JP Morgan: 2 Auto Stocks To Load Forward In 2021
The U.S. auto industry is looking up despite the COVID pandemic – and this is causing auto watchers and Wall Street analysts alike to lean toward cautious optimism. Customers are starting to buy cars again, as the December figures from Toyota Motor show: The company reported sales of 249,601 vehicles, up 20.4% from the previous year. Now that vaccination rates are rising and spring weather is only a few months away, automakers are forecasting increased demand – and they expect significant year-over-year gains in 2021 as they bounce back from declining sales in the Corona year. ‘ With that in mind, JP Morgan slams two auto stocks in particular, noting that each stock could gain at least 20% over the coming year. We took the two through the TipRanks database to see what other Wall Street analysts have to say about them. Ford Motor (F) Ford Motor is the smallest of the three great Detroiters. However, with a market capitalization of $ 45 billion, Ford shows that “small” is a relative concept. The company also has a loyal customer base and a solid sales foundation that builds on the F-Series pickups. Ford’s third-quarter revenue of $ 37.5 billion showed a turnaround from Corona-induced losses of 1H20. It was the strongest quarter so far for 2020, beating expectations by 13%. Net income for the third quarter was $ 2.34 billion for the third quarter, up 22% year over year. Quarterly performance was supported by 35% market share for F-Series trucks in the US market, a 22% increase in product shipments to China, and Ford Credit’s best performance in 15 years. However, in recent months, Ford has scored a few hits. The company was forced to conduct two safety recalls in the North American market last November for select models of the Taurus, Explorer, Edge and Lincoln Aviator vehicles. Earlier this month, Ford announced that it would post a profit of $ 4.1 billion from the closure of three manufacturing facilities in Brazil. Analyst Ryan Brinkman is reviewing Ford on JPM and identifies several factors that will prop the stock. “We find Ford stock attractive considering that despite a number of significant positive results, the valuation is only close to history, including (1) a radically revamped range of vehicles, including hot launches like the Mustang Mach-E electric crossover, the new one Ford Bronco (>) 190K reservations), Bronco Sport and upcoming F-150); (2) A refreshed F-150 has historically resulted in a significant improvement in North American profitability that we expect by the second quarter of 21. (3) The “Bold Moves” Ford is striving to bring its international activities, including most recently in South America, to the right size. We expect capital to be freed up for initiatives that are likely to reward investors more, such as: B. Electrification and Autonomous Efforts, “Brinkman wrote. Consistent with his bullish comments, Brinkman improved his stance on F from neutral to overweight (i.e. buy) and set a price target of $ 14, an uptrend of 25% for the year ahead (To see Brinkman’s track record, click here.) Overall, Wall Street tends to be cautious here where JPM is willing to take a risk, the stock has 12 recent valuations that consist of 4 buys, 7 holds and 1 sell The shares are selling for $ 11.19 and the average target price of $ 10.01 indicates a downward trend of ~ 11% from current levels. (See Ford’s stock analysis on TipRanks) General Motors (GM) General Motors, known by its initials, is the largest automaker in Detroit with a market capitalization of $ 75 billion and has posted a 58% share gain over the past 12 months and le gaining 210% from its corona-induced low in March. GM’s recent performance has impressed auto industry watchers. The company posted revenues of $ 35.5 billion for the third quarter, the best quarterly revenue of the last four quarters and third quarter results of 19. Earnings were $ 4 billion, or $ 2.78 per share, an increase of $ 3.78 billion 74% compared to the previous year. Fourth quarter results will be released on February 10, but preliminary sales show a 4.8% year-over-year increase, despite US auto sales declining 11.8% over the year. The company outperformed its industry for the fourth quarter and for the full year thanks to its pickup and SUV lines – a testament to the continued popularity of midsize trucks in the consumer market. Other top-selling models include the all-electric Chevy Bolt, whose sales rose 26%, and the classic Chevy Corvette, whose sales rose 20%. GM has also strengthened autonomous vehicle work through the Cruise Division. In January the company presented the Cruise Origin, a production model for a driverless vehicle. The Origin is designed from the start as an autonomous vehicle and therefore does not have a manual steering system. Future production will be concentrated at GM’s Detroit-Hamtramck facility. The vehicle is currently being tested on the streets of San Francisco. In his comments on GM for JP Morgan, analyst Ryan Brinkman sees steady growth ahead. “GM’s global light vehicle production in Q4 20 was + 16% year-on-year, significantly better than expected in mid-October. GM’s fourth quarter production trend outpaced Ford as the UAW strike broke out did not repeat and had a negative impact on both the third and third quarters. ” 4th Quarter 2019 … GM production outside North and South America in Q420 was much better than expected in mid-October, driven by a strong recovery in sales in China, “commented Brinkman. To do this, Brinkman is overweight (i.e. buying) GM stock and his one-year price target of $ 63 shows his confidence in upside potential of 21%. Overall, GM has built its consensus strong buy rating on solid performance that has received 12 buy ratings in the past three months as opposed to just 1 hold. This stock is selling for $ 52.04 and the average target price of $ 55.50 implies an upside of ~ 7%. (See GM Stock Analysis on TipRanks.) To find great ideas for trading auto stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ insights into stocks. Disclaimer: The opinions expressed in this article are solely those of the presented analyst. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.