Top 5 Car Stocks to Add to Your Portfolio in 2024

Over the weekend, Yahoo Finance published an article on the 12 Most Promising Car Stocks According to Analysts. This insightful piece delves into the current market trends and potential investment opportunities in the automotive sector. From electric car brands to auto retailers, there are a diverse range of companies poised for growth in the new year.

Here, we’ll outline the top 5 car stocks that stood out in the analysis, shedding light on the factors that make them particularly promising investments.

Top 5 car stocks

5. ACV Auctions Inc. (NASDAQ:ACVA)

ACV Auctions Inc. has carved a niche for itself by transforming the traditional landscape of vehicle remarketing. Specializing in online wholesale automotive auctions, ACV Auctions leverages cutting-edge technology to streamline and modernize the buying and selling processes within the used car market.

Founded in 2014, the company brought a disruptive approach to car auctions by transitioning from physical auctions to a digital platform. The company’s mission is to provide a transparent, efficient, and trusted marketplace for automotive dealers to buy and sell used cars.

According to Insider Monkey, ACV Auctions Inc. (NASDAQ: ACVA) underwent analysis by 8 Wall Street analysts in the last three months, with 7 maintaining a Buy rating on the stock. As of the December 15 market close, the average price target stood at $20.38, reflecting an upside potential of 40.17%.

4. NIO Inc. (NYSE:NIO)

We’ve had an eye on NIO EV for a few years now, but it seems this electric vehicle automaker is on an unstoppable trajectory. From groundbreaking innovations in battery technology to a commitment to creating a holistic approach to electric mobility, NIO has captured the imagination of investors and enthusiasts alike.

Founded in 2014, NIO gained prominence with its flagship electric SUVs, namely the NIO ES8, ES6, and EC6. However, the brand’s battery as a service (BaaS) concept has stood out the most, allowing customers to purchase electric vehicles without the battery. This unique approach aims to lower the initial cost of EVs and provides flexibility for battery upgrades in the future.

NIO Inc. went public on the New York Stock Exchange (NYSE) in 2018, becoming one of the first Chinese EV companies to be listed on a major U.S. stock exchange. This year, the company’s revenue experienced a robust growth of 46.6% year-over-year (YoY), reaching $2.61 billion.

3. OPENLANE, Inc. (NYSE:KAR)

Investors and stakeholders interested in the digital revolution of the automotive market may find OPENLANE, Inc. a compelling entity to watch in 2024. Similar to ACV Auctions, this company operates within the broader automotive remarketing sector, specializing in digital marketplaces that connect buyers and sellers to the used car market.

After KAR acquired OPENLANE in 2011, the company underwent significant strategic development, aligning itself with the digital trends shaping the automotive industry. Today, it serves customers and sellers in North America, Europe, the Philippines, and Uruguay.

Three Wall Street analysts covered OPENLANE, Inc., and they all agreed on a Buy rating for the stock. As of the market close on December 15, the average price target was $21, suggesting a potential upside of 43.34%.

2. Driven Brands Holdings Inc. (NASDAQ:DRVN)

Driven Brands boasts an extensive portfolio of well-known automotive service brands, including Meineke Car Care Centers, Maaco, Jiffy Lube, and Take 5 Oil Change, among others. This expansive network positions Driven Brands as a formidable force in the franchising landscape, and one of the more attractive car stocks in 2024.

The company has solidified its presence in the United States, earning recognition and trust among consumers, which have contributed to its sustained growth. They also recently announced the launch of a B2B digital marketplace, called Driven Advantage, that will connect 5,000 corporate locations with third-party products.

Overall, the company exhibits long-term potential, with an average analyst price target of $20.70, and an upside potential of 47.33%.

1. Li Auto Inc. (NASDAQ:LI)

Li Auto Inc. holds a prominent position among Chinese new energy vehicle manufacturers, specializing in the design and construction of sport utility vehicles (SUVs). Renowned for its commitment to innovation and sustainable mobility solutions, Li Auto continues to draw attention from investors.

Just recently, Li Auto reported an impressive 172.9% YoY surge in monthly deliveries for November, reaching 41,030 vehicles. The company’s CEO and Chairman, Xiang Li, expressed further confidence in meeting the ambitious monthly delivery target of 50,000 units by the end of December, as detailed by Insider Monkey.

Ultimately, Analysts view Li Auto as a standout choice among the most promising car stocks. As of the latest data, the average analyst price target for LI is $53.75, indicating a noteworthy upside potential of 52.18%.

Buy now, thank us later…

In conclusion, the performance of car stocks in 2024 largely hinges on key critical factors. This includes electric vehicle (EV) advancements, the trajectory of autonomous driving technology, challenges in the global supply chain, and the impact of interest rates and inflation.

To navigate the automotive industry successfully, a keen understanding of these factors is essential. Whether you’re a car enthusiast or avid investor, the more you know, the better informed your decisions.

FAQs on Car Stocks

Why invest in car stocks?

Investing in car stocks provides exposure to a diverse industry. This market includes traditional automakers, electric vehicle (EV) manufacturers, and companies developing innovative technologies. The automotive sector can offer growth opportunities and dividend potential in any economic climate.

What factors should I consider before investing in car stocks?

Factors to consider include the financial health of the company, market trends, technological advancements, regulatory changes, and global economic conditions. Additionally, understanding the company’s competitive position and growth prospects is crucial.

Are electric vehicle (EV) stocks a good investment?

Electric vehicle stocks have gained popularity due to the growing demand for sustainable transportation. However, like any investment, it’s essential to conduct thorough research. You must consider factors such as the company’s EV market share, tech advancements, and regulatory support.

How can I stay updated on car stock trends?

Staying informed involves regularly monitoring financial news, company reports, and industry publications. You can also follow market analysts, attend automotive conferences, and utilize reputable resources with valuable insights.

What are the risks associated with investing in car stocks?

Risks include economic downturns impacting consumer spending, changes in fuel prices, competition, technological disruptions, and regulatory challenges. In addition, factors such as global trade tensions, supply chain, and geopolitical events can significantly influence the performance of car stocks.

Investors must carefully assess these risks and their potential impact on individual companies before making investment decisions. Diversification, thorough research, and staying abreast of industry trends are crucial strategies to mitigate these challenges successfully.