As We Enter 2021, Is There Money to Be Made in the Automotive Industry?

As I was scrolling through the news yesterday, I saw that Ford Motor Company (NYSE: F) announced its fourth-quarter results. I previously held it in my personal portfolio but haven’t looked at it in a while, so of course I clicked to see the results.

Auto sales for Ford in the U.S. fell 15.6% for 2020. This was due to the coronavirus pandemic, decline in commercial fleet sales and tight inventories of its F-150 pickup trucks. The company commented that this is in line with the declines seen in the overall automotive industry.

In 2018, Ford announced it would be discontinuing all passenger cars except the Mustang and focusing more on the booming demand for SUVs, trucks and crossover vehicles. This means that 2019 and 2020 were most likely going to be transitional years anyway.

Ford is now working hard to get more F-150s back into its dealerships from the shutdowns last year and position itself for those forward-looking goals.

Shares are down 3% to where they were one year ago. The company could be a good investment again in the future, but for right now it’s screaming sell, as reflected in its “D” rating.

I headed over to the WeissRatings.com stock screener to take a look at how some of the other companies in the automobiles and components industry are faring.

Using the stock screener on the Weiss Ratings website, I saw that two other companies are rated “Sell” right now — Fiat Chrysler Automobiles N.V. (NYSE: FCAU) and Nissan Motor Co., Ltd. (OTC: NSANY), with “D+” and “D” ratings, respectively.

In the “Hold” range right now — which is a rating between “C-” and “C+” — we have RV companies Thor Industries, Inc. (NYSE: THO) and Winnebago Industries, Inc. (NYSE: WGO), which both saw sales increase due to families wanting a safer way to travel. Shares are up 38% and 26% respectively over the past year.

Toyota Motor Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC), Tesla, Inc. (Nasdaq: TSLA), Ferrari N.V. (NYSE: RACE), General Motors Co. (NYSE: GM) and Harley-Davidson, Inc. (NYSE: HOG) are all rated “Hold” as well.

In fact, there are only two companies in the industry that are currently rated a “Buy”.

First up is Cooper Tire & Rubber Company (NYSE: CTB). The company has been around since 1914 and sells tires throughout Europe, Asia and the Americas. Shares are up 42% in the past year.

The other company rated buy is XPEL, Inc (Nasdaq: XPEL). The company is the leader in protective films for automotive or home/office windows. It also offers automotive surface and paint protection, headlight protection and proprietary software.

It’s strong recognition as a premium brand has allowed it to continue seeing cash flow despite the challenges of 2020. By the end of October, the company had seen more cash flow than the whole of 2019.

And you can bet investors have been taking notice.

Shares are up 237% in the past year.

It’s clear that the automotive industry as a whole needs a little more time to recover. But like always, the Weiss Ratings shows us there are even two opportunities there if you take the time to look.

Best,

Kelly Green