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Auto Stock Roundup: TSLA to Enter S&P 500, GM to Rev Up EV Investment & More

Last week, European Automobile Manufacturers Association disclosed passenger car sales in Europe. Registration of new cars in the European Union (EU) totaled 953,615 units for October, down 7.8% year over year. Passenger car registrations in EU during the 10 months ended October 2020 declined around 27% year over year to 8 million units. This marked the worst decline, outpacing the slump during the 2009 financial crisis. (European Car Sales Rebound Falters, Outlook Remains Muted)

On the news front, Tesla TSLA grabbed headlines and its shares rallied around 20% for the week ended Nov 20 on the news that the electric carmaker is set to enter the S&P 500. The S&P Dow Jones Indices announced that Tesla will be added to the closely-followed stock index on Dec 21, before the market opens. It will be one of the largest companies to be added to the S&P 500 in the past decade. Tesla will be among the most valuable companies ever added to the S&P 500 and make up about 1% of the index. Tesla currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, General Motors GM and Ford F participated in the 2020 Barclays Global Automotive Conference held last week. Both the firms outlined their future plans to boost the e-mobility game. 

(Read the Last Auto Stock Roundup here)

Recap of the Week’s Most Important Stories

General Motors announced plans to pump in more funds for electrification development and boosting production in order to roll out more electric vehicles (EVs) sooner than anticipated. Management will increase investment in EVs to $27 billion by 2025 from the budget of $20 billion laid out before the COVID-19 outbreak. Further, by 2025, General Motors plans to roll out 30 electric vehicles globally, more than two-thirds of which will be available in North America. The vehicles will encompass the company’s entire brand portfolio — including Cadillac, Buick, GMC, and Chevrolet — in a range of prices. General Motors has also created a new organization called EV Growth Operations, pioneering on the EV business and hiking customer adoption.

NIO Inc. NIO reported third-quarter loss per ADS of 12 cents, narrower than the Zacks Consensus Estimate of 15 cents and the year-ago loss of 33 cents. The China-based EV maker posted revenues of $666.6 million, up 146.4% year over year. The top line also surpassed the consensus mark of $628 million. Robust deliveries in third-quarter 2020 led to the outperformance.NIO expects fourth-quarter deliveries in the band of 16,500-17,000 vehicles, signaling an uptick of 103% at the mid-point of the range. Fourth-quarter revenues are forecast between $921.8 million and $947.9 million, indicating a year-over-year rise of 123% the midpoint of the guided range.

Cummins Inc. CMI outlined plans on how it intends to evolve the fuel cell and hydrogen production business to further strengthen its base as a global power leader. The company is likely to register electrolyzer revenues of a minimum $400 million in 2025.Cummins expects green hydrogen and fuel cell technology to be adopted over time as it continues to innovate with reduction in costs. The firm is counting on government support to pace up the adoption of hydrogen fuel cell solutions. Cummins intends to cater to those markets wherein it sees prompt acceptance of these technologies via taking advantage of its technology leadership, customer relationships, and application know-how as well as support capabilities. 

Polaris Inc. PII recently announced that its chairman and CEO Scott Wine will depart from the company to assume the CEO’s role in European tractor maker CNH Industrial CNHI. Wine will retain his current role at Polaris through the end of the year to give the company time for the transition.Though the departure of Wine might create short-term hiccups for Polaris, the board seems fairly optimistic for the remainder of the year and into 2021. For full-year 2020, adjusted net income is expected in the range of $7.15-$7.30 per share, indicating a 13-16% year-over-year increase. Sales growth is anticipated within 2-3%. The prior year’s adjusted sales were $6,783 million.

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past six months, all stocks have increased apart from AutoZone. Over the past week, Tesla, General Motors and Harley-Davidson registered gains, with Tesla being the maximum gainer. 

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Ford Motor Company (F): Free Stock Analysis Report
Cummins Inc. (CMI): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Polaris Inc. (PII): Free Stock Analysis Report
CNH Industrial N.V. (CNHI): Free Stock Analysis Report
NIO Inc. (NIO): Free Stock Analysis Report
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