5 Most Promising Car Stocks According to Analysts

In this article, we discuss the 5 most promising car stocks according to analysts. To read the detailed analysis of the automotive industry, go directly to the 12 Most Promising Car Stocks According to Analysts.

5. ACV Auctions Inc. (NASDAQ:ACVA)

Average Analyst Price Target Upside: 40.17%

Average Analyst Price Target: $20.38

ACV Auctions Inc. (NASDAQ:ACVA) is a New York-based company that provides an online automotive platform for wholesale vehicle transactions and data services.

Over the last three months, ACV Auctions Inc. (NASDAQ:ACVA) was covered by 8 Wall Street analysts, and 7 kept a Buy rating on the stock. The average price target of $20.38 had an upside of 40.17% as of the December 15 market close.

In Q3, 24 hedge funds were bullish on ACV Auctions Inc. (NASDAQ:ACVA)’s stock. With 10.83 million shares worth $164.385 million, Gavin Baker’s Atreides Management was the most significant shareholder in the company.

ACV Auctions Inc. (NASDAQ:ACVA) was mentioned in TimesSquare Capital Management’s second-quarter investor letter. Here is what it said:

“More positive was the 34% climb by ACV Auctions Inc. (NASDAQ:ACVA), a digital marketplace operator for wholesale vehicle sales. They posted solid first quarter results. A recovery in used wholesale volumes was accompanied by improved pricing. Management raised its full-year guidance.”

4. NIO Inc. (NYSE:NIO)

Average Analyst Price Target Upside: 42.36%

Average Analyst Price Target: $18.70 

NIO Inc. (NYSE:NIO) is a Chinese company that designs, manufactures, and sells smart electric vehicles, powertrains, and batteries, as well as provides battery-swapping technologies and autonomous driving technologies.

On December 5, NIO Inc. (NYSE:NIO) released its Q3 earnings result with a non-GAAP EPADS of -$0.31, topping the estimates by $0.05. The revenue grew 46.6% year-over-year (YoY) to $2.61 billion.

On December 6, Reuters reported that NIO Inc. (NYSE:NIO) is planning to spin off its battery manufacturing unit, which could take place as early as the end of the current year. According to sources, the move is to increase the company’s profitability through cost reduction and efficiency improvement.

On December 10, Deutsche Bank maintained a Buy rating on NIO Inc. (NYSE:NIO)’s stock with a $10 price target. The firm mentioned that the company needs to look into its cost structure and right-sizing it.

3. OPENLANE, Inc. (NYSE:KAR)

Average Analyst Price Target Upside: 43.34%

Average Analyst Price Target: $21

OPENLANE, Inc. (NYSE:KAR), formerly KAR Auction Services, Inc., provides a digital marketplace for used vehicles for its customers and sellers in North America, Europe, the Philippines, and Uruguay.

On December 4, OPENLANE, Inc. (NYSE:KAR) announced that it plans to acquire Cox Automotive’s Manheim Canada for $95 million. If the deal goes through, the online auction company will own the Manheim Montreal facility and auction sales, operations, and select staff of Manheim Canada.

3 Wall Street analysts covered OPENLANE, Inc. (NYSE:KAR), and all of them maintained a Buy rating on the stock. As of the December 15 market close, the average price target of $21 represented an upside of 43.34%.

White Brook Capital Partners commented on OPENLANE, Inc. (NYSE:KAR) in its first-quarter investor letter. Here is what it said:

“KAR Auction Services, Inc. (NYSE:KAR): More constrained banks have resulted in higher yields for incumbent non-bank dealer floor plan financing companies. This should positively impact the ability of KAR, a very large dealer floorplan lender, to lend profitably at higher yields.

KAR’s loans are typically installment loans where the principal must be paid along with interest.  Higher yields on still-high used car prices should incentivize dealers to wholesale cars they cannot retail more quickly and to accept lower bids for those cars when they do try to wholesale them. This is a positive for the fundamentals of both company divisions that has gone largely unappreciated.”

2. Driven Brands Holdings Inc. (NASDAQ:DRVN)

Average Analyst Price Target Upside: 47.33%

Average Analyst Price Target: $20.70

Driven Brands Holdings Inc. (NASDAQ:DRVN) is a North Carolina-based company that provides diversified automotive services, including vehicle repair, oil change, paint, collision and cosmetic solutions, and more.

On December 13, Driven Brands Holdings Inc. (NASDAQ:DRVN) reported the launch of its new B2B digital marketplace called Driven Advantage. Through the marketplace, more than 5,000 of the company’s automotive corporate locations, shop owners, franchises, and affiliates will be connected to over 80,000 third-party handpicked products.

According to Insider Monkey’s database, the hedge fund sentiment was positive toward Driven Brands Holdings Inc. (NASDAQ:DRVN) in Q3. The number of hedge funds with investments in the stock was 24 in the third quarter, up from 20 in the previous quarter. Israel Englander’s Millennium Management increased its stake by 140% to 6.775 million shares worth $85.3 million, making it the top investor in the company stock.

Baron Funds mentioned Driven Brands Holdings Inc. (NASDAQ:DRVN) in its third-quarter 2023 investor letter. Here is what it said:

“Driven Brands Holdings Inc. (NASDAQ:DRVN) is the largest automotive services company in North America, providing a range of need-based services to consumer and commercial customers through 4,800-plus locations. The company operates many well-known and trusted brands that provide customers with a full suite of automotive services across paint, collision, glass, vehicle repair, oil change (Take 5), maintenance, and car wash. The stock declined significantly during the quarter after the company reduced its revenue and profitability expectations for the balance of the year, driven by weakness in its car wash business and integration delays in the company’s recent foray into the glass repair segment. The company is now in the process of reviewing each of its car wash locations to determine how they fit in the portfolio and have paused future development as the company implements processes to improve operations and use FCF to de-lever the balance sheet. In glass, while Driven remains encouraged by the long-term potential to consolidate the glass industry, they are a few quarters behind where they anticipated due to integration delays of the recent businesses they’ve acquired. Despite these challenges, we think the stock has overreacted to the downside, and are currently evaluating management’s long-term assumptions calling for EBITDA to more than double over the next three years.”

1. Li Auto Inc. (NASDAQ:LI)

Average Analyst Price Target Upside: 52.18%

Average Analyst Price Target: $53.75 

Li Auto Inc. (NASDAQ:LI) is one of the leading Chinese new energy vehicle manufacturers that designs and builds sport utility vehicles (SUVs). The company is our top stock pick among the most promising car stocks, according to analysts.

On December 1, Li Auto Inc. (NASDAQ:LI) announced that its monthly deliveries in November increased 172.9% YoY to 41,030 vehicles. The CEO and Chairman, Xiang Li, mentioned that the company is set to complete its December monthly delivery target of 50,000 units.

Over the past three months, 4 Wall Street analysts covered Li Auto Inc. (NASDAQ:LI), and all of them kept a Buy rating on the stock. The average price target of $53.75 had an upside of 52.18% as of the December 15 market close.

On November 13, Barclays analyst Jiong Shao raised the price target on Li Auto Inc. (NASDAQ:LI)’s stock to $50 from $48 and maintained an Overweight rating on the shares. The firm highlighted the company’s positive Q3 results and the launch of its first battery electric vehicle.

You can also look at the 13 Cheap Penny Stocks to Buy According to Hedge Funds and the 12 Best Gold Stocks With Dividends.

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