In this article, we will take a look at the 5 most promising car stocks according to analysts. To see more such companies, go directly to 11 Most Promising Car Stocks According to Analysts.
5. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
One-year Average Price Estimate: $31.75
California-based EV company Rivian Automotive, Inc. (NASDAQ:RIVN) ranks 5th in our list of the most promising car stocks according to analysts. Earlier this month, Rivian Automotive, Inc. (NASDAQ:RIVN) shares jumped after the company priced its $1.3 billion debt offering.
BofA analyst John Murphy said in a note that the capital raise was expected but it came sooner than expected. The analyst said Rivian Automotive, Inc. (NASDAQ:RIVN) went for the capital raise earlier than expected to ensure “financial resources are sufficient to bridge the company to profitability and avoid larger last minute financing rounds, which may prompt nervousness across the investor base.”
The analyst has a Buy rating on Rivian Automotive, Inc. (NASDAQ:RIVN) shares and a $40 price target, which presents solid upside from the current levels.
At the end of the fourth quarter of 2022, 29 hedge funds reported having stakes in Rivian Automotive, Inc. (NASDAQ:RIVN). The total value of these stakes was $945 million
Baron Asset Fund made the following comment about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q4 2022 investor letter:
“Consumer Discretionary investments along with the lack of exposure to the strong performing Energy sector offset a portion of the above-mentioned gains. Within Consumer Discretionary, the underperformance of electric vehicle (EV) manufacturer Rivian Automotive, Inc. (NASDAQ:RIVN) coupled with lower exposure to this better performing sector hampered relative results. Rivian’s shares fell as investors fretted over the company’s unit economics and how macroeconomic uncertainty is impacting the EV industry.
Rivian Automotive, Inc. is an EV manufacturer producing vehicles for the consumer and corporate delivery van markets. Its shares were under pressure during the quarter. Investors remained focused on the company’s execution challenges, the implied unit economics for its vehicles, and near-term headwinds for the automotive industry stemming from a weaker global economy. Despite these headwinds, we are comfortable with Rivian’s liquidity position and its competitive position within the EV industry, which we believe will continue to grow at impressive rates. Rivian should also benefit from its positive product reviews, its integrated technology approach, and its industry partnerships.”
4. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 32
One-year Average Price Estimate: $286.00
Sports car company Ferrari N.V. (NYSE:RACE) ranks 4th in our list of the most promising car stocks according to analysts. Ferrari N.V. (NYSE:RACE)’s one-year average price estimate is $286. Earlier this month, Morgan Stanley called Ferrari N.V. (NYSE:RACE) its top automobile stock pick. Morgan Stanley’s Adam Jonas believes Ferrari N.V. (NYSE:RACE) is a strong defensive play which avoids the risk and overhype associated with EV stocks.
Jonas thinks in addition to strong fundamentals, Ferrari N.V. (NYSE:RACE) has “levers to pull for both growth or downside protection, within a wide dispersion of macro outcomes.”
Adam Jonas has an Overweight rating on Ferrari N.V. (NYSE:RACE) and a $310 price target.
As of the end of the fourth quarter of 2022, 32 hedge funds reported owning stakes in Ferrari N.V. (NYSE:RACE). The total value of these hedge funds’ stakes is $924 million. The biggest stakeholder of Ferrari N.V. (NYSE:RACE) is Anand Desai’s Darsana Capital Partners which owns a $161 million stake in the company.
3. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 41
One-year Average Price Estimate: $133.00
Although not a pure-play car stock, Ireland-based Aptiv PLC (NYSE:APTV) makes vehicle components that are widely used in the automotive industry. In February, Aptiv PLC (NYSE:APTV) jumped after the company, at an investor event, said it sees a path to a whopping $40 billion revenue and expects margin over 17% by 2030. Currently, Aptiv PLC (NYSE:APTV)’s revenue stands at around $17.5 billion while its margin is 9.1%, as of 2022.
Aptiv PLC (NYSE:APTV) said it will benefit from the new trends like EVs, automation and software usage in cars.
