Auto Industry

  • 26 Sep
    An EV Future: Investing Dos & Don’ts – Specific Investment Opportunity Disclosed

    An EV Future: Investing Dos & Don’ts – Specific Investment Opportunity Disclosed

    • We won’t mention Tesla (except for right here).
    • Margins are essential for profitable long term investments.
    • Alternative related investments seem like the best option for low risk, high reward pre-hype investing opportunities in the electric market, the opposite is true for oil.

    Introduction

    The rumor is that Apple Inc. (NASDAQ: AAPL) is searching for a partner to develop a car that many believe will be all-electric. This would be only one additional player in the long line of automotive manufacturers that have embraced the electric trend.

    In this article, we will look at how big the electric trend really is and what the investing opportunities and risks related to the new trend are. More →

  • 21 Sep
    Heavy Machinery & Auto Stocks – Is Now The Time To Buy?

    Heavy Machinery & Auto Stocks – Is Now The Time To Buy?

    • Heavy equipment seems to be in the midsts of a supply glut where the risks outweigh the rewards.
    • Emerging markets are the key for car manufacturers, and positioning for growth there is essential.
    • Car manufacturers offer the possibility for long term outperformance by proper due diligence and geographic growth analysis.

    Introduction

    Heavy equipment, machinery and automotive manufacturing are important parts of the economy, but the sector is a cyclical one. In periods of economic growth, the majority of people buy new cars, and new infrastructure and homes are built, which increases the demand for machinery. However, this demand only lasts up to a point after which people have already purchased their new car—and aren’t likely to replace it for 7 years—and there is an abundance of machinery available as machinery is typically made to last for more than 20 years. More →

  • 21 Apr
    An Investigation Into the Relative Cheapness of the Automotive Industry

    An Investigation Into the Relative Cheapness of the Automotive Industry

    • With a PE ratio of 5 to 10 the automotive industry looks attractive
    • The risks are that the industry is considered to be at a historical peak by most analysts
    • A global perspective gives a bullish outlook for the industry

    Introduction

    The automotive industry is usually called a cyclical industry, considered elastic in relation to GDP and vulnerable to economic shocks. According to a former Ford chief economist a normal recession reduces sales by 15%. With sales being reduced by 15% and costs being inelastic the decline in sales is the one that makes the difference between strong earnings and big losses. Any sign of a recession puts people off from buying new cars and makes them stick to the car they have for a little longer. Connecting the cyclicality and cost inelasticity with the current valuation for automotive companies brings to interesting conclusions. More →

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