Intro

A great option for the value investor

Extreme volatilities in the automotive sector makes this industry one of the best choices for value investors, cheap during recessions and expensive during market peaks. Growing global market and the shift from traditional oil powered vehicles to electrical vehicles are the challenges, automotive companies need to face to become successful in the cyclical automotive sector.

Balancing growth and heavy investments needed to revamp existing models and to release new models and to build next generation models is critical for automotive companies to survive during recessions and to sustain their growth.

Majority of the automotive companies from developed economies does business in most developing economies and their growth is mostly supported by developing economies. As companies in developing countries expand their operations worldwide, so does the market, becoming more global than country(s) specific. These expansions are intensifying the competition and the need for companies to come up with new concepts and styles.

Automotive Sector Recovery

Approximately 17.13 million light vehicles were sold to retail customers in US in 2017, this figure is very close to the 2016 peak of 17.47 million. Total vehicle sales in Canada grew from 1.98 billion in 2016 to 2.07 billion in 2017. Peak sales in both countries represent a strong market for automotive companies at present, driven by growing employment and income. Low interest rates in both countries are at growth friendly levels. Slow and steady growth in employment and consumer confidence in U.S. and Canada signifies a strong near-term future for the automotive companies.

Continue reading to discover our Automotive Sector Top Picks…