5 Top-Ranked Auto Stocks Poised To Pop

The technological changes will generate demand for new components that are also likely to bring about changes in the supply chain.

Additionally, there’s an ongoing change in the way people shop for cars that has been accelerated by the pandemic. So consumers, who are increasingly doing their research online, are displaying a growing preference for choosing their cars online. So they are engaging with digital showrooms and review videos, and are willing to try virtual reality (VR) test drives. They still like to touch and feel, however, so the ideal at the moment seems to be to choose online and test drive at home before buying.

With the pandemic hitting this year, the shared economy has taken a hit, as people prefer owning their cars once again. While the vaccine remains good news for the Ubers and Lyfts, this is one change we should expect to last, at least for a few years. As far as 2021 is concerned, Fitch Ratings estimates that light vehicles will grow 10% to 15.6 million units from its estimated 14.2 million units in 2020, remaining about 8% below 2019 levels, even with broad availability of vaccines by mid-year.

Zacks estimates that the sector will grow earnings 60.1% in the fourth quarter of 2020 on revenue that will grow 1.7%. This compares with earnings growth of 45.8% on revenue that declined 2.2% in the third quarter.

Given the above, it’s clear that there are a number of challenges facing the industry at the moment that may also be viewed as opportunities by the ones able to grab them.

Many auto players look attractive at the moment, but here’s a list of those with a Zacks Rank #1, Zacks Industry Rank >20, VGM Score of A or B, and attractive estimate revision trend. They are also undervalued.

Standard Motor Products, Inc. (SMP Quick Quote SMP - Free Report)

HarleyDavidson, Inc. (HOG Quick Quote HOG - Free Report)

Honda Motor Co., Ltd. (HMC Quick Quote HMC - Free Report)

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