Analyzing Top 3 Auto Stocks for Growth in 2024

The automotive industry is set to maintain strong momentum this year, fueled by sustained new vehicle demand, a global shift to electric vehicles (EVs), and ongoing technological advancements. Hence, fundamentally solid growth auto stocks Rolls-Royce Holdings (RYCEY), BYD Company (BYDDY), and Stellantis (STLA) might be ideal buys this year. Keep reading...

Growth stocks represent companies poised for above-average growth compared to the broader market, making them attractive for those seeking substantial returns on their investments. In this article, let us focus on robust auto growth stocks Rolls-Royce Holdings plc (RYCEY), BYD Company Limited (BYDDY), and Stellantis N.V. (STLA) that are poised to capitalize on the evolving landscape of the automotive industry this year.

U.S. new vehicle sales are projected to increase by 1% to reach 15.7 million units this year, according to car shopping website Edmunds. Additionally, the electric vehicle market share is expected to increase slightly, reaching 8% of total new vehicle sales in 2024. Government incentives and policies encouraging the use of electric vehicles have played an important part in boosting this growing trend.

Moreover, the global surge in electric vehicle (EV) demand and swift digital transformation are set to boost the EV market's profitability and growth. Factors such as environmental concerns, increasing gasoline prices, and government incentives are driving people worldwide to transition to EVs.

The U.S. electric vehicle market is anticipated to achieve a revenue of $82.80 billion in 2024, with a projected CAGR of 18.2% until 2028, leading to a market volume of $161.6 billion.

Furthermore, the industry is poised to gain from the increasing adoption of AI in the automotive market. The AI in the automotive sector is expected to grow at a 22.7% CAGR to $52.98 billion by 2028. Rising technological advancements and consumer preference for vehicles with advanced systems have been major drivers for AI in the automotive market.

Considering these conducive trends, let's take a look at the fundamentals of the three best Auto & Vehicle Manufacturers stocks, starting with number 3.

Stock #3: Rolls-Royce Holdings plc (RYCEY)

Headquartered in London, the United Kingdom, RYCEY operates as an industrial technology company in the United Kingdom and internationally. The company operates in four segments: Civil Aerospace; Defence; Power Systems; and New Markets.

Over the last five years, RYCEY has achieved a CAGR of 30.6% in EBITDA, while its net income has seen a steady growth at a CAGR of 3.8%.

In the six-month period, which ended on June 30, 2023, RYCEY’s revenue rose 34.3% from the year-ago value to £7.52 billion ($9.54 billion). Its gross profit increased 56% year-over-year to £1.66 billion ($2.10 billion). Moreover, the company’s profit for the period and EPS came in at £1.23 billion ($1.56 billion) and 14.70p compared to a loss and loss per share of £1.55 billion ($1.94 billion) and 19.29p in the prior-year period, respectively.

RYCEY’s revenue for the fiscal year ending December 2023 is expected to increase 23.5% year-over-year to $18.85 billion. Its EPS for the same year is projected to improve 374.2% year-over-year to $0.11.

Over the past year, the stock has soared 192.1% to close the last trading session at $3.87. The stock has returned 59.9% over the past three months.

RYCEY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has a B grade for Growth, Value, and Stability. Within the 52-stock Auto & Vehicle Manufacturers industry, it is ranked #15.

In addition to the POWR Ratings stated above, one can access RYCEY’s Momentum, Sentiment, and Quality ratings here.

Stock #2: BYD Company Limited (BYDDY)

Based in Shenzhen, China, BYDDY develops, manufactures, and sells automobiles and related products worldwide. It operates through three segments: Rechargeable Battery and Photovoltaic Products; Mobile Handset Components and Assembly Service; and Automobiles and Related Products.

BYDDY’s revenue and net income have grown at a CAGR of 60.9% and 102.5%, respectively. It has raised its EBIT and EBITDA at a CAGR of 45.3% and 40.5%, respectively.

During the nine months ended September 30, BUDDY’s total operating revenue rose 57.8% year-over-year to RMB422.27 billion ($59.32 billion). Its other income grew 145% from the prior-year period to RMB2.82 billion ($396.16 million). Moreover, its total profit amounted to RMB26.07 billion ($3.66 billion), up 115.1% from the prior-year period.

As per analysts, BYDDY’s EPS and revenue are likely to improve 80.3% and 40.3% year-over-year to $3 and $86.55 billion, respectively, in the fiscal year 2023.

The stock declined by 2.4% intraday, closing the last trading session at $45.48.

BYDDY’s POWR Ratings reflect its strong prospects. The stock has an overall rating of B, which equates to a Buy according to our proprietary rating system.

It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #12 in the same industry.

Click here to access the complete POWR Ratings for BYDDY.

Stock #1: Stellantis N.V. (STLA)

Headquartered in Hoofddorp, the Netherlands, STLA designs, manufactures, distributes, and sells automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, mobility services, and production systems worldwide. It offers its products under the Abarth, Alfa Romeo, Chrysler, DS, Dodge, Jeep, Fiat, Maserati, Ram, Opel, Lancia, Vauxhall, Peugeot, Comau, and Teksid brands.

STLA has seen a remarkable growth of 50.3% CAGR in revenue and a substantial 115.9% CAGR in net income over the past three years.

The company pays an annual dividend of $1.48, which yields 6.76% on the prevailing price level.

STLA’s net revenues for the six months ended June 30, 2023, increased 11.8% year-over-year to €98.37 billion ($106.58 billion). Its net profit increased 37.2% year-over-year to €10.92 billion ($11.83 billion). Its adjusted operating income rose 11% year-over-year to €14.13 billion ($15.31 billion). The company’s EPS came in at €3.45, representing an increase of 39.7% year-over-year.

Street expects STLA’s revenue to increase 8.1% year-over-year to $205.81 billion for the year ending December 2023. Its EPS is expected to grow 17.5% year-over-year to $6.49 for the same year.

Shares of STLA have gained 44.8% over the past year to close the last trading session at $21.87.

STLA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

STLA also has an A grade for Value, a B for Stability and a C for Growth. It is ranked #11 in the same industry.

To access STLA’s additional POWR Ratings for Sentiment, Momentum, and Quality,  click here.

What To Do Next?

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BYDDY shares fell $0.85 (-1.87%) in premarket trading Wednesday. Year-to-date, BYDDY has declined -17.71%, versus a 3.28% 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.


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