The automotive industry has been rebounding from the pandemic-led slowdown. Worldwide, car sales grew from a low of 63.80 million units in 2020 to about 66.70 million in 2021. Moreover, technological advancement in this space is expected to drive further growth in the coming years.

Carmakers are now moving increasingly toward cleaner and sustainable technologies. The global electric vehicle (EV) market is expected to surpass $980 billion by 2028, growing at a CAGR of 24.5% between 2022 and 2028 .

Given this backdrop, fundamentally strong auto stocks Volkswagen AG ( VWAGY – Get Rating ), Stellantis N.V.( STLA – Get Rating ), and Honda Motor Co., Ltd. ( HMC – Get Rating ) might be solid buys now.

However, supply chain issues still pose a threat to the auto industry. The supply issues are expected to persist next year . Hence, it might be ideal to avoid auto stock Mullen Automotive Inc. ( MULN – Get Rating ), considering its weak fundamental positioning.

Stocks to Buy:

Volkswagen AG ( VWAGY – Get Rating )

VWAGY, headquartered in Wolfsburg, Germany, manufactures and sells automobiles through four segments, Passenger cars; Commercial vehicles; Power Engineering, and Financial Services. It provides its products under the Volkswagen Passenger Cars, Audi, KODA, SEAT, Bentley, Porsche, Lamborghini, Ducati, and Bugatti brands.

In September, VWAGY announced its decision to launch an initial public offering (IPO) process of the preferred shares in Dr. Ing. h.c. F. Porsche AG, at a placement price range from €76.50 to €82.50.

In August, VWAGY signed an agreement with the Canadian government on battery value creation and raw material security. Its battery power company PowerCo SE intends to ramp up its business, which is expected to support VWAGY’s growth strategy.

VWAGY’s sales revenue increased 3.3% year-over-year to €69.54 billion ($69.03 billion) for the second quarter ended June 2022. Its earnings after tax improved 25.8% year-over-year to €3.91 billion ($3.77 billion) over the period. The company’s EPS increased 27.1% from its year-ago value to €20.51.

The consensus revenue estimate of $78.22 billion for the fiscal fourth quarter ending December 2022 represents a 12.3% year-over-year increase.

The stock has gained marginally over the past month to close its last trading session at $18.33.

VWAGY’s POWR Ratings reflect this promising outlook. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

VWAGY is rated a B in Value, Stability, and Sentiment. Within the Auto & Vehicle Manufacturers industry, it is ranked #2 of 70 stocks.

Beyond what we’ve stated above, we have also given VWAGY grades for Growth, Momentum, and Quality. Get all VWAGY ratings here .

Stellantis N.V.( STLA – Get Rating )

STLA designs, engineers, manufactures, distributes, and sells automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, and production systems. It is headquartered in Hoofddorp, the Netherlands.

On September 20, STLA and its joint venture partner Punch Powertrain signed a new agreement increasing the production of the future-generation electrified dual-clutch transmission for STLA hybrid and plug-in hybrid electric vehicles. The agreement aims to drive the company’s transformation of its global electrification value chain and support its decarbonization targets.

STLA’s net revenues rose 21.2% year-over-year to €88 billion ($88.12 billion) for the first half-yearly period ended June 30, 2022. The company’s adjusted operating income increased 46.6% year-over-year to €12.37 billion ($12.39 billion), while its net profit increased 37.2% year-over-year to €7.96 billion ($7.97 billion).STLA’s revenue is expected to increase 7.7% year-over-year to $41.03 billion in the third fiscal quarter ending September 2022.The stock has gained marginally intraday to close the last trading session at $12.24.It’s no surprise that STLA has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade in Value and a B in Stability, Sentiment, and Quality. STLA is ranked #1 in the same industry.In addition to the POWR Ratings stated above, we have also given STLA grades for Growth and Momentum. Get all STLA ratings here . Honda Motor Co., Ltd. ( HMC – Get Rating ) HMC, headquartered in Tokyo, Japan, designs, manufactures and sells motorcycles, automobiles, power, and other products. It operates in four segments: Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.HMC’s sales revenue came in at ¥3.83 trillion ($26.73 billion) for the first quarter ended June 30, 2022, up 6.9% year-over-year. The company’s operating profit amounted to ¥222.20 billion ($1.54 billion), while the profit for the period attributable to owners of the parent […]

source The 3 Best Auto Stocks to Invest in Right Now and the Worst

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