Shift Into High Gear with These 3 Auto Stocks Primed for December Rally

Rising consumer demand for new vehicles and stabilizing inventory levels, alongside an intensified global shift toward electric vehicles (EVs), set the stage for robust growth within the automotive industry. Therefore, quality auto stocks Isuzu Motors (ISUZY), Suzuki Motor (SZKMY), and REV Group (REVG), primed for the December rally, could be noteworthy portfolio additions now. Read on….

The future horizons of the automotive industry appear promising, underpinned by robust demand for new vehicles, ascending trends within supply-chain conditions, and a brisk transition towards EVs spurred by favorable government incentives. The infusion of advanced technologies further consolidates the potential growth within the sector.

Given the industry’s bright growth prospects, investors could invest in fundamentally sound auto stocks Isuzu Motors Limited (ISUZY), Suzuki Motor Corporation (SZKMY), and REV Group, Inc. (REVG).

Despite grappling with inflation, semiconductor shortages, and supply chain disruptions, the global automotive industry has successfully sustained operations, met customer needs, and charted strategic transit routes for growth.

In November, new vehicle sales in the U.S. reached 1,242,376 units, marking an 8.8% year-over-year rise. Fueled by efficient inventory management and strong consumer demand, global auto sales could reach 86.80 million units in 2023.

As 2024 approaches, S&P Global Mobility predicts 88.3 million new vehicle sales globally owing to improved demand and supply chains. As per Statista, production of motor vehicles in the U.S. is projected to reach 11.7 million units by 2025. The global automotive market is expected to increase at a CAGR of 3% to $3.58 trillion by 2031.

EV sales have been rising rapidly, setting records in the third quarter. In November 2023, monthly sales of battery electric vehicles (BEVs) and plug-in hybrids (PHEVs) worldwide hit a new record of 1.4 million units, up from 1.1 million units in November 2022. The sales are expected to remain robust in December as well.

Driving this surge in EV adoption are the advantageous tax incentives offered on their purchase, recently extended even to used vehicles. Additionally, state-of-the-art digital technologies like the Internet of Things (IoT), AI, and blockchain are ushering in significant transformations in the manufacturing processes within the automotive industry.

In light of these encouraging trends, let’s look at the fundamentals of the three Auto & Vehicle Manufacturers stocks, beginning with number 3.

Stock #3: Isuzu Motors Limited (ISUZY)

Headquartered in Yokohama-shi, Japan, ISUZY is a global manufacturer of commercial vehicles, light commercial vehicles, diesel engines, and components. Their product range includes trucks, buses, SUVs, and industrial engines. The company also offers after-sales services, vehicle leasing, and maintenance contracts.

The company pays $0.58 dividends annually, equating to a yield of 4.53% on the current market price. Its four-year average dividend yield is 3.78%. ISUZY’s dividend payments grew at 29.2% and 4.7% CAGRs over the past three and five years, respectively.

ISUZY’s trailing-12-month ROCE, ROTC, and ROTA of 12.39%, 8.51%, and 5.24% are 8.6%, 41%, and 31.4% higher than the industry averages of 11.40%, 6.04%, and 3.99%, respectively. Its trailing-12-month EBIT margin of 8.52% is 13.6% higher than the industry average of 7.50%.

Its revenue and EBITDA grew at 21.7% and 33.6% CAGR over the past three years, respectively. Over the past three and five years, ISUZY’s total assets grew at 16.3% and 9.3% CAGRs, respectively.

During the six months that ended September 30, 2023, ISUZY generated net sales of ¥1.64 trillion ($11.55 billion), up 9.7% year-over-year. Its gross profit and operating income grew 17.8% and 27.6% year-over-year to ¥327.93 billion ($2.31 billion) and ¥143.20 billion ($1.01 billion), respectively.

Net Income attributable to owners of parent and net income per share stood at ¥88.11 billion ($621.24 million) and ¥113.66, both up 20.7% year-over-year. The company’s cash and cash equivalents at the end of the period amounted to ¥379.44 billion ($2.68 billion), up 5.7% from the prior-year period.

Street expects ISUZY’s revenue to grow 151.2% year-over-year to $24.19 billion for the fiscal year ending March 2024. The company surpassed the revenue estimates in each of the trailing four quarters, which is impressive.

Shares of ISUZY soared 8.1% year-to-date to close the last trading session at $12.55. Over the past nine months, it gained 3.9%.

ISUZY’s POWR Ratings reflect its robust prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

ISUZY has an A grade for Value and a B for Stability and Quality. Within the Auto & Vehicle Manufacturers industry, it…