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 Tesla, Inc. (NASDAQ:TSLA) 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.
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).
Analyst Says Tesla (TSLA) In ‘Very Early Innings,” Sees “Compounding Throughout The Decade’
25 Most In Demand Cars Heading into 2024
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an American automotive and clean energy company, headquartered in Austin, Texas. It is a pioneer in the EV industry and has significantly contributed to the global shift toward sustainable transportation through its electric cars.
As of the close of day on December 26, its market value has swelled by 87% since Trump’s election victory in early November, which has lifted Tesla back into the elite club of companies having a market cap of $1 trillion.
The company’s CEO, Elon Musk, spent a whopping $277 million on Trump’s election campaign and is set to lead the Department of Government Efficiency under the new administration, which will give him the ability to eliminate inconvenient regulations. Investors are also expecting Tesla, Inc. (NASDAQ:TSLA) Robotaxi and FSD technology to drive another phase of growth for the company.
Tesla’s financial performance also remains strong. During Q3 2024, it reported a revenue of $25.18 billion, up 8% from last year, driven by strong growth in vehicle deliveries. EPS was logged at $0.72, beating forecasts of 58 cents per share.
The company also experienced improved profit margins during the quarter, fueled by automotive regulatory credit revenue of $739 million. Automakers are mandated to obtain a certain amount of regulatory credits every year and often purchase them from companies like Tesla if they fail to meet the target themselves. Since it only manufactures electric vehicles, Tesla, Inc. (NASDAQ:TSLA) has excess credits.
Looking ahead, Musk expects vehicle growth between 20% and 30% next year, due to the advent of autonomy and the lower cost of vehicles. He is also confident about Cybercab reaching volume production in 2026, aiming for at least 2 million units a year.
Tesla is the best car stock to invest in now, with 99 hedge funds having investments in the company, according to Insider Monkey’s database for Q3 2024.
Overall TSLA ranks 1st on our list of the best car stocks to invest in now. While we acknowledge the potential of TSLA 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT:8 Best Wide Moat Stocks to Buy Now and30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.
As a journalist, Lauri Blackwell has always been interested in writing about the business world. She aims to keep her readers up-to-date on current events and trends in the business world, without sacrificing the journalistic integrity that made her want to be a writer in the first place.
