HomeMost PopularInvestingSeizing the Wheel: Opportunities in the Foreign Auto Industry

Seizing the Wheel: Opportunities in the Foreign Auto Industry

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Industry Overview

The Zacks Automotive – Foreign industry is revving up amidst a backdrop of sustained global vehicle demand and increasing focus on green energy initiatives. Playing field heavyweights such as Toyota and Volkswagen offer enticing prospects. These companies are involved in designing, producing, and selling vehicles, components, and production systems, with countries like China, Japan, Germany, and India leading the pack in foreign automotive manufacturing.

Key Investing Themes

Registrations in EU to Record Modest Growth: New car registrations in the EU are projected to see a modest rise as the region adapts to stricter emission regulations and expanding charging infrastructure. This shift is expected to drive an uptick in battery-powered electric vehicles sales, aiming for a 20% market share.

China Auto Sales to Rise Despite Economic Headwinds: Despite economic challenges, China’s vehicle sales are predicted to climb, driven by the country’s EV targets and automakers’ innovation sprint. Electric vehicle sales are set to dominate, comprising 44% of all new vehicle sales.

Car Sales in India to Continue Momentum: India’s automotive market continues its upward trajectory, fueled by a growing population, fiscal stimulus, and demand for SUVs. SUV sales are set to increase, maintaining significant dominance in the Indian passenger vehicle market.

Zacks Industry Rank Indicates Rosy Prospects

The Zacks Automotive – Foreign industry holds a strong Zacks Industry Rank, signaling optimistic near-term forecasts. Analysts are bullish on the group’s earnings potential, with a notable 12.5% increase in earnings estimates for 2024.

Industry Tops Sector and S&P 500

The industry has outperformed the Auto, Tires, and Truck sector, along with the S&P 500 composite, with a robust growth of 52.5% in the past year, showcasing a remarkable lead against sectoral and index benchmarks.

One-Year Price Performance

Graph showing One-Year Price Performance

The industry’s valuation, based on EV/EBITDA, is attractive, currently trading at 13.19X compared to the S&P 500’s 15.17X and the sector’s 15.54X. With a historical range of 5.65X to 13.36X (median of 9.02X) over the past five years, the industry is well-positioned for potential growth fueled by its comparative valuation.

EV/EBITDA Ratio (Past Five Years)

Graph depicting EV/EBITDA Ratio over Past Five Years
Graph showing EV/EBITDA Ratio fluctuations

2 Stocks to Grab Right Away

Toyota: Positioned as a front-runner in the automotive landscape, Toyota’s focus on electric and fuel-cell vehicles aligns with the global trend towards eco-friendly transportation. With ambitious EV sales targets for the coming years, Toyota stands out as a solid investment opportunity.

As the foreign auto industry shifts into a higher gear, these two prominent stocks present investors with promising avenues for growth and sustainability. Aiming for the top speeds of global demand and technological advancements, foreign automakers are seizing the wheel of future mobility.

Fueling Growth: A Tale of Toyota and Volkswagen

Fueling Growth: A Tale of Toyota and Volkswagen

The Rise of Toyota

As fiscal 2024 beckons, a glimmer of hope shines upon Toyota like a warm sunrise after a long, dark night. Projections paint a picture of prosperity with revenues and operating income set to soar by 18% and an astoundingly buoyant 79.8%, respectively. Toyota’s dedication to showering shareholders with riches, through dividends and buybacks, stands as a glowing testament to their commitment.

The Toyota Renaissance

In the grand tapestry of financial success, Toyota proudly wears the Zacks Rank #1 (Strong Buy) badge, bedazzling investors with a VGM Score of A. Market pundits whisper of a divine 10% surge in sales and an awe-inspiring 73.6% growth in EPS for fiscal 2024, as per the Zacks Consensus Estimate. A recent upward revision of 83 cents in the earnings forecast for fiscal 2024 only adds cherry on top of this sumptuous feast.

Price & Consensus: TM


Volkswagen’s Electrifying Journey

Behold, the titan from Europe – Volkswagen! In a dazzling display of prowess, the car giant witnessed a 12% surge in deliveries last year, culminating in a staggering 9.24 million vehicles hitting the roads. The winds of change blow mightily with electrification gripping the reins, pushing BEV deliveries to an all-time high of 10% in the final quarter. A remarkable 35% jump in BEV deliveries to 771,100 units in 2023 speaks volumes of the company’s ascent.

Unveiling the Future

The dawn of 2024 unfurls a vivid tapestry of innovation for Volkswagen. Hybrid marvels like the Golf and Passat are set to dance off the assembly lines alongside new all-electric wonders such as the Porsche Macan Electric and Audi Q6 e-tron01. A promise of 30 new products stepping into the spotlight this year underscores Volkswagen’s unyielding dedication to carving a path of innovation and market dominance.

Price & Consensus: VWAGY


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