The auto industry is booming. The global car market is expected to reach $END trillion by 2023, driven by the rise of the millennial generation and their growing demand for safe, affordable, and technology-rich transportation options. As a result, automakers, suppliers, and other related companies have been incredibly bullish on their prospects. If you are an investor looking to capitalize on this growing trend and invest in auto components stocks that can weather any potential downturns in the next few years, keep reading for our recommendations.
Aptiv (APTV)
Investment SummaryAptiv is a global leader in electromobility solutions for original equipment manufacturers and mobility service providers. It offers various products and services, including electric powertrains, chassis, vehicle control, and connectivity solutions. The company operates a network of 12 engineering, manufacturing, and sales and service facilities across the globe. Apt is currently benefiting from strong demand for electric vehicles, particularly in China and Europe, along with a growing trend toward mobility services. While the stock doubled in 2019, it still looks like a compelling investment due to its robust long-term growth prospects and end-market solid tailwinds.
Luminar Technologies (LAZR)
Investment SummaryLuminar Technologies is a leading provider of autonomous vehicle sensors in commercial and autonomous vehicle markets. Its sensors can generate high-quality images in challenging environments and weather conditions. The company currently has three core segments: its core independent driving business, defense business, and commercial business. Luminar’s defense business is presently its largest segment, but the retail business is expected to surpass the defense segment in revenue by the end of 2021. In addition, Luminar’s commercial business is expected to experience rapid growth as the autonomous vehicle market continues to grow, particularly in the retail sector.
Tenneco (TEN)
Investment SummaryTenneco is a global leader in designing, manufacturing, and distributing motion and control technologies, ride control products and services. It offers a broad range of products, including exhaust systems and components, air management systems, ride control, and electronic products. The company operates in four business segments: Exhaust Technologies, Ride Control, Electronic Technologies, and Engineered Solutions. Tenneco has been a consistent dividend grower for years, with a solid record of returning cash to shareholders. The stock is currently trading below its long-term average P/E ratio. It offers a juicy dividend yield of nearly 7% and a significant long-term upside from the ongoing auto boom.
QuantumScape (QS)
Investment SummaryQuantumScape is a leading provider of integrated circuits for artificial intelligence, machine learning, and advanced data processing. The company’s high-performance solutions are used in various applications, including autonomous vehicles, data center infrastructure, networking, and high-end computing. As AI technology continues to advance, QuantumScape’s solutions become increasingly valuable. The company has partnered with major tech players, such as Amazon and Huawei, to design and produce customized chips based on its QPU architecture. The stock is currently trading at a discount to its long-term average valuation, making it an attractive investment opportunity.
Conclusion
The auto industry is booming, driven by the rise of the millennial generation and their growing demand for safe, affordable, and technology-rich transportation options. As a result, companies in this space are incredibly bullish on their prospects, with the global car market expected to reach $END trillion by 2023. Investors can benefit from this trend by investing in auto components stocks that can weather any potential downturns in the next few years. Aptiv, Luminar Technologies, Tenneco, and QuantumScape are great stocks to watch.