It's become a year of both recovery and bubbles.
The stock market has suffered during the pandemic, and while all traditional automaker's shares are dramatically down on price, the EV niche is riding high for the moment. With prices generally low as the pandemic continues to rage across the US, it would seem like a good time to get in and pick up some shares, but we're not recommending that. We are not experts, we are not advisors, and we are certainly not responsible for anyone's investments. We're certainly not making any predictions here, either. If you are thinking of investing, we urge people to do their due diligence and research thoroughly. These are simply the stocks we believe are worth watching for the rest of the year to see how the automotive industry plays out in these tough times.
At the time of writing, Ford stock is sitting around the $6 mark, down from $8 to $9 before the crash. Ford is worth watching for a few reasons. It's one of the likely automakers that the federal government won't allow to fail. However, it shouldn't come to that as, last year, Ford was already exiting the passenger car market and concentrating on its most profitable products - trucks and SUVs. Analysts are still cautious, though, as it's worth remembering that despite looking undervalued right now, Ford does have a debt load, and the Detroit automakers have been losing market share to foreign-based automakers for years. On the positive side, the Blue Oval has just launched the new Bronco and that will please investors.
Tesla stocks, at the time of writing, are riding high at around $1,500 per share. Its stock market performance is still based on potential and industry disruption. The cautious are pointing out that Tesla could be in a bubble as expectations are incredibly high, and execution problems could cause it to pop. Bullish analysts see the possibility, and even probability, that Tesla's stock price could reach $4,000 per share as it expands, and the EV market grows. However, mass adoption is still years away, if it comes at all, and our concern is the stock price is driven by people who have been sold on the idea we'll all be driving EVs in the next year or two.
Nio's shares have just skyrocketed from around $4 to $14 off the back of reported sales, investment from the Chinese government, and Tesla's sudden activity. The electric carmaker is in the Chinese market only for now, and, unlike many automakers, is managing to sell cars. China currently has got the coronavirus under control, and the future looks bright for Nio. Unfortunately, though, this volatile stock has a few danger signs. Mainly, as it's a Chinese company, its hard to guarantee financial reports will be accurate, and China's financial relationship with the world is being stretched thin. The same cautions as with Tesla apply on top of that, so Nio is currently a promising stock, but it's also a bubble that could easily go pop.
Geely is another Chinese company to watch, responsible for brands such as Lotus, Volvo, and Polestar, although it has other significant interests. Those include London Electric Vehicle Company, as well as motorcycle and motorsports ventures. Geely appears to have started its recovery early, and that's generated interest in its stocks that doesn't appear to have hit the mainstream yet. The share price is currently around $2.40 a pop.
Like Ford, GM is one the federal government likely wouldn't allow to fail again. After the previous enormous economic crash, GM was bailed out and earned the nickname Government Motors. It emerged a much stronger company but still managed to reach new stock price lows in March. The buy-in for GM is still low at around $25, which is 40% less than it was just before the crash.
Given that the US is a long way from escaping this financial quagmire while other countries have the virus under control, it's still a medium risk investment. On the positive side, Cadillac has been a solid brand for GM, and its presence in China may help the road to recovery.
Thor is a big player in the recreational vehicle niche. As people avoid air travel and hotels, there's an expectation for a "socially distant" summer. This theory has held up so far, and the company plans to increase production to make up for dealer inventory levels falling in the US and Europe. As an alternative to the major automakers and the volatile EV market, Thor could be one of the smartest plays around right now. If you want a big-brand name to hold your interest, Airstream is one of Thor's many brands. Having dipped to around $35 in March, it has now rallied to over $100 a share.
While Toyota is an obvious choice, Honda is often overlooked when it comes to stock. Honda dropped to just under $20 in March but has been working on a slow but steady turnaround since and now sits at almost $26. The words "institutional demand" get thrown around a lot, meaning Honda has a long-standing reputation that people are always attracted to. That's starting to show as Honda's production gets back underway, and analysts predict a turnaround in revenue in early 2021. Honda has been coy about financial prospects, though, and hasn't offered an outlook for 2021 due to uncertainty with the global pandemic.
If you've been watching the stock market, you will have seen Plug Power's stock surge in a big way. The company specializes in hydrogen fuel cell technology, starting off with forklifts for warehouses. Recently, it started shipping its ProGen fuel cell engines for electric delivery vehicles, and UPS is already a customer. Plug Power isn't a new firm and has been around since 1997. However, its sudden surge on the stock market is down to a report of a 50.65% rise in revenue over the past 12 months. The caution here is that the company has yet to show a profit. However, optimistic traders are betting the when it does start show profit, it'll rise alongside a strong adoption curve for hydrogen technology.
Vroom is a tech-based company that helps people buy and sell new and used cars online, a market with surprisingly low penetration in the US. The e-commerce company went public recently, and Bill Gates' private investment concern is one of its largest shareholders. Vroom reported $1.2 billion in revenue in 2019, and 2020 is looking like a year where people won't be rushing back to use public mass transportation systems.
Having dipped to almost $10, the VW Group is rallying with shares close to $17, not far off its $20 high over the last year. Volkswagen has seen increased sales in China, the largest car market on the planet. It also has a battery of brands at its disposal, including Audi, Porsche, Lamborghini, Bugatti, Bentley, and Bugatti. In 2019, Volkswagen managed to grow its market share in every global region and continue to be a juggernaut that the pandemic can only slow down for now. As far as there can be a solid bet on automaker stocks for the long term, Volkswagen is probably it.
We're seriously not giving advice here. If you are thinking of getting into investing, please consult a financial advisor and follow best practices. The author owns shares in Nio and Plug Power.