The automotive industry consists of companies involved in the production of cars, vehicles, trucks, automobile parts, etc. The market for automotive shares is vast, and it may not be apparent for traders to figure out which are the best automotive shares to buy. So to help clear out the noise, we have picked the top ones to invest in 2021.
What are automotive shares?
In simple terms, an automotive share is a part of an automobile company that can be owned by an individual. Shareholders are people who have invested in any specific firm through the equity market. Traders can then trade these stocks by speculating on price movement. These can be traded on the stock market or exchange the company is listed on.
Some of the main automotive which are listed on the U.S. stock market includes the likes of Tesla, Volkswagen, General Motors, etc. Some traders may have a specific strategy developed to trade a particular equity based on their trading style. However, most people in this financial niche use both fundamentals and technicals to get the best probability in their executions. In 2020, Tesla was one of the favorites among many participants to get profit rolling at the market’s initial hours.
Where can I trade automotive shares?
You have to find a middle man that can carry out your transactions if you want to trade stocks. Have a sound strategy to beat the markets, some cash, and your id, and you’ll be good to go. Nowadays, brokers offer the best solution for opening/closing positions inequities. They charge a small fee for their platform, live market feed, and price per share. The following stock brokerages are some of the best for trading equities.
TD Ameritrade, Robin Hood, and Interactive Brokers are all regulated by top tier authorities. They accept US customers and provide one of the lowest costs in trading the stock markets. Demo accounts are only available on TD and Interactive.
We've shortlisted the best automotive stocks to buy in 2021 and you can start trading them in our recommended brokers by clicking on the buttons of the following table.
Top 10 Automotive shares to trade
In the list below, you’ll find what we believe to be the top 10 automotive shares to trade. All of these have been selected after carefully observing various factors such as company reserves, market cap, quarterly earnings, future projects, technical setups, and so forth.
- Tesla TSLA
- Volkswagen VWAGY
- Toyota Motor Co. TM
- Ford Motor Co. F
- General Motor Co. GM
- Ferrari RACE
- NIO Inc. NIO
- Honda motor corp HMC
- BYD Co. Ltd. BYDDF
- XPeng XPEV
With headquarters in California, United States, Tesla is one of the most famous automotive companies that has dramatically increased its stock value in the past five years. The total market cap for it now stands at $800.97 billion as of January 21 2021. Tesla is known to give its all to its customers in terms of value, comfort, and design. Professionals in proprietary firms use various strategies to trade the equity, including strength buying and technicals.
Situated in Germany, Volkswagen nets a market cap of 87.27 billion US dollars. The company sells various quality automotive vehicles and plans to increase the overall investments by $88.5 billion within the next five years. The past couple of years have its stock value fluctuate between $100 and $200. Traders frequently exploited the upper and lower values of resistance and support at two price points to buy and short the stock.
Toyota Motor Co. TM
Toyota is a Japanese automotive manufacturer since 1937 with a whopping market cap of $246.9 billion. In 2019, the revenue generated by Toyota Motor is ten times that of Tesla. Analysts from the Bank of America mark the stock as a potential buy with a target of nearly 180$. TM’s share value has been on an uptrend for the past years as traders and market makers uphold the bullish sentiment. The recent decline in sales value should be taken to get in the stock at a lower price and ride the uptrend for profits.
Ford Motor Co. F
An American multinational automaker Ford has a market cap of $45.05 billion. The company, though by many to be a legendary carmaker, was the first to automate vehicle manufacturing back in 1903. The share value is capped around $10, making it a favorite choice for those with low trading capital. Day traders can make good use of 10 days and 200 period monthly moving averages to trade any possible pullbacks in the price of Ford Motors.
General Motor Co. GM
General Motors is an automotive manufacturer that sells both vehicles and financial services and has its shares priced at $55. The current market cap of the automaker stands at $78.84 billion. The company is famous for producing noted cars such as Chevrolet, Cadillac, and GMC, extremely well-made, stylish, and trustworthy. At CES 2021, the company aimed at introducing flying cars and transportation with zero-emission. The current outlook took the stock to its all-time highs and has an extremely bullish outlook for its future.
Ferrari is an all-time famous sports car manufacturer with a current market cap of $41.91 billion. Listed on the New York Stock Exchange, its symbol exemplifies its presence in the automotive racing industry. The shares’ current outlook looks positive, continuing the overall uptrend from the three to four years. Remember that economic recessions do not affect stocks like Ferrari, whose target market are those living in the upper echelons of society.
NIO Inc. NIO
A Chinese car manufacturing company that specializes in producing electric vehicles. It has a market cap of $91.76 billion and is a favorite among investors who believe it is a good rival for Tesla. You may see top traders rushing towards either side as soon as they hear good news. Any positive outlook for the company gears it towards the buyers’ end. Within its first six years in the market, the value of a single share has gone up to $50.
Honda motor corp HMC
Led by Takahiro, the Japanese company manufactures motorcycles, automobiles, and power equipment. The market cap stands at $51.17 billion with the share value fluctuating between $25 and $35 for the past five years. Increasing net revenue makes it more favorable as a buying opportunity. By taking a look at the volatility, one may be able to swing trade; however, keeping the trade for a long time is not preferable.
BYD Co. Ltd. BYDDF
Backed up by Warren Buffet, BYD is an automobile manufacturer first established back in 1995. It has a market cap of $97.98 billion. The company is combating Tesla with an increasing number of sales from 2016, excluding 2019. Outlook for BYD looks positive for the coming years with increasing demand for electric vehicles. The recent huge uptrend in the share value should be kept in mind for potential short term sell opportunities as investors take profits.
XPeng is also one of the Chinese vehicle producers with its headquarters in Guangzhou. The company has a market cap of $42.90 billion in its short term existence of nearly seven years. Like other electronic auto producers, Xpeng also had a significant uptrend in its share value due to the increasing sales. Future is also bright for the automaker as it plans to introduce its EVs in Europe.
Expert Tips on Investing in Automotive Shares
We are nearing the end of an ongoing pandemic situation where we may see an increasing sales number by carmakers. In investment terms, it is recommended to have your approach geared towards companies with a bright outlook. Electric vehicles show promise in these terms as the world shifts to a more environmentally friendly approach. The competition will be among EV manufacturers, and you should keep an eye out for fake dips in these shares as they will present healthy buy opportunities.
Why invest in Automotive shares?
The technical approach to trading automotive shares is simple, as seen on charts. Some companies have had their share value stuck between support and resistance for the past couple of years, while others are uptrend. On the fundamental side, it is easy to access and predict how any automaker is doing its sales, earnings, cash flow, etc. The financial industry is a game of probabilities. Having even a small edge in both charts and news will help you make money consistently while being cautious about risk management.
Frequently Asked Questions
Tesla is the current number one automotive stock as it experienced tremendous growth in 2020.
Yes, however, it depends on the fundamentals and technical of a company.
Toyota is the strongest stock financially.
Everyone from scalpers, day, swing, carry, institutional traders to a prominent investor like Warren Buffet invests in automotive shares.
Of course, everyone can invest in automotive stocks. It’s an industry which will potentially see growth for years to come.
The vast market cap, volatility along with reasonable probability in executions make automotive shares popular.
Automotive shares are traded when their respective exchanges are open. Pre- and post-market activity may also be seen.