Rise in auto sales in the first quarter: ETFs and stocks to exploit

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After last year’s worst plunge since the 1970s, the US auto industry rebounded strongly in the first quarter of 2021. This is especially true as car sales soared 11% in the first quarter of 2021, sustained by the waning signs of the COVID-19 crisis. and concerns about potential vehicle shortages.

Rapid vaccinations, unprecedented stimulus measures and reopening of economies have boosted demand for daily travel, leading to increased auto sales. According to figures compiled by Edmunds.com, automakers sold more than 3.9 million vehicles in the first quarter, with several large companies reporting sales in March that nearly doubled levels recorded in the same month a year earlier. (read: Top performing ETFs in the first quarter of 2021).

Among the six major US and Japanese automakers, Toyota MotorTM was the biggest winner, recording a 21.6% increase in sales. This was followed by increases of 16.2% for Honda Motors HMC, 10.8% for Nissan NSANY, 4% for General Motors GM and 1% for Ford Motor F. Stellantis STLA – formed after the merger of Fiat Chrysler and PSA Group – also experienced a 5% increase in car sales in the first quarter.

The strong trend is expected to continue this year given strong demand supported by confidence and rising consumer spending. The Fed has pledged to keep rates lower until the end of 2023. Ever lower interest rates will encourage new car purchases, pushing more consumers to resort to loans. Additionally, with the continued acceleration of digitization, the auto industry will benefit from a boost as automakers propel their services online.

However, the global chip shortage could derail auto production in the coming months, which could slow the recovery of the industry, which has just started to see increased sales (read: Auto ETF under pressure on Renesas Chip -Plant Fire).

Below we highlight the auto pure play ETF and some stocks that could be attractive choices for 2021:

First Trust NASDAQ Global Auto CARZ ETF

This fund provides pure global exposure to 34 automotive stocks by tracking the NASDAQ OMX Global Auto Index. It has a moderate concentration between the components, each of them representing less than 8.4%. CARZ has $ 72.4 million in assets under management and trades a small average daily trading volume of approximately 23,000 shares. The product charges 70 basis points of fees per year and has a Zacks ETF Rank # 3 (Hold) with a high risk outlook.

Tesla Inc. TSLA

Tesla is the market leader in battery electric car sales in the United States, holding around 60% of the market share. The stock saw a strong earnings estimate revision of 5 cents over the past month for this year with estimated growth of 87%. Tesla has a Zacks # 3 ranking and a growth score of A (read: Tesla ETFs to tap robust Q1 deliveries, Biden EV’s plan).

The Goodyear Tire & Rubber Company GT

It is one of the largest tire manufacturing companies in the world, selling under Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other “house” brands (such as Lee, Kingstone, Douglas, Mohave and Republic) as well as private labels (namely Roadhandler, Star and Monarch). The stock has seen a positive revision to the profit estimate of 3 events for this year over the past 30 days and has an estimated growth rate of 146.6%. He has a Zacks rank of 3 and a Growth score of A.

Dorman Products Inc. DORM

This company is a leading supplier of exclusive spare parts to dealerships for the automotive, medium and heavy aftermarket markets. The stock has seen a positive revision to the profit estimate of 10 cents for this year over the past 30 days and has an estimated earnings growth rate of 30.1%. He has a Zacks Rank # 2 (Buy) and a Growth score of B. You can see The full list of today’s Zacks # 1 (strong buy) ranking stocks here.

Cooper Tire & Rubber Company CTB

This company manufactures, markets and sells tires for a wide range of vehicles, including radial tires for trucks and buses (TBR) and motorcycles. The stock saw a solid earnings estimate revision of 30 cents for this year in one month and has an estimated earnings growth rate of 37.8%. He has a Zacks Rank # 2 and a Growth Score of B.

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Ford Motor Company (F): Free Stock Analysis Report

Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report

Nissan Motor Co. (NSANY): Get Free Report

Toyota Motor Corporation (TM): Free Stock Analysis Report

The Goodyear Tire & Rubber Company (GT): Free Stock Analysis Report

Cooper Tire & Rubber Company (CTB): Free Stock Analysis Report

General Motors Company (GM): Free Inventory Analysis Report

Tesla, Inc. (TSLA): Free Stock Analysis Report

Dorman Products, Inc. (DORM): Free Inventory Analysis Report

Stellantis NV (STLA): Free stock analysis report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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