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These 5 auto stocks are better bets than Tesla in 2021, according to Bank of America

Published by Business Insider on Thu, 14 Jan 2021


<p><img src="https://static2.businessinsider.com/image/5fff55dafe7e140019f7ec6a-1290/cq5dam.web.3840.3840 (4).jpeg" border="0" alt="2021 Ford F-150" data-mce-source="Ford" data-mce-caption="The 2021 F-150 PowerBoost gets an EPA-estimated 25 mpg combined on two-wheel-drive models."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>As it did for so many, 2020 proved a challenging year for the auto industry. After COVID-19 forced American automakers to shut down factories and disrupted supply chains in the spring, US vehicle sales declined 15% from 2019.</p><p>Though the industry began to recover during the second half of the way, 2021 probably won't bring a rapid comeback, according to Bank of America, which predicted in a research note published on Monday that US vehicle sales will rise this year by just 2.5%, to 14.8 million units, from last year's 14.5 million units.</p><p>But as the auto industry slowly returns to its pre-2020 sales levels, now could be a good time to invest in automotive stocks, according to Bank of America, which said in the Monday research note that auto "stocks may just be at the beginning of a multi-year bullish trade." The bank has a "buy" or "neutral" rating on 80% of the automotive companies it covers.</p><p>Though electric-vehicle companies have attracted soaring valuations over the past year, Bank of America sees more upside this year in some of the auto industry's established giants.</p><p>These are the five automotive stocks BofA recommends for 2021.</p><p><strong>SEE ALSO:&nbsp;<a href="https://www.businessinsider.com/ford-mustang-mach-e-named-best-suv-2020-2021-1" >The Ford Mustang Mach-E was named SUV of the year in the latest signal the new crossover will give Tesla a run for its money</a></strong></p><h3>Ferrari</h3><img src="https://static2.businessinsider.com/image/5f622e19323fc4001e0d6970-400-300/ferrari.jpg" alt="" /><p><p>Stock ticker: <a href="https://markets.businessinsider.com/stocks/race-stock">RACE</a></p><p>Bank of America's price target: $307</p><p>Why Bank of America recommends it: "Ferrari is a unique high-end luxury automaker, focused on design/production of luxury performance cars, along with its Formula 1 team and adjacent businesses. The company is an iconic asset, with resilient financial performance, significant intangible brand value, and a true high-end luxury status. We believe its balanced strategy of volume growth, price increases, and model introductions over our forecast period should drive outsized revenue/earnings growth."</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/top-vc-firms-autonomous-vehicles-self-driving-car-2021-1">12 VC firms leading the $40 billion charge into self-driving-car startups like Zoox and TuSimple</a></em></p></p><br/><br/><h3>General Motors</h3><img src="https://static2.businessinsider.com/image/5e46d7a14b661b266e795933-400-300/general-motors.jpg" alt="" /><p><p>Stock ticker: <a href="https://markets.businessinsider.com/stocks/gm-stock">GM</a></p><p>Bank of America's price target: $72</p><p>Why Bank of America recommends it: "We believe GM's Core business is being managed very well despite ongoing global cycle/macro pressure, driven by its proactive retrenching efforts to profitable markets/segments and investment in product. In addition, the efforts across its Future businesses are an unappreciated upside factor, including electrification (Ultium, etc.), autonomy (Cruise), and mobility services (Cruise Anywhere)."</p></p><br/><br/><h3>Ford</h3><img src="https://static3.businessinsider.com/image/5fff55dafe7e140019f7ec6a-400-300/ford.jpg" alt="" /><p><p>Stock ticker: <a href="https://markets.businessinsider.com/stocks/f-stock">F</a></p><p>Bank of America's price target:&nbsp; $12</p><p>Why Bank of America recommends it: "Our Buy rating is predicated on our view that Ford is just starting to hit a more sustainable inflection in earnings, driven by the combination of a very favorable product cadence in the all-important US/NA [North America] market and restructuring efforts with its Global Redesign. In the face of a tough cycle/macro, we believe this self-help story will start to get more credit among the investment community, while improved execution and communication may allow Ford's multiple to recover over time."</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/tesla-gm-ford-taking-different-approaches-electric-vehicle-ev-market-2020-9">Tesla, GM, and Ford each have their own unique strategies for EV success &mdash; here's how they compare</a></em></p></p><br/><br/><h3>Magna International</h3><img src="https://static6.businessinsider.com/image/5fff5688fe7e140019f7ec70-400-300/magna-international.jpg" alt="" /><p><p>Stock ticker: <a href="https://markets.businessinsider.com/stocks/f-stock">MGA</a></p><p>Bank of America's price target: $105</p><p>Why Bank of America recommends it: "We view Magna as one of the highest-quality automotive suppliers, and believe its solid proprietary technology and customer relationships will allow it to grow via consolidation and takeover business over time. Despite a tough cycle/macro, we believe MGA's expertise of the complete vehicle/ components provides it with a unique competitive advantage amid the ongoing industry evolution and technological advancement."</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/magna-ceo-on-deal-with-lg-develop-electric-vehicle-powertrains-2021-1">Magna's CEO explains why he's joining with LG to make a $1 billion play for the electric car space</a></em></p></p><br/><br/><h3>CarMax</h3><img src="https://static2.businessinsider.com/image/5fff5715fe7e140019f7ec76-400-300/carmax.jpg" alt="" /><p><p>Stock ticker: <a href="https://markets.businessinsider.com/stocks/kmx-stock">KMX</a></p><p>Bank of America's price target: $121</p><p>Why Bank of America recommends it: "Our Buy rating on CarMax is based on both a cyclical and secular view. First, we believe that the record levels of trade-in/off-lease vehicles returning to the market in 2021+ will increase supply into the used vehicle channel and drive vehicle churn, which should re-accelerate volume growth. Second, CarMax remains focused on new store openings and expanding its online presence, which should drive incremental growth."</p><ul class="read-more-links"><li>Read more:</li><li><a href="https://www.businessinsider.com/polestar-2-review-price-ev-volvo-tesla-specs-horsepower-electric-2020-8">REVIEW: The $60,000 Polestar 2 luxury EV solves the worst part about driving a Tesla</a></li><li><a href="https://www.businessinsider.com/magna-ceo-on-deal-with-lg-develop-electric-vehicle-powertrains-2021-1">The CEO of the most important car company you've never heard of explains why he's joining with LG to make a $1 billion play for the electric car space</a></li><li><a href="https://www.businessinsider.com/rivian-vp-exec-job-interview-advice-2021-1">Rivian execs reveal how to ace a job interview with the Amazon-backed startup</a></li><li><a href="https://www.businessinsider.com/gm-launches-ev-delivery-van-brightdrop-logistics-business-2021-1">GM announces new electric delivery van with its own motorized pallet as part of new move into logistics</a></li></ul></p><br/><br/>
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