We recently compiled a list of the 10 Best Car Stocks To Invest In Now. In this article, we are going to take a look at where Autoliv, Inc. (NYSE:ALV) stands against the other car stocks.
The automotive industry has witnessed a constant churn of innovation over the last several decades, with car makers continuously providing drivers with new features. However, there has been a different pace of change lately, with the rapid adoption of electric vehicles (EVs) being the most talked-of topic in the industry.
READ ALSO: 10 Best Used Car Stocks To Buy According to Hedge Funds and 10 Best Self Driving Car Stocks To Buy Now.
A lot of the conversations in the automotive space currently revolve around robotaxis, the autonomous taxis for ride-hailing, especially after Elon Musk unveiled the Cybercab in October this year. His company is showcasing the self-driving two-seater at several key locations across the United States in December, with plans to deploy the autonomous services in California and Texas in 2025.
According to a report in Euro News, global EV sales surged in November, with a record-breaking 1.8 million units sold worldwide, overtaking the record set in the prior month by 100,000 units. China accounted for two-thirds of the sales during the month. Around 15.2 million EVs were sold between January and November, growing 25% year-to-date.
The report stated a 3% decline in EV sales in the region comprising the United Kingdom (UK), the European Free Trade Association (EFTA) and the European Union (EU). With 280,000 units sold in November, annual sales for the region reached 2.7 million units. However, the UK is having an improvement in the second half of the year; sales have grown 17% from last year, driven by the Zero Emission Vehicle (ZEV) Mandate.
China is not only leading the EV market but is also on track to take over the global auto industry because of its massive and growing capacity. Earlier this month, the Council on Foreign Relations (CFR) highlighted that the country’s EV capacity will soon match its domestic auto demand, whereas China’s car production capacity is already half of the global demand for automobiles.
It is projected to have a total output of 20 million electric vehicles in 2024, with production increasing between 4-5 million units annually, helped by heavy investments from Chinese firms to expand production. According to the New York Times, China also has the capacity to produce over 40 million internal combustion engine cars a year.
India’s auto market is also seeing impressive growth, contributing significantly to the global market. Annual production of automobiles in the country stood at 25.9 million units in fiscal 2023. The thriving vehicle market has also resulted in a booming auto components industry, which has grown 11.3% during the first half of FY25, driven by strong demand for larger and more powerful cars.
Methodology
We sifted through screeners to identify stocks in the auto manufacturers, auto parts, and auto dealerships industries. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best car stocks to invest in now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A focus on an anti-whiplash system inside a car, showcasing the detail and precision of the companies automotive parts.
Autoliv, Inc. (NYSE:ALV)
Number of Hedge Fund Holders: 38
Autoliv, Inc. (NYSE:ALV) is an automotive safety supplier for leading car manufacturers worldwide. It has a wide range of product offerings, including airbag protection systems, seatbelts, steering wheels, battery cutoff switches, and inflator technologies. The company has over 60 facilities across 25 countries. Its products save 35,000 lives and reduce around 450,000 injuries every year.
In December this year, the automotive safety systems specialist formed a strategic partnership with Chinese car manufacturer Jiangling Motors Co., Ltd (JMC). Autoliv has supplied seatbelts to JMC for nearly three decades. Under this new arrangement, both companies aim to leverage each other’s strengths to enhance their global presence by bringing new technologies to the market that redefine safety and comfort.
Autoliv, Inc. (NYSE:ALV) is also increasing its footprint in the flying cars segment. The company’s China division in June signed a strategic cooperation agreement with XPENG AEROHT to develop safety solutions for future mobility. XPENG AEROHT is among Asia’s leading flying vehicle innovators.
Despite challenges in the global automotive industry, Autoliv, Inc. (NYSE:ALV)’s financial performance remains resilient. In its recent Q3 2024 earnings call on October 18, the company reported consolidated net sales of $2.6 billion, down 2% from last year due to lower light vehicle production and negative currency translation effects. EPS was posted at $1.84 per share, falling shy of expectations of $2.
Autoliv, Inc. (NYSE:ALV) outperformed the global light vehicle production by 4%. It also posted an 18% year-over-year increase in sales with domestic OEMs in China. During the quarter, the company paid a dividend of 68 cents per share and repurchased and retired 1.33 million shares for around $130 million, reflecting its commitment to a high level of shareholder returns.
Wall Street analysts have a consensus Buy rating for Autoliv, with an average share price upside potential of 31%. According to Insider Monkey’s database for Q3 2024, 38 hedge funds held a stake in the company, making it one of the best car stocks to invest in now.
Overall ALV ranks 8th on our list of the best car stocks to invest in now. While we acknowledge the potential of ALV as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ALV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.