Top Car Stocks for Q1 2022

POAHY, TSLA, and LCID are top for value, growth, and momentum, respectively

The auto industry is made up of companies that manufacture and distribute vehicles and vehicle parts. The automobile sector has been undergoing significant change since the advent of electric and hybrid technologies, especially in the retail vehicles segment.

Major automakers such as General Motors Co. (GM), Ford Motor Co. (F), and Toyota Motor Corp. (TM) continue to have considerable market share, but newer entrants such as electric vehicle (EV) maker Tesla Inc. (TSLA) are reshaping the sector.

The automobile sector outperformed the broader market over the past year. As of Dec. 6, 2021, the S&P 1500 Automobiles Industry Index posted a 39.6% in one-year trailing return compared with the Russell 1000 return of 24.3%.

Here are the top three car stocks with the best value, the fastest growth, and the most momentum. All numbers below are as of Dec. 7, 2021.

Best Value Car Stocks

These are the car stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Best Value Car Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Porsche Automobil Holding SE (POAHY) 8.33 25.5 3.9
Workhorse Group Inc. (WKHS) 5.01 0.8 4.7
Honda Motor Co. Ltd. (HMC) 28.22 48.5 5.9

Source: YCharts

  • Porsche Automobil Holding SE: Porsche Automobil is a Germany-based holding company whose subsidiaries specialize in the manufacture of cars, SUVs, and sedans. The company owns a majority stake in Volkswagen AG (VOW3).
  • Workhorse Group Inc.: Workhorse Group is an original equipment manufacturer that designs electric vehicles, aircraft, and drone systems. In the third quarter (Q3) of 2021, the company recalled its flagship electric delivery vans (model C-1000), resulting in negative revenues.
  • Honda Motor Co. Ltd.: Honda is a Japan-based global automaker. The company designs and manufactures cars, light trucks, and motorcycles, along with providing vehicle financing. It also produces power products, such as generators and farm machinery.

Fastest Growing Car Stocks

These are the top car stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share (EPS) can be significantly influenced by accounting factors that may not reflect the overall strength of the business.

However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.

Fastest Growing Car Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Tesla Inc. (TSLA) 1014.97 1,019 433.3 56.9
Porsche Automobil Holding SE (POAHY) 8.33 25.5 9.9 647.1
Li Auto Inc. (LI) 28.5 29.4 N/A (see company description) 231.1

Source: YCharts

  • Tesla Inc.: Tesla, the world’s largest automaker by market value, designs, manufactures, and sells electric vehicles. It is also in the business of energy generation and storage products for residential and commercial use. Its fully electric cars include sedans, SUVs, and trucks. On Dec. 6, 2021, Reuters reported that the U.S. Securities and Exchange Commission (SEC) is investigating an alleged failure of the company to inform shareholders and the public for several years about a fire risk in its solar panels.
  • Porsche Automobil Holding SE: See above for company description.
  • Li Auto Inc.: Li Auto is a China-based company that designs, manufactures, and sells electric vehicles. Its flagship vehicle is the Li One, a six-seater premium electric SUV. The company saw a 190.2% YOY increase in car deliveries in November 2021. There is no EPS growth number for Li Auto in the above table because the company had negative net income for the most recent quarter.

Car Stocks with the Most Momentum

These are the car stocks that had the highest total return over the last 12 months.

Car Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Lucid Group Inc. (LCID) 47.27 77.8 378.9
Tata Motors Ltd. (TTM) 31.45 24.0 148.4
Ford Motor Co. (F) 19.14 76.5 108.9
Russell 1000 N/A N/A 24.3
S&P 1500 Automobiles Industry Index N/A N/A 39.6

Source: YCharts

  • Lucid Group Inc.: Lucid, a new entrant to the industry, started manufacturing luxury EVs during Q3 2021 at its plant in Casa Grande, Ariz. On Dec. 6, 2021, the company’s stock plunged as much as 19% after it disclosed in a regulatory filing that it was under U.S. investigation following its merger with a blank-check company. Lucid Group said that it received a subpoena from the SEC on Dec. 3, 2021. The probe is a blow to the emerging EV maker, which saw customer reservations for its vehicles reach 13,000 in Q3 2021, reflecting an order book of about $1.3 billion. The company’s Lucid Air Dream EV has been found to outperform other pure battery EVs by lasting for 520 miles on a single charge. Lucid Air won the 2022 MotorTrend Car of the Year award.
  • Tata Motors Ltd.: Tata Motors manufactures cars, trucks, buses, utility vehicles, and defense vehicles. Its vehicles are sold in several countries, including Australia, the Middle East, South East Asia, South Asia, Africa, Russia, and the Commonwealth of Independent States countries. Apart from commercial and retail vehicles, Tata Motors is also in the business of vehicle finance, information technology, factory automation, and machine tools.
  • Ford Motor Co.: Ford is a major manufacturer of gasoline-fueled sedans, SUVs, trucks, and other vehicles, and it is mounting a major initiative to catch up to rivals in EVs and mobility vehicles. Its financing unit, Ford Credit, has been ranked No. 1 for consumer satisfaction among the nation’s mass market consumer financing brands for five years continuously.

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