These Are the Top Auto Stocks for Next Year
The global automotive industry is at an interesting crossroads heading into 2022. Supply chain constraints have reduced the number of new vehicles available for purchase, which has certainly had a negative impact on earnings for some of the major players in the industry. With that said, some analysts believe that the semiconductor shortage won’t get any worse going forward. If automakers are able to produce even a fraction more than the number of vehicles manufactured in 2021, we could see some big earnings coming out of the top names in the sector.
Investors should also consider the rapidly increasing demand for electric vehicles that could drive profits for many automotive companies next year and beyond. The entire industry will undergo a massive shift as this technology continues to evolve, and the fact that President Joe Biden will be investing billions to accelerate the widespread adoption of EVs should give investors the green light to add shares. A continued economic rebound could also mean more consumer spending next year, which is yet another reason to consider adding auto stocks to your portfolio.
Keep reading below for an overview of the top 3 automotive stocks for 2022.
Ford Motor Company (NYSE: F)
Ford Motor Company could be poised for a big 2022 thanks to intriguing new vehicle launches and an ongoing restructuring plan that is leading to a leaner and more profitable company. The iconic automaker will be launching its highly anticipated Ford F-150 Lightning electric truck in spring 2022, which could become an instant bestseller. The company had to double the model’s planned production after reservations nearly topped the 200,000 mark, which is a good sign ahead of the release. Other new additions to its vehicle portfolio like the Bronco, Mustang Mach-E EV, Expedition, and E-Transit help to round out a strong selection of new vehicles for consumers and commercial customers to choose from next year.
Ford manufactures and sells its well-known brand of automobiles on six different continents, and also provides financial services through Ford Motor Credit. The company’s plans to reduce the amount of debt on its balance sheet is a big positive to consider, as is the recent deal with semiconductor manufacturer GlobalFoundries that should help to boost chip supplies. Finally, the fact that Ford just reinstated its dividend is another sign of a company that is heading in the right direction after years of uncertainty, which makes it a top automotive stock pick for 2022.
If you’re looking for the top dog in the EV space, look no further than Tesla. The company’s industry-leading technology, sleek line of vehicles, and improving operating results have rewarded long-term shareholders in 2021, yet there could be more upside in store next year as well. Shares have taken a sharp downturn in recent weeks thanks to CEO Elon Musk’s sale of roughly 10% of his ownership stake in the company, but investors can breathe a sigh of relief as it looks like he has completed the selling. That could mean Tesla stock is ready to start the year off firing on all cylinders, and there are plenty of reasons to be bullish about the EV leader’s long-term prospects.
Investors should be impressed with the company’s plans to reduce its battery costs by 56% in the coming years, which could further strengthen Tesla’s market position. Additionally, new factories in Texas and Germany should really improve the company’s manufacturing capacity next year. It’s also hard to imagine other EV makers being able to replicate the company’s extensive supercharger network anytime soon, which is another competitive advantage for Tesla that should not be overlooked. Finally, the fact that Tesla is planning to launch new vehicles like the Cybertruck, a semi-truck, and a more affordable electric vehicle, along with a fully autonomous driving solution, could be additional catalysts that help Tesla shares rally during 2022.
Finally, we have Goodyear Tire, a leading tire manufacturing company that should be in for a busy year as the auto industry continues to rebound from the pandemic. Goodyear holds the leading market share in North America, Latin America, China, and India, and plays an important role in the commercial truck industry with its service and tire retreading centers. It’s also an intriguing EV play, as the company recently launched a new tire that is specifically designed for electric vehicles. Electric vehicles tend to be heavier than normal cars and also generate significant noise from tires on the road due to their quiet engines, so Goodyear optimized tires specifically suited for these environmentally friendly automobiles.
Investors should also view the recent acquisition of Cooper Tire as a positive, as this strategic move should lead to strong synergies over the long term. Goodyear reported Q3 results that saw revenue increase by 42% year-over-year to reach $4.9 billion, which might be a sign of good things to come in 2022. This could be one of the most underrated automotive stock picks for 2022, so keep an eye out for buy-the-dip opportunities.
Ford Motor is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.