In this article, we will look at 5 best undervalued automobile stocks to buy now. If you want to read our detailed analysis of the automobile industry, you can go to 10 Best Undervalued Automobile Stocks to Buy Now.
5. Honda Motor Co Ltd (NYSE:HMC)
PE Ratio as of July 8: 8.00
Number of Hedge Fund Holders: 12
This June, Honda Motor Corporation (NYSE: HMC) announced that it has formed a strategic partnership with Sony Group Corporation (NYSE:SONY) by which they will jointly develop, manufacture, and sell high-value-added electric vehicles and provide services for mobility. Both companies plan to form a new company dedicated to their joint EV venture in 2022 and expect the company to be fully operational by 2025.
As of July 8, Honda Motor Corporation (NYSE:HMC) has a trailing-twelve-month PE ratio of 8.00 and is offering a forward dividend yield of 5.78%.
At the end of Q1 2022, 12 hedge funds held stakes in Honda Motor Corporation (NYSE:HMC) worth $317.34 million. This is compared to 10 positions in the preceding quarter with stakes worth $327.80 million.
In the first quarter of 2022, Ken Fisher’s Fisher Asset Management raised its stakes in Honda Motor Corporation (NYSE:HMC) by 6%, bringing them to $243.21 million. Fisher Asset Management is the largest shareholder in the company as of Q1 2022.
4. General Motors Company (NYSE:GM)
PE Ratio as of July 8: 5.14
Number of Hedge Fund Holders: 76
On July 1, General Motors Company (NYSE:GM) reported that the company’s vehicle wholesale volumes suffered in the second quarter of 2022 due to supply chain constraints. The company said that it expects its net income for Q2 2022 to fall between $1.6 billion and $1.9 billion. Moreover, General Motors Company (NYSE:GM) reported that it sold roughly 582,000 vehicles in the U.S. in the second quarter of 2022, down 15% year over year. However, for the full year 2022, General Motors Company reaffirmed its net income guidance range of between $9.6 billion and $11.2 billion and its EPS-diluted guidance range of between $5.76 and $6.76. The company also still expects to increase its wholesale volumes increase by up to 30% year over year by the end of 2022.
As of June 5, Barclays analyst Brian Johnson has a $52 price target and an Overweight rating on General Motors Company (NYSE:GM).
In the first quarter of 2022, Berkshire Hathaway raised its stakes in General Motors Company (NYSE:GM) by 4%, bringing them to $2.71 billion. Berkshire Hathaway is the most prominent shareholder in the company.
As of July 8, General Motors Company (NYSE:GM) has a trailing-twelve-month PE ratio of 5.14.
At the close of Q1 2022, 76 hedge funds were long General Motors Company (NYSE:GM) with stakes worth $5.50 billion. This is compared to 90 positions in the preceding quarter with stakes worth $7.13 billion.
Oakmark Funds, an investment management firm, mentioned General Motors Company (NYSE:GM) in its “Oakmark Global Fund” first-quarter 2022 investor letter, here is what the firm said:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
3. Volkswagen AG (OTC:VWAGY)
PE Ratio as of July 8: 5.14
Number of Hedge Fund Holders: N/A
Volkswagen AG (OTC:VWAGY) manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific. The company operates through four primary segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. Some of Volkswagen AG’s (OTC:VWAGY) most prominent brands are Audi, Bentley, Porsche, Lamborghini, Ducati, and Bugatti.
Analysts are bullish on Volkswagen AG (OTC:VWAGY). On May 31, HSBC analyst Edoardo Spina raised his price target on Volkswagen AG (OTC:VWAGY) to EUR 234 from EUR 230 and upgraded the stock to Buy from Hold. On July 7, UBS analyst Patrick Hummel trimmed his price target on Volkswagen AG (OTC:VWAGY) to EUR 230 from EUR 280 and reiterated a Buy rating on the shares.
As of July 8, Volkswagen AG (OTC:VWAGY) has a trailing-twelve-month PE ratio of 5.14 and is offering a forward dividend yield of 4.11%, which makes it an undervalued dividend-paying automobile stock to invest in now.
2. Ford Motor Company (NYSE:F)
PE Ratio as of July 8: 4.06
Number of Hedge Fund Holders: 46
On July 4, Ford Motor Company (NYSE:F) reported that its sales in the U.S. in June 2022, increased by 31.5% year over year to roughly 152,000 units. The majority of share gains came from the company’s F-Series, Explorer, and Expedition vehicles and also the company’s battery-electric offerings. Ford Motor Company (NYSE:F) also reported that its F-150 Lightning was America’s best-selling electric truck in June.
As of June 1, Goldman Sachs analyst Mark Delaney has a $14 price target and a Neutral rating on Ford Motor Company (NYSE:F).
As of July 8, Ford Motor Company (NYSE:F) is offering a forward dividend yield of 3.44% and has a trailing-twelve-month PE ratio of 4.06.
At the close of Q1 2022, 46 hedge funds were bullish on Ford Motor Company (NYSE:F) and held stakes worth $1.23 billion in the company. This is compared to 53 positions in the previous quarter with stakes worth $1.70 billion.
In Q1 2022, D E Shaw raised its stakes in Ford Motor Company (NYSE:F) by 10%, bringing them to $528.36 million. As of March 31, D E Shaw owns over 31.24 million shares of Ford Motor Company (NYSE:F) and is the most prominent shareholder in the company.
Here is what Baron Funds had to say about Ford Motor Company (NYSE:F) in its first-quarter 2022 investor letter:
“Ford (NYSE:F) is another example of typical industrial manufacturing business executive mindsets. The April 18, 2022, Bloomberg Businessweek cover story features Ford CEO Jim Farley behind the wheel of an electrified Ford F-150 Lightning. The article is titled, “Hey Elon, THIS is a truck.” I thought the article was terrific. One idea especially stood out to me. Since the F-150 is such a popular vehicle, it “argued for a gradual approach to electrification. Essentially the company retrofitted an existing F-150 with an electric powertrain rather than develop an entirely new truck.” No all-in financial and operation bet by this company on electrification.”
1. Stellantis N.V. (NYSE:STLA)
PE Ratio as of July 8: 2.72
Number of Hedge Fund Holders: 29
Stellantis N.V. (NYSE:STLA) engages in the design, manufacture, and sale of automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, and production systems worldwide. Some of the most prominent brands under which the company markets its products include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati, and Peugeot.
Analysts are bullish on Stellantis N.V. (NYSE:STLA). On July 7, UBS analyst Patrick Hummel trimmed his price target on Stellantis N.V. (NYSE:STLA) to EUR 18.50 from EUR 25 but reiterated a Buy rating on the shares.
As of July 8, Stellantis N.V. (NYSE:STLA) has a trailing-twelve-month PE ratio of 2.72 and is offering a forward dividend yield of 8.66%, factors that make it rank high among the best undervalued automobile stocks to buy now.
At the end of Q1 2022, 29 hedge funds held stakes in Stellantis N.V. (NYSE:STLA). The total value of these stakes came in at $1.25 billion. This is compared to 23 hedge funds in Q4 2021 with stakes worth $1.25 billion.
As of March 31, Arrowstreet Capital is the leading shareholder in Stellantis N.V. (NYSE:STLA) and owns over 50.6 million shares of the company. The fund’s stakes were valued at $829.49 million and the investment covers 1.03% of its 13F portfolio.
You can also take a look at 10 Electric Car Stocks to Buy for 2022 and 10 Best Self Driving Car Stocks to Invest In.
