Now that GM and Chrysler are bankrupt and hemorrhaging sales, a
select group of auto stocks will step into the void to gain market
share and see huge growth in 2010.
The December sales figures released on Tuesday showed the best
month for automakers since the August boom caused by "Cash for
Clunkers." This is extremely significant since it shows that
pent-up demand is catching up with consumers and that the worst may
be over for auto stocks that weathered the downturn
Here are my top auto stocks to buy now.
Auto Stock #1 - Honda Motor Co. (
) is Japan's second-largest automaker (after Toyota) and the
world's largest motorcycle manufacturer. Honda's name is synonymous
with fuel efficiency and products include the Civic, Element and
other iconic vehicles - but also top-notch motorcycles, ATVs and
even lawn mowers. This diversification allowed Honda to stay
profitable even as vehicle sales slumped in early 2009, and is
supercharging returns now that sales are picking up. The latest
numbers show Honda sales topping forecasts and growing
significantly worldwide - including a stunning 97% jump in Japanese
sales over last year!
Auto Stock #2 - Thor Industries (
Not your typical vehicle maker,
) specializes in small and mid-sized buses. Its key customers are
local governments, but also include rental car companies and hotels
that have their own private transportation needs. As the recession
has taken hold, many municipalities and businesses are seeing less
revenue and are opting to delay the purchase of bigger buses in
favor for Thor's smaller and more affordable coaches. The company
has grown its profits considerably in each of the past three
quarters, and I expect another strong showing when THO releases Q4
numbers in the coming weeks.
Auto Stock #3 - Kandi Technologies (
Another unconventional auto stock, China's
) is a small company that designs and manufactures all-terrain
vehicles, motorcycles and scooters. The company does the majority
of its business in Asian urban centers, where motorcycles and
scooters are staples since they are more affordable to consumers
with lower income and provide greater mobility and fuel efficiency
than cars. This stock has explosive potential, with shares more
than tripling since October. However, it's a microcap stock that is
thinly traded, so please use a limit order when you buy to prevent
from overpaying for shares.
Auto Stock #4 - Ford Motor Co. (
Back in March, shares of
Ford Motor Co.
) bottomed out at around $1.50 per share, but Ford has not only
struggled back to profitability recently but has managed to show an
impressive rate of growth that could put it in a position for huge
gains in 2010.
The third quarter marked Ford's first quarterly profit since the
beginning of 2008, and the company has consistently blown away Wall
Street's pessimistic forecasts for each of the last three quarters.
The naysayers may be saying that consumer spending remains
relatively weak, and that Ford shares will continue to suffer, but
don't believe it. The December auto sales released on Tuesday show
continued growth for Ford as it eats into the market share of its
competitors. Ford reported an increase of 32% in its sales for
December compared to last year, while GM and Chrysler saw
significant drops. What's more, auto sales in general are growing.
Yesterday's final figure of about 1 million vehicles sold in
December marks the second-best month of 2009 after August, showing
that the industry is looking up for the New Year.
In a nutshell, Ford is raking in a bigger percentage of sales
even as total vehicle sales are growing. The icing on the cake is
that Ford will report its fourth-quarter earnings at the end of
January, and I expect another strong showing. My analysis indicates
that a number of Wall Street experts have revised their estimates
for the company higher, which typically indicates a stock is going
to top forecasts.