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Top 5 Auto Stocks by Wall Street Ratings in September 2017

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13
Part 3
Top 5 Auto Stocks by Wall Street Ratings in September 2017 PART 3 OF 13

Top 5 Auto Stocks: Why General Motors Is Analysts’ 2nd Favorite

Top 5 auto stocks

In the previous part, we looked at analysts’ recommendations for Fiat Chrysler (FCAU). A majority of analysts recommend a “buy” for FCAU, which makes it the highest-rated auto stock on our top-five list. In the last few quarters, Fiat Chrysler has tried to cut its fleet sales to intentionally increase the contribution of more profitable retail sales in its US sales figure. The first company to begin this practice of intentionally cutting fleet sales was General Motors (GM), which is second on our top five auto stocks list.

Top 5 Auto Stocks: Why General Motors Is Analysts’ 2nd Favorite

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Analysts’ views on GM stock

According to the latest Reuters consensus, 40.0% of analysts covering GM stock have given it a “buy” recommendation. A majority of 56.0% of analysts have given it a “hold” recommendation. The remaining 4.0% expect the stock to underperform and have given it a “sell” recommendation.

In 2016, US auto sales data showed that GM was the largest automaker (IYK) in the United States ahead of Fiat Chrysler (FCAU), Toyota (TM), and Ford (F).

As of September 25, 2017, GM’s 12-month consensus target price was $39.52, which is already about 1.9% lower than its market price of $40.30. According to a report by Business Insider, Morgan Stanley has recently raised its price target for GM stock from $40 to $43.

Recent fundamentals

General Motors has been able to boost its profit margins in the last couple of years. The company’s strategy to focus on retail sales and futuristic technology such as autonomous vehicles, personal mobility, and electric vehicles makes GM stand out among other mainstream automakers.

To compete with Tesla’s (TSLA) Model 3 in the mass electric car segment, GM launched its all-electric car, the Chevrolet Bolt EV (electric vehicle), in 2016.

GM stock continues to be among Wall Street’s top five auto stocks, probably because of its solid fundamentals. As of September 25, 2017, the stock has risen 15.7% year-to-date, which is higher than the 11.5% rise for the S&P 500 index (SPY).

Next, let’s look at the third auto company on our list of the top five auto stocks based on analysts’ ratings.

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