Auto sales in the US are predicted to rise as a result of pent-up demand, consumer confidence, and technological advancements. Given the industry’s growth prospects, fundamentally strong auto stocks BYD Company Limited (BYDDY), Oshkosh Corporation (OSK) and Hyster-Yale Materials Handling, Inc. (HY) might be worth buying.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the auto industry.
In January, the number of new vehicles sold in the United States was 1,082,620 units, up 2.2% year-over-year. This increase in the sales of new vehicles reflects a favorable trend in the automotive industry, reflecting increased customer confidence and demand.
The worldwide automotive industry is expected to reach $6.86 trillion by 2033 at a CAGR of 6.8%. The shift toward electric and driverless vehicles is expected to propel the automobile sector forward in the next few years.
In addition, the auto parts and accessories market is expected to reach $1.03 trillion by 2030, expanding at a CAGR of 5.7%. The auto parts and accessories market is growing due to rising demand for customization, new production methods, and the rise of internet shopping.
With these encouraging market trends in mind, let’s delve into the fundamentals of the three auto stocks mentioned above.
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 trailing-12-month ROCE of 24.68% is 116.9% higher than the industry average of 11.38%. Its 23.18% trailing-12-month CAPEX / Sales is 657.8% higher than the 3.06% industry average.
For the nine months ended September 30, BYDDY’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). Also, its total profit amounted to RMB26.07 billion ($3.66 billion), up 115.1% from the prior-year period.
Analysts expect BYDDY’s revenue to increase 27% year-over-year to $109.97 billion for the year ending December 2024. Its EPS is expected grow 15.3% year-over-year to $3.35 for the same period. Shares of BYDDY have gained 6% over past month to close the last trading session at $49.38.
BYDDY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BYDDY has a B grade for Growth, Sentiment and Quality. Within the Auto & Vehicle Manufacturers industry, it is ranked #15 out of 53 stocks. To see additional POWR Ratings for Value, Stability and Momentum for BYDDY, click here.
Oshkosh Corporation (OSK)
OSK designs, manufactures, and markets specialty trucks and access equipment vehicles worldwide. It operates through four segments: Access Equipment; Defense; Fire & Emergency; and Commercial.
On February 29, 2024, OSK announced its investment in Eatron® Technologies, a pioneering producer of AI-powered Battery Management Software (BMS). Oshkosh's investment in Eatron supports its aim of using advanced analytics and predictive modeling for lithium-ion batteries to manage its diverse fleet of electric vehicles.
This investment will allow OSK to improve the performance and efficiency of its electric vehicle fleet, resulting in lower operational costs and environmental impact.
OSK’s trailing-12-month ROTC of 12.29% is 77.3% higher than the industry average of 6.94%. Its 6.55% trailing-12-month ROTA is 36.5% higher than the 4.80% industry average.
OSK’s net sales for the fiscal fourth quarter that ended December 31, 2023, increased 11.9% year-over-year to $2.47 billion. Its gross income rose 44.3% from the prior-year period to $454.40 million. Also, the company’s adjusted net income and adjusted EPS increased 57.7% and 57.1% from their year-ago values to $169.40 million and $2.56, respectively.
The consensus revenue estimate of $10.31 billion for the year ended December 2024 reflects a 6.8% year-over-year improvement. Its EPS is expected grow 3.5% year-over-year to $10.33 for the same period. Its EPS surpassed in all four trailing quarters. The stock has gained 50% over past nine months to close the last trading session at $110.86.
It’s no surprise that OSK has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Value. It is ranked #19 in the same industry.
Beyond what is stated above, we’ve also rated OSK for Growth, Stability, Sentiment, Momentum and Quality. Get all OSK ratings here.
Hyster-Yale Materials Handling, Inc. (HY)
HY designs, engineers, manufactures, sells, and services a line of lift trucks, attachments, and aftermarket parts globally. It markets its products primarily under the Hyster and Yale brand names to independent Hyster and Yale retail dealerships.
HY’s trailing-12-month ROCE of 49.49% is 316.4% higher than the industry average of 11.89%. Its trailing-12-month ROTC of 15.63% is 125.3% higher than the industry average of 6.94%.
For the fiscal fourth quarter that ended December 31, 2023, HY’s revenues increased 4.3% year-over-year to $1.03 billion. Its operating profit came in at $48.70 million, up 146% from the year-ago quarter. The company’s net income attributable to stockholders rose 231.6% and 225% year-over-year to $25.20 million and $1.43 per share, respectively.
Street expects HY’s revenue to come in at $4.20 billion for the year ending December 2024, up 1.9% year-over-year. Shares of HY have gained 51.3% over the past year to close the last trading session at $58.88.
HY has an overall B rating, equating to a Buy in our POWR Ratings system.
HY’s is ranked #11 out of 62 stocks in the A-rated Auto Parts industry. It has an A grade for Value and Growth. To see additional HY’s ratings for Stability, Sentiment, Momentum and Quality, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
BYDDY shares were trading at $49.85 per share on Friday afternoon, up $0.47 (+0.95%). Year-to-date, BYDDY has declined -9.81%, versus a 7.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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