Buoyed by the positive customers’ sentiment of owning an electric vehicle (EV), the auto sector expected a massive rise in EV demand in 2024. However, affordability concerns among customers amid high interest rates and insufficient EV charging infrastructure resulted in inventory build-up, which prompted manufacturers to slash their production and sales guidance for EVs. The industry was taken by surprise as demand fell short of expectations, especially after substantial investments had been committed to the development of EV technologies.
On the brighter side, in the back half of the year, the Fed reduced its benchmark interest rates three times and expects two more rate cuts in 2025. The declining interest rates point toward reduced cost of vehicle financing, which bodes well for future EV demand.
Despite a challenging demand backdrop for EVs, the demand for traditional internal combustion engines and hybrid vehicles remained resilient. The legendary automakers reported a massive year-over-year rise in hybrid vehicle sales. Also, a disciplined cost management approach has helped companies maintain healthy margins.
Per S&P Global Mobility, the 2025 global sales of new light vehicles are projected to hit 89.6 million units, reflecting 1.7% year-over-year growth. We have selected five Zacks Rank #1 (Strong Buy) or 2 (Buy) auto stocks that have rallied more than 20% this year and have a market capitalization of more than $1 billion. Driven by a positive industry outlook, robust innovation technology and cost optimization efforts, these stocks are well-positioned to continue with their solid momentum.
YTD Price Performance Comparison
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5 Top Performers of 2024 With Brighter Outlook
Tesla, Inc. TSLA, the EV maker, has benefited from its Energy Generation and Storage business, which is on a robust growth trajectory on the back of the strong reception of its Megapack and Powerwall products. This segment stands out as Tesla's most lucrative, boasting the highest margins. Over the past three years, energy storage deployments have witnessed a CAGR of 120.7%. With ongoing efforts to ramp up production at the Megapack factory to meet escalating demand, Tesla anticipates deployments to rise continuously. Also, it expects to witness 20-30% vehicle sales growth in 2025 amid robust sales of Model 3/Y and others.
TSLA currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for 2025 sales and earnings per share is pinned at $117.58 billion and $3.26, respectively. The Zacks Consensus Estimate for 2025 EPS has moved up 6 cents in the past 30 days. The stock has risen 69.45% in the year-to-date period. The EV maker has surpassed estimates in one of the trailing four quarters and missed thrice, the average earnings surprise being 0.13%.
General Motors Company GM, the legendary automaker, is the top-selling automaker in the United States. Its compelling portfolio with strong demand for its quality pickups and SUVs bodes well for delivery growth. The company’s hot-selling brands in America, namely Chevrolet, Buick, GMC and Cadillac, are boosting the top line. GM’s North America division, the company’s largest and most profitable segment, continues to shine.
GM currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2025 sales and earnings per share is pinned at $176.1 billion and $10.62, respectively. The Zacks Consensus Estimate for 2025 EPS has moved up 9 cents in the past seven days. The stock has risen 44.24% in the year-to-date period. The automaker has surpassed estimates in each of the trailing four quarters, the average earnings surprise being 17.54%.
Dorman Products, Inc. DORM is a leading supplier of Dealer Exclusive replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. In the light-duty segment, the company reported strong margin expansion in 2024 due to automation and operational efficiencies. The non-discretionary repair parts have enhanced its product portfolio in the specialty vehicle segment. Continued margin improvement bodes well for Dorman’s prospects.
DORM currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for 2025 sales and earnings per share is pinned at $2.09 billion and $7.54, respectively. The Zacks Consensus Estimate for 2025 EPS has moved up 88 cents in the past 60 days. The stock has risen 57.49% in the year-to-date period. The replacement part supplier has surpassed estimates in each of the trailing four quarters, the average earnings surprise being 34.68%.
OPENLANE Inc. KAR provides sellers and buyers across the wholesale used vehicle industry with technology-driven remarketing solutions. The company's end-to-end platform supports whole car, financing, logistics and other ancillary and related services. The company is revolutionizing the wholesale process by expanding its marketplace and enhancing access to a diverse inventory for buyers and sellers. It leverages advanced technologies to empower customers with informed decision-making and better outcomes. By prioritizing a seamless, transparent and efficient customer experience, the company is strengthening its position as the leading and most trusted marketplace.
KAR currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2025 sales and earnings per share is pinned at $1.80 billion and 95 cents, respectively. The Zacks Consensus Estimate for 2025 EPS has moved up by a penny in the past 60 days. The stock has risen 37% in the year-to-date period. The automaker has surpassed estimates in two of the trailing four quarters and missed twice, the average earnings surprise being 8.09%.
Blue Bird Corporation BLBD is engaged in the designing, engineering, manufacturing and sale of school buses and related parts. It also offers alternative fuel applications with its propane-powered and compressed natural gas-powered school buses. The company has outperformed its expectations in fiscal 2024 and continues to do so by improving productivity, driving new orders and expanding its leadership in alternative-powered buses. Encouraged by the robust demand for buses, the company has increased fiscal 2025 guidance for Net Revenue and Adj. EBITDA.
BLBD currently sports a Zacks Rank #1. The Zacks Consensus Estimate for fiscal 2025 earnings per share is pinned at $4.53. The stock has risen 46% in the year-to-date period. The school bus manufacturer has surpassed estimates in three of the trailing four quarters and missed once, the average earnings surprise being 85.12%.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpGeneral Motors Company (GM) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
OPENLANE, Inc. (KAR) : Free Stock Analysis Report
Dorman Products, Inc. (DORM) : Free Stock Analysis Report
Blue Bird Corporation (BLBD) : Free Stock Analysis Report
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