Auto Stock Roundup: Trump Plans Raise Hope; Ford, Honda Reveal Expansion Strategies

Last week was quite a positive one for automakers, with the performance of most stocks reflecting the same. President Donald Trump extended support to auto manufacturers and suggested measures to invigorate growth.

While Honda Motors HMC announced investment plans, Tesla, Inc. TSLA revealed plans to raise $1.1 billion capital before beginning of the Model 3 production.

Ford Motor Company F expanded its vehicle electrification program and Harley-Davidson, Inc. HOG launched a new motorcycle that could help the company to break out of its niche market.

(Read the previous roundup here: Auto Stock Roundup for Mar 9, 2017)

Recap of the Week’s Most Important Stories

1. Trump announced his decision to reopen the mid-term review of the agreement signed regarding the U.S. vehicle fuel-efficiency standards, after extensive lobbying by automakers. Moreover, he also stated that his administration would focus on the elimination of regulations that negatively impact industry growth as well as lower taxes to promote job creation.

Additionally, he ensured to keep in place regulations that would protect the union workers’ jobs and auto factories, promising promotion of growth in the auto sector. Trump will also be reviewing trade deals, particularly NAFTA, that he believes has been adversely affecting the U.S. auto industry and its workers. (Read More: Are Automakers Poised to Grow Under Trump’s Presidency?)

2. Honda announced plans of investing $150 million in two of its U.S. facilities. The investment will be utilized for the production of 10-speed automatic transmissions. These transmissions will then be installed in front-wheel-drive vehicles. (Read More: Honda to Invest $150M in US Plants for 10-Speed Transmission)

Honda carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

3. Tesla announced plans to raise $1.1 billion through a series of offerings. The company will offer roughly $250 million worth common stocks along with senior convertible notes worth $750 million due in 2022. Tesla aims to raise this capital to strengthen its balance sheet as well as lower risks related to the swift scaling of its business with the upcoming launch of Model 3. The company aims to begin Model 3 deliveries by the end of 2017.

Tesla carries a Zacks Rank #3 (Hold).

4. Ford announced plans to expand its Advanced Fuel Qualified Vehicle Modifier (QVM) program. The new program, eQVM, will include companies which will develop and install electrified as well as hydraulic hybrid powertrains for Ford trucks and vans. The program is set to begin will three new companies that will modify a range of the company’s vehicles. Ford plans to invest $4.5 billion over the next five years in 13 new electrified vehicles. (Read More: Ford Expands Commercial Vehicles Electrification Program)

Additionally, Ford’s subsidiary, Lincoln Motor Co., has also revealed plans to commence the manufacturing of luxury SUVs in China by late 2019. This move, into the world’s largest auto market, is consistent with the company’s aim to compete with its German and U.S. rivals which already operate in the Chinese auto market.

Ford carries a Zacks Rank #3.

5. Harley-Davidson has launched a new motorcycle, Street Rod 750, which is priced significantly below the normal range of the company’s vehicles. The motorcycle has an entry price of $8,699, compared to other bikes sold by the company that may exceed $25,000. The new model is aimed for urban commuters, as the company looks to diversify from its customer base. The motorcycle has been designed for easy driving, with emphasis on light and precise handling at all speeds.

Harley-Davidson carries a Zacks Rank #4 (Sell).

Performance

Auto stocks recorded a relatively positive performance last week. Advance Auto Parts, Inc. AAP lost the maximum among the stocks listed below, while Harley-Davidson was the biggest gainer.

Over the last six months, Tesla has been the biggest gainer, while AutoZone, Inc. AZO was the worst performer.

 

Company

Last 1-Week Period

Last 6 Months

GM

-0.5%

+19.8%

F

+1.0%

+4.5%

TSLA

+3.6%

+24.5%

TM

+1.3%

-1.2%

HMC

+0.7%

+7.8%

HOG

+7.5%

+21.7%

AAP

-1.5%

+3.3%

AZO

-0.2%

-2.6%

 

Auto-Tires-Trucks Sector 5YR % Return

 

Auto-Tires-Trucks Sector 5YR % Return

 

What’s Next in the Auto Space?

Some automakers are expected to reveal Europe sales for February in the coming week.

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Ford Motor Company (F): Free Stock Analysis Report
 
Tesla Inc. (TSLA): Free Stock Analysis Report
 
Honda Motor Company, Ltd. (HMC): Free Stock Analysis Report
 
Advance Auto Parts Inc (AAP): Free Stock Analysis Report
 
AutoZone, Inc. (AZO): Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG): Free Stock Analysis Report
 
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