Automobiles have been around for more than a century and are still at the core of our daily transportation, even as the industry constantly evolves. Automobiles are at the heart of current and future transportation, from traditional vehicles to hybrid cars to electric vehicles to flying cars in the air.
The year’s first half proved to be a good start for the automobile industry. As demand for automobiles has increased, more investors are looking to buy automobile stocks.
When everyone is actively looking for an auto stock to invest in, the market can soon get overly saturated. Before it does and this ideal period for auto investment goes away, investors should keep an eye out and find an undervalued auto stock. Thus, below are the three most undervalued auto stocks to buy in July 2024 that will bring investors a major fortune.
Toyota (TM)
For the past four consecutive years, Toyota (NYSE:TM) has been the largest auto company in the world. Last year, it was the only automaker to sell over 10 million vehicles. It has dominated the Asia-Pacific for decades and is a close second manufacturer in the North American market after Ford (NYSE:F).
In the changing automobile market, Toyota has emphasized the importance of both hybrid and electric vehicles. While some of its competitors were quick to fully go electric or invest a hefty sum of money into EVs, Toyota’s strategy has always prioritized hybrid models over fully electric vehicles. This unique policy gives Toyota an edge over other auto companies when pure electric vehicles struggle. Out of the 11.2 million vehicles Toyota sold in 2023, a third of its sales came from hybrid cars.
In addition to great sales and market dominance, Toyota is relatively undervalued, with a forward price-to-earnings ratio of 9.33x. Now is the perfect time for investors to buy Toyota.
BYD Company (BYDDF)
BYD Company (OTCMKTS:BYDDF) is now the largest electric vehicle company globally, beating major competitors like Tesla (NASDAQ:TSLA), General Motors (NYSE:GM), and Volkswagen (OTCMKTS:VWAGY). It owns a little less than 20% of the industry’s market share. This Chinese EV powerhouse has established itself as the cream of the crop with active delivery, consistent performance, and constant improvements.
Last month, BYD recorded another all-time high performance. It sold 341,658 new energy vehicles (NEV), which is an outstanding 35% increase from the same period last year. Sales this June contributed to a larger all-time high in second-quarter sales. This was also a 40% increase in sales year over year. The company also sealed a major $1 billion deal to open an EV factory in Turkey, which will help BYD produce nearly 150,000 vehicles annually. In addition to its dominance in the Asia-Pacific market, deals like these show that BYD is constantly making efforts to expand beyond its domestic market.
With such strong and consistent sales performance, BYD will continue to keep the top EV maker spot for an extended period of time, and now it is the cheapest price investors will be able to buy BYD.
General Motors (GM)
General Motors has been a top player in the auto industry since its founding in 1908.
In April, GM authorized a $6 billion share repurchase, another major stock buyback authorization after the $10 billion authorization in November 2023. In addition, the automobile company increased its dividend payment by 33% from 9 cents to 12 cents per share.
Additionally, GM’s 2024 second-quarter sales were impressive. It sold almost 700,000 vehicles, GM’s highest quarterly sales record since 2024.
While EVs only make up less than 4% of all auto sales for GM, its EV sales are up by 40% compared to the previous quarter, a positive indication that GM is adapting to the global shift toward electric vehicles.
For those looking for an undervalued auto stock, GM is an excellent choice. Its forward price-to-earnings ratio is 5.04x.
On the date of publication, Andy Kim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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July 16, 2024 at 01:45AM
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