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Forget Tesla, Volkswagen Is the Automaker Stock I Love (video)
[The Street] It's time to look at auto stocks now that the Detroit Auto Show is over.The Detroit auto show's Car of the Year winners for 2018 are the Honda Accord, the Volvo XC90 and Ford's (F) Lincoln Navigator, but I just can't get excited about any such old-fashioned nameplates. That's the problem facing car companies (and their stockholders) right now. The current products seem like just placeholders until autonomous vehicles hit the market, and auto stocks' chronically low price-to-earnings ratios reflect the lack of enthusiasm toward today's models. In an interview in conjunction with NAIAS, CEO Mary Barra of General Motors (GM) forecast flat earnings for 2018 vs. previous guidance calling for $6.50 a share in 2017 profits. With zero earnings growth, maybe GM's 6.75x forward P/E ratio isn't really that low. If you're going to buy GM now, you basically have to ignore the company's current production -- and ignore the fact that the Chevy Bolt is failing in the marketplace, with only 23,297 units delivered in 2017. Instead, you have to hope for the company's future deliverance -- if it comes -- via upcoming autonomous vehicles with electrified powertrains. Of course, that's a lot of "ifs," and I can see why investors might choose the rapid earnings growth of Amazon (AMZN) or the growth in installed base of Netflix (NFLX) instead. Related: MarketWatch - Volkswagen to invest $3.3 billion in North America Posted by: Besoeker 2018-01-29 |
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