We recently compiled a list of the 10 Best Self Driving Car Stocks To Buy Now. In this article, we are going to take a look at where Honeywell International Inc. (NASDAQ:HON) stands against the other self driving car stocks.
Advancements in artificial intelligence, data analysis, and machine learning are shaping how industries perform today. These three technological advancements have enhanced the potential of autonomous vehicles and Advanced Driver Assistance Systems (ADAS).
However, are the consumers ready to put their hands off the driving wheel and trust self-driving vehicles? Let’s explore how the autonomous driving industry is progressing with almost all major automotive manufacturers investing significantly to put their Full Self Driving (FSD) cars on the road.
The Global Autonomous Vehicle Industry
According to a report by Mordor Intelligence, the global autonomous vehicle market is valued at $41.10 billion in 2024. The market is expected to grow at a compound annual growth rate of 22.75% to reach $114.54 billion by 2029. The COVID-19 pandemic hindered the overall output of the automotive industry thereby delaying the production and roll-out of self-driving cars. In addition, increased government regulations to ensure road safety have also proved to be a barrier for automakers. However, with significant improvement in software and hardware technology backed by artificial intelligence, we see automakers rolling out their Level 2 and Level 3 autonomous cars on public roads.
For instance, on June 25 CNBC reported that Waymo a leading autonomous vehicle company, opened its self-driving robot taxis for users in San Francisco. The company claims that more than 300,000 people signed up for the service. To cater for the growing number of users Waymo One has rolled out a fleet of 300 cars in the city.
According to a survey by McKinsey & Company, automotive market leaders believe the autonomous segment to be less fragmented due to the complexity and investment involved in its operations. As per the survey, 15% of the respondents believe North America will have most companies working and deploying autonomous technology in the future. In contrast, 38% of respondents believe the European market to be led by at most two or three companies.
Regionally speaking, China and North America are leading the race to become the first countries to roll out Level 4 highway pilot technology. Respondents of the survey are equally divided with 58% believing either country could be the first in Level 4 technology.
As mentioned above, developing and rolling out autonomous vehicles requires a huge investment in software technology. However, the investment is also expected to return high margins. The survey found that experts believe autonomous vehicle software is expected to have an average margin of 15% and hardware technology will add another 10% to the margin, thereby making the autonomous vehicle segment a lucrative venture for automotive companies.
Latest Trends in the Autonomous Vehicle Industry
Emerging trends in the autonomous vehicle industry are paving the way towards achieving level 5 autonomy. Some of the latest developments in the industry include, the use of Internet of Things (IoT) to allow vehicles to connect with other vehicles, its environment, and the internet. This not only improves the vehicle safety by providing quick data acquisition and analysis to make timely decisions based on the traffic changes on the road. New sensor technologies such as the LiDAR scans the surrounding of the car using laser technology. When these LiDAR sensors move continuously using multiple laser sensors they create a 3D representation of the surrounding ensuring the vehicle drives safely without collision. Almost all level 3 autonomous vehicles use LiDAR scanners to enhance vehicle visibility to around 300 meters during daytime.
Moreover, advancements in artificial intelligence such as object detection algorithms along with the LiDAR help the vehicle detect pedestrians, traffic signs, and other vehicles on the road. Other deep learning algorithms are helping improve the user experience by enhanced voice recognition, gesture recognition, and sentiment analysis to help interact with the vehicle efficiently. Last but not the least, Big Data analysis techniques are being utilized by autonomous automakers to improve vehicle autonomy through analyzing data collected through radars, scanners, and cameras.
Our Methodology
To compile the list of the 10 best self-driving car stocks to buy, we looked at autonomous driving stock holdings of the Global X Autonomous & Electric Vehicles ETF. We selected the top 20 stocks from the ETF holdings and ranked the stocks that were the most widely held by institutional investors, as of Q1 2024. The list is in ascending order of the number of hedge fund holders for each stock.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A shot of a commercial plane with a blur of color in the background, representing the production of auxiliary power units in the Safety and Productivity Solutions segment.
Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 52
Honeywell International Inc. (NASDAQ:HON) is a diversified technology company that operates in the aerospace, automation, industrial automation, and energy solutions industries. The company through its Performance Materials and Technologies provides software applications that control and optimize automation including sensors, switches, control systems, and video surveillance. The company also offers consultation to manufacture automation end products including computer chips, controls for sensing, and other related software. It is one of the best autonomous driving stocks as it was held by 52 hedge funds in the first quarter of 2024, with total stakes worth $1.18 billion. Diamond Hill Capital is the top shareholder of the company, with a position worth $242.14 million as of August 11.
The company plays an integral part in the autonomous vehicle industry by providing advanced technologies that enhance safety, accuracy, and operations to automotive manufacturers. For instance, Honeywell’s Inertial Measurement Units are pertinent for the functionality of these vehicles, they help determine exact location and trajectory of autonomous cars. VSI labs, which is a leading researcher of active safety and automated vehicle technology is using Honeywell’s IMUs to determine standards for successful self driving cars.
Honeywell International, Inc. (NASDAQ:HON) posted a strong second quarter of 2024, with both revenue and earnings beating analyst estimates. The company’s organic sales grew 4% year-over-year to reach $9.6 billion, beating the expectations of $9.4 billion. Moreover, the company reported earnings per share of $2.49 again beating analyst expectations of $2.42. The growth in sales was led by its Commercial Aerospace, Defense and Space, and Building Solution segments, which posted double-digit organic sales of 16% during the quarter. In addition, Honeywell International, Inc. (NASDAQ:HON) was also able to increase its order backlog by 5% during the quarter to maintain the record level of $32 billion. Financially speaking the company was able to keep its free cash flow flat at $1.1 billion year-over-year. The company’s full-year guidance sits at organic sales growth of 5% to 6%, with overall margins between 23.3% and 23.5%.
Should you invest in Honeywell International Inc. (NASDAQ:HON)?
The company has not only delivered a strong financial 2nd quarter of 2024 but has a history of generating stable revenue. The company has grown its revenue by 3.21% and net income by 6.09% over the past 3 years. 26 analysts have a consensus Buy opinion on the stock, with their 12-month median price target of $226 presenting an upside of 14% from current levels.
Overall HON ranks 8th on our list of the best self driving car stocks. While we acknowledge the potential of HON as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
