When you first start looking at stocks, it can be difficult to know which sector to invest in. With countless categories and industries to consider, why not start with companies that we all know, the ones that take you from A to B? Auto stocks are easy to understand because every person is familiar with their importance in everyday life.
So what auto stocks should beginner investors buy?
This is one company I’m sure you’ve heard of, if not for their efforts in dominating the electric vehicle market but perhaps for Tesla’s (NASDAQ: TSLA) eccentric CEO Elon Musk.
Tesla’s innovative technology and potential for digital disruption in the auto industry have made it stand out in the crowded space against its rivals such as Volkswagen and NIO. In the first quarter, the firm posted revenue of $10.39 billion, up 74% year-over-year thanks to expanding into the Chinese market and launching new models.
One fact I constantly find myself coming back to when explaining why I invest in EV companies is this:
By 2035, all new US vehicles could be required to be electric.
With Tesla leading the pact with its new models and autonomous driving data, this stock is on top of most investors’ lists. In addition, Tesla doesn’t just build vehicles. Musk has his fingers in many pies, including the battery sector and solar energy.
Tesla is currently worth around $650 per share as of July 21. However, Tesla bulls think we’re just at the beginning of seeing what this company can achieve for EVs, renewable energy, and importantly for us, its shareholders.
Ford (NYSE: F) is a classic legacy stock for many investors. Numerous advancements were made in the auto industry because of the company and now it is tackling its next biggest challenge: hybrid and EV models.
Proving that it can keep up with newer companies, Ford is launching a hybrid fusion, all-electric Mustang, an electric F-150, and many other “green” machines in the coming years. What Ford has over rival Tesla is that it is very well established and enjoys visibility plus brand loyalty.
Ford’s EV play is also already paying off, with sales of non-gas-powered cars expanding 117% in June reaching a fresh first-half sales record of 56,570 vehicles. With such a large fanbase for its original cars, impressively, 70% of customers who bought the battery-electric SUV are new to Ford. This proves that its efforts are working as it is capturing lots of new fans.
If this success continues, Ford will become a leading player in the EV space. What’s great about this stock is that it already has dominated a market once, proving it can do it again as the world changes.
3. General Motors
General Motors Company (NYSE: GM) is definitely one stock for beginners to invest in given its sheer size and how well it is playing the EV trend. The U.S.-based car manufacturer also already holds around 17% of the entire U.S. auto market.
Earlier this month, General Motors stated that it sold 688,236 vehicles in the U.S. in Q2, up 40% YoY. These figures were viewed as very impressive given the unique market the company found itself in, with strong customer demand hindered by low inventory due to the global semiconductor shortage.
The Detroit-based firm’s heavy $35 billion EV investment has analysts putting the stock in the ‘disruptive technology’ category alongside Tesla. General Motors has big plans of shaking up the auto space and has announced it will launch 30 new all-electric vehicles by 2025.
Which auto stock should I buy?
With many players in the auto space, we recommend beginner investors focus on the ones that have years of experience dominating the auto sector in their respective lanes. Just like the stocks we mentioned above.
Governments enacting legislation to promote green energy has fueled all-electric vehicles sales. Therefore, the EV race will definitely not be a single-lane winner, meaning there will be room for multiple players.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Content Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.