clean energy firm owned by billionaire Elon Musk. It is the largest electric vehicle maker in the world by market capitalization. The firm has production facilities in the US, Europe, and China. Tesla also has stakes in the autonomous vehicles business. It was founded in 2003 and is placed third on our list of 10 best automotive stocks to invest in now. Some of the products of Tesla include electric cars, battery energy storage from home to grid scale, solar panels and solar roof tiles.
Earlier this week, Tesla, Inc. (NASDAQ: TSLA) reported record profits of $438 million on revenues of $10.39 billion for the first quarter of the year despite facing supply problems and being involved in safety investigations following a fatal Tesla crash in Texas. The firm said it sold more than 180,000 vehicles in the first quarter of 2021, more than double compared to the first three months of the previous year.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in the firm with 28.9 million shares worth more than $20 billion.
2. Toyota Motor Corporation (NYSE: TM)
Number of Hedge Fund Holders: 11
Toyota Motor Corporation (NYSE: TM) is a Japan-based multinational automotive company. The company makes regular cars, hybrid cars, and has also started growing in the electric vehicle market. Some of the more famous vehicles it makes include the Prius, Camry, JPN TAXI, Avalon, Crown, Century HV, Corolla SD, and Corolla Sport. The firm also provides financial services related to cars and operates in more than 170 countries. It was founded in 1933 and is ranked second on our list of 10 best automotive stocks to invest in now.
On April 27, Toyota Motor Corporation (NYSE: TM) announced that it was purchasing the self-driving unit of ride hailing service Lyft for $550 million. As part of the agreement, the self-driving unit has been tasked to improve the safety of autonomous drives and accelerate the development of self-driving cars for the Japanese carmaker.
At the end of the fourth quarter of 2020, 11 hedge funds in the database of Insider Monkey held stakes worth $797 million in the firm, down from 12 in the preceding quarter worth $698 million.
1. Fisker Inc. (NYSE: FSR)
Number of Hedge Fund Holders: 18
Fisker Inc. (NYSE: FSR) is a California-based electric vehicle automaker. It was founded in 2016 and is placed first on our list of 10 best automotive stocks to invest in now. The company claims that Fisker Ocean, one of the vehicles it is working on, is the most environment-friendly car in the world. Fisker Ocean is an electric-powered SUV made from recycled and vegan materials. The production of this vehicle is expected to begin in 2022. The company has also announced plans to build an electric car with a range of 400 miles on a single charge.
Fisker Inc. (NYSE: FSR) has a market cap of more than $4 billion. On April 23, investment bank Morgan Stanley gave Fisker an Overweight rating and said the electric vehicle manufacturing sector was experiencing underappreciated growth that would accelerate with a new US government keen to reduce greenhouse gas emissions and incentivize EV production.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Adage Capital Management was a leading shareholder in the firm with 2.9 million shares worth more than $42 million.
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