Will These Automaker Stocks Outperform in the Second Half of 2014?

07/10/2014 7:00 am EST

Focus: STOCKS

Given that automaker stocks were badly beaten down and battered as a result of the financial crisis, Chris Lau of Kapitall.com explores how they’ve performed in the first half of 2014 and what may be in store for them in the second half of the year.

Automaker stocks suffered after the financial crisis. Will 2014 be different?

June sales for automobiles could slump, contrasting the strong sales in the previous month. If Edmonds.com is right, then the big three could see weaker sales.

Edmonds.com forecasts GM’s (GM) sales will fall by 8.5% and 6.5% for Ford (F). Conversely, Toyota Motors (TM) could grow sales by 1.3% in June. Despite the setback for the American automakers, Ford is the outperformer in the last six months.

chart
Click to Enlarge

New leadership at Ford should reinvigorate shares further. Ford is set to get a new CEO, as Alan Mulally plans for retirement on July 1. This will be succeeded by Mark Fields. Mulally simplified operations so that it could run more profitably. With Fields in charge, investors should not expect many operational changes at Ford. Instead, the company is set to focus more on advertising its brand and product. Ford’s growth now depends on standing out against the other automobiles.

Alternative Investments

After bottoming in 2012, GM’s shares continued its ascent up until quality issues in its products surfaced. GM is on the rise once again, but slower demand, litigation risks, and pressure on profitability could hurt its shares.

Other than make a recall for around 650,000 cars due to defective airbags, Toyota continues to introduce more fuel efficient options for consumers. The firm said it will sell the first fuel-cell car by March 2015 in Japan.

Bottom Line

Ford is still defined by its pickup truck, but it has work to do in boosting consumer interest in its sedan and compact cars. Higher consumer demand for fuel efficiency favors Ford’s hybrid and compact car offerings. Ford just needs to advertise effectively to win against other fierce automotive competitors.

Disclosure: Author holds a long position in Ford.

Do you think automaker stocks are ready to see a bounce in the remainder of the year? Use the links below to start your analysis.

1. Ford Motor Co. (F): Develops, manufactures, distributes, and services vehicles and parts worldwide. Market cap at $59.84B, most recent closing price at $15.18.

2. General Motors Company (GM): Operates as a global automaker. Market cap at $50.91B, most recent closing price at $36.55.

3. Toyota Motor Corporation (TM): Engages in the design, manufacture, assembly, and sale of passenger cars, minivans, and commercial vehicles. Market cap at $184.08B, most recent closing price at $116.17.

By Chris Lau of Kapitall.com

Related Articles on STOCKS