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Are There Investing Opportunities in the Auto Stocks in 2023?

Tracey Ryniec
·4-min read

  • (2:00) - Is Now A Good Time To Invest Into Auto Retailers?

  • (11:40) - Regulations For Emissions: Are Car Manufactures Reaching The End of An Era?

  • (19:00) - What Headwinds Does The Automotive Industry Face In The Coming Future?

  • (24:35) - Episode Roundup: AZO, PAG, LAD, CVNA, KMX, GM, F, TM, TSLA

  • Podcast@Zacks.com

Welcome to Episode #359 of the Zacks Market Edge Podcast. Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

 

This week, Tracey was joined by Zacks Stock Strategist, David Bartosiak, who is also the editor of the Blockchain Innovator and Surprise Trader newsletters, to talk about the auto industry in 2023. 

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The average age of the cars on the road in the United States continues to get higher. For both cars and trucks it’s now 12.5 years, the oldest ever. 

Part of the blame falls with the auto industry for making more reliable cars that are simply lasting longer. But another issue is the price of both new and used autos. They are high. How can anyone afford to get a new car anyway? But for investors, the question is where the investing opportunities are this year. 

 

5 Auto Stocks for Your Watch List

 

  • AutoZone, Inc. AZO

AutoZone, the auto parts retailer with stores in the United States, Mexico and Brazil, just reported fiscal third quarter earnings. Same store sales were up 1.9% year-over-year even with weaker than expected sales in March. Shares of AutoZone are flat on the year but it’s been a big 5-year winner, gaining 318% versus just 53% for the S&P 500 during that time. AutoZone isn’t cheap, with a forward P/E of 20. Given the aging car market, should AutoZone be on your watch list? 

 

  • Carvana Co. CVNA

Carvana became a darling of Wall Street during the pandemic but those days are over. Shares of Carvana have fallen 95.6% over the last 2 years, although they have rallied 151% in 2023. Earnings are expected to rise 30% this year to a loss of $6.08 after losing $8.66 last year. Is Carvana moving in the right direction with earnings with the losses expected to narrow? What do Tracey and Dave think about Carvana in 2023? 

 

  • Ford Motor Company F

Ford is expected to see earnings fall 9.6% this year to $1.70 from $1.88 last year. However, the analysts are bullish as 6 estimates have been raised in the last month. Ford shares are down 12.6% over the last 2 years but are up 0.9% year-to-date. Ford remains dirt cheap with a forward P/E of 6.8. It also pays a dividend, currently yielding 5.2%. But is Ford just a value trap this year?

 

  • Toyota Motors Corp. TM

What is happening with the Japanese automakers and EVs? Toyota Motors is one of the most popular of the Japanese auto makers. Earnings for Toyota are expected to rise 14.5% in fiscal 2024 to $15.20 from $13.28 last year. Shares of Toyota are down 13.4% over the last 2 years but are up 2.2% year-to-date. Toyota remains cheap, with a forward P/E of 9.3. It pays a dividend, currently yielding 2.8%. Should Toyota be on your watch list? 

 

  • Penske Automotive Group, Inc. PAG

Penske Automotive Group is an auto retailer in the United States, UK, Germany, Italy, Spain and Japan and also operates commercial truck centers in the US and Canada. Penske was a big pandemic winner and it remains so. Shares of Penske are up 62.7% over the last 2 years, gaining another 24% in 2023. But earnings “peaked” in 2022 and are expected to fall 16% in 2023 and another 4% in 2024. Penske is still cheap, however, with a forward P/E of 9. It also pays a dividend, currently yielding 1.9%.  Is it too late to buy Penske? 

 

What else do you Need to Know about the Auto Stocks in 2023? 

 

Listen to this week’s podcast to find out. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Ford Motor Company (F) : Free Stock Analysis Report

Toyota Motor Corporation (TM) : Free Stock Analysis Report

Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report

AutoZone, Inc. (AZO) : Free Stock Analysis Report

Carvana Co. (CVNA) : Free Stock Analysis Report

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Zacks Investment Research