With the increased demand for vehicles in the US, alongside the growing popularity of electric cars, the future for the auto industry looks promising. Therefore, I think investors could watch quality auto stocks Tesla, Inc. (TSLA), Wabash National Corporation (WNC), and Blue Bird Corporation (BLBD) for August, which are poised to capitalize on the industry trends.
In the second quarter, demand for new SUVs, trucks, and cars surged in the US, driving a 16.8% increase in auto sales compared to April through June last year. This was due to pent-up demand following two years of chip shortage-related supply constraints.
Moreover, the demand for electric vehicles (EVs) is soaring as concerns over climate change intensify. Electric vehicle sales continued to rise during the first half of the year to more than 557,000 vehicles, or 7.2% of all new vehicle sales.
In addition, governments worldwide are implementing more stringent regulations concerning emissions, fuel efficiency, and safety. This is spurring innovation and catalyzing the advancement of novel and sophisticated automotive technologies.
The global automotive market is expected to grow to $28.70 billion by 2030 at a CAGR of 4.5%.
Alongside these developments, the growth in the availability of automotive aftermarket parts on e-commerce platforms is a significant trend impacting the US aftermarket automotive parts and components market. Also, the rise of plug-in hybrid and battery electric vehicles is also contributing to its growth.
The US’s global automotive parts aftermarket market is estimated to grow at a CAGR of 7.7% until 2027.
Let us take a look at the above-mentioned stocks to watch:
Tesla, Inc. (TSLA)
TSLA designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. It operates in two segments, Automotive, and Energy Generation and Storage.
TSLA’s trailing-12-month EBIT and EBITDA margins of 13.46% and 17.86% are 83.6% and 67.70% higher than the 7.33% and 10.65% industry averages. Its trailing-12-month net income margin of 12.97% is 203.3% higher than the 4.28% industry average.
On July 19, TSLA announced extensive changes to its Berlin factory, including expanding battery cell production, indicating continued efforts to increase production despite its recent focus on the US.
TSLA’s total revenues increased 47.2% year-over-year to $24.93 billion in the fiscal second quarter that ended June 30, 2023. The company’s non-GAAP net income attributable to common stockholders increased 20.2% year-over-year to $3.15 billion, and its non-GAAP EPS came in at $0.91, representing an increase of 19.7% year-over-year.
TSLA’s revenue is expected to rise 16% year-over-year to $24.89 billion in the fiscal third quarter ending September 2023. The company has also surpassed the EPS estimates in three of the trailing four quarters, which is impressive.
The stock has soared 110.5% year-to-date and 61.5% over the past three months to close the last trading session at $259.32.
TSLA’s POWR Ratings reflect its promising outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TSLA has a B grade for Quality. The stock is ranked #39 among 56 stocks in the Auto & Vehicle Manufacturers industry.
Click here to access additional TSLA ratings for Growth, Value, Momentum, Stability, and Sentiment
Wabash National Corporation (WNC)
WNC designs, manufactures, and distributes connected solutions for the transportation, logistics, and distribution industries, primarily in the United States. The company operates through two segments, Transportation Solutions and Parts & Services.
WNC’s trailing-12-month asset turnover ratio of 1.96x is 146.8% higher than the industry average of 0.79x. Its trailing-12-month ROTC and ROTA of 20.70% and 14.67% are 192.7% and 187.7% higher than the 7.07% and 5.10% industry averages.
WNC pays an annual dividend of $0.32, which translates to a yield of 1.35% on the current price level. Its four-year average dividend yield is 2.10%.
WNC’s net sales increased 6.8% year-over-year to $686.62 million in its fiscal second quarter (ended June 30, 2023). Its income from operations rose 187.7% from the year-ago quarter to $103.31 million. The company’s net income attributable to common stockholders increased 229.8% year-over-year to $74.33 million, while its net income per share grew 234.8% year-to-year to $1.54.
Analysts expect WNC’s EPS to rise 40.4% year-over-year to $1.03 in the fiscal third quarter ending September 2023. Its revenue is likely to increase 3.6% year-over-year to $697.03 million in the same quarter. Moreover, the company has exceeded the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 33.5% to close the last trading session at $23.89.
WNC’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Value and a B in Quality. It is ranked #16 in the same industry.
Beyond what is stated above, we’ve also rated WNC for Stability, Growth, Momentum, and Sentiment. Get all WNC ratings here.
Blue Bird Corporation (BLBD)
BLBD designs, engineers, manufactures, and sells school buses and related parts in the United States, Canada, and internationally. It operates through two segments, Bus and Parts.
BLBD’s trailing-12-month asset turnover ratio of 2.62x is 230.4% higher than the 0.79x industry average.
On June 8, BLBD announced the pricing of an underwritten secondary public offering by certain stockholders of Blue Bird (the “Selling Stockholders”) of 4,500,000 shares of Blue Bird’s common stock, par value $0.0001 per share, at a price to the public of $20.00 per share.
BLBD’s net sales increased 44.7% year-over-year to $299.8 million in the fiscal second quarter that ended April 1, 2023. Its non-GAAP net income came in at $8.60 million, compared to a non-GAAP net loss of $10.13 million in the previous-year quarter. Also, its non-GAAP EPS came in at $0.27, compared to a non-GAAP loss per share of $0.31 in the year-ago quarter.
Additionally, its adjusted EBITDA came in at $19.84 million, compared to an adjusted EBITDA loss of $10.69 million in the year-ago quarter.
BLBD’s revenue is expected to increase 38.3% year-over-year to $285 million in the to-be-announced quarter that ended June 2023. Also, the company has an impressive earnings surprise history, surpassing revenue estimates in three of the trailing four quarters.
Over the past nine months, the stock has gained 117.3% to close the last trading session at $20.34.
BLBD’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Quality, Growth, and Sentiment. Within the same industry, it is ranked #23.
For BLBD’s Value, Momentum, and Stability ratings, click here.
What To Do Next?
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TSLA shares were trading at $258.80 per share on Friday morning, down $0.52 (-0.20%). Year-to-date, TSLA has gained 110.10%, versus a 18.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Quality Auto Stocks to Watch for August StockNews.com
