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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 2
Top 5 Auto Stocks by Wall Street Ratings in September 2017 PART 2 OF 13

Top 5 Auto Stocks: Why Is Fiat Chrysler at the Top?

Fiat Chrysler stock tops the list

According to data compiled by Reuters, about 44.0% of the 25 analysts covering Fiat Chrysler stock (FCAU) are recommending a “buy.” Another 32.0% have advised investors to remain cautious on the stock and have given it a “hold” recommendation. The remaining 24.0% (or six analysts) have rated it a “sell.”

That puts the Italian-American automaker at the top of our five highest-rated auto stocks that we’re covering in this series.

Top 5 Auto Stocks: Why Is Fiat Chrysler at the Top?

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Solid upside potential despite recent rally

As of September 25, 2017, Fiat Chrysler’s consensus 12-month target price was $20.51. That suggests an impressive upside potential of 17.5% from its market price of $17.51.

In the first half of 2017, FCAU stock rose 16.6%. That positive return was much higher than the broader market (SPY) and peers General Motors (GM), Toyota Motor (TM), and Ford Motor (F).

However, FCAU’s gains in the first half of 2017 were much lower than the price rally it’s seeing so far in 3Q17. In the quarter, the stock has been speeding up its upward journey, trading with outstanding 65.4% quarter-to-date gains.

What could be driving optimism?

In the last five quarters, Fiat Chrysler’s profitability and debt position have improved significantly. Its US retail sales are improving, and efforts to drive its manufacturing efficiencies have helped it boost its profit margins. In the second quarter, FCAU reported an adjusted EBIT (earnings before interest and tax) margin of 6.7%, which was much higher than 5.8% in the same quarter of 2016.

According to a Reuters report, Chinese auto giant Great Wall Motors has confirmed its interest in acquiring part of Fiat Chrysler’s business operations. However, no deal has been finalized yet. The interest in Fiat Chrysler’s business may have encouraged investors.

All these factors could be why Wall Street analysts are still seeing a handsome upside potential for Fiat Chrysler stock.

Next, let’s see which auto stock has made it to second place in our top five stocks based on analysts’ “buy” ratings.

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