Hedge fund sentiment is strong for Aptiv PLC (NYSE:APTV). Insider Monkey’s database of 943 hedge funds shows that 41 funds had stakes in Aptiv PLC (NYSE:APTV) at the end of the fourth quarter of 2022. The total value of these stakes was $1.5 billion.
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 80
One-year Average Price Estimate: $48.86
US automotives giant General Motors Company (NYSE:GM) ranks 2nd in our list of the most promising car stocks according to analyst. In February, General Motors Company (NYSE:GM) declared a quarterly dividend of $0.09 per share, in line with the previous dividend. The dividend was payable to shareholders on March 16 to shareholders of record as of March 3.
As of the end of the fourth quarter of 2022, 80 hedge funds tracked by Insider Monkey had stakes in General Motors Company (NYSE:GM), up from 74 hedge funds in the previous quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder in the company with a $1.68 billion stake.
ClearBridge Investments made the following comment about General Motors Company (NYSE:GM) in its Q3 2022 investor letter:
“A volatile market can offer attractive opportunities to the patient investor, and we have our pencils sharpened for good entry points in favored companies. In the third quarter we added General Motors Company (NYSE:GM), finding shares overly discounted due to skepticism over earnings in a down cycle. While a slowing economy will clearly impact automotive demand, inventories and production are well below long-term averages, mitigating the risk of cyclical declines. Further, the company is at a technological inflection point we believe is underappreciated as it readies several electric vehicle product launches and scales its automated vehicle offering, Cruise.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 91
One-year Average Price Estimate: $196.67
Despite short-term headwinds and volatility, Tesla, Inc. (NASDAQ:TSLA) remains one of the most promising car stocks according to analysts. According to CNN Business data, Tesla, Inc. (NASDAQ:TSLA)’s median price target for one year compiled based on price estimates of 36 analysts is $210.00, with a high estimate going to $320. Cathie Wood, one of the biggest Tesla, Inc. (NASDAQ:TSLA) bulls, thinks Tesla stock could hit $500 by 2026. According to Yahoo Finance, Tesla, Inc. (NASDAQ:TSLA)’s one-year price target is $196.67, which still shows a decent upside potential from the current levels.
Morgan Stanley’s analyst Adam Jonas recently pointed to a promising new opportunity for Tesla, Inc. (NASDAQ:TSLA): heat pumps. Tesla, Inc. (NASDAQ:TSLA) has already indicated its interests in developing heating devices for homes. Jonas believes with Powerwall and SolarCity, Tesla, Inc. (NASDAQ:TSLA) already has presence in the relevant industry which it could use to boost its heat pumps business.
At the end of the fourth quarter of 2022, 91 hedge funds reported having stakes in Tesla, Inc. (NASDAQ:TSLA), up from 88 hedge funds in the previous quarter.
ClearBridge Large Cap Growth Strategy made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q4 2022 investor letter:
“Tesla, Inc. (NASDAQ:TSLA), meanwhile, also fits squarely within our earnings reset group. We took advantage of its enterprise multiple falling back to historic lows to initiate a starter position in the leading manufacturer of electric vehicles (EV) and developer of battery technologies. Tesla has a significant structural cost advantage in battery production, EV manufacturing and EV selling, which gives it industry-leading operating margins in EVs. As the auto cycle has softened, the stock has sold off substantially with the rest of the automakers, despite EVs continuing to have a secular growth advantage. Tesla has a clean balance sheet with negative net debt and enormous revenue growth, EBITDA growth and free cash flow generation. Its margin buffer also gives the company the ability to cut prices while still protecting earnings better than competitors, which should help support continued volume growth. There is also significant upside optionality driven by its software offerings, which we do not believe is currently priced into the stock.
That being said, Tesla is highly indexed to a flagging auto market and we expect its earnings outlook to worsen in the near term. We are also monitoring increasing EV competition and the recently emerging risks to the brand and management integrity raised by CEO Elon Musk’s actions at Twitter to determine future position size in the portfolio.”
You can also take a peek at 12 Small Cap Stocks with Insider Buying and 12 Best EV Stocks To Buy For 2023.
