Yahoo Finance 3 Broker-Favored Auto Stocks to Add to Your Portfolio Now
In the fast-paced world of investment, broker recommendations serve as guiding beacons. Their assessments not only offer insights but also carry significant weight, influencing market sentiment and investor decisions. These brokers diligently revise their earnings estimates, weighing the potential upsides and downsides of the stocks they analyze.
In this article, we delve into three auto stocks — Blue Bird Corp BLBD, General Motors GM and Dorman Products DORM — that have garnered favor from brokers and would be worth investing in now to reap handsome rewards. Each stock boasts strong fundamentals, promising growth trajectories and the confidence of broker consensus. They have an attractive average broker recommendation ("ABR") on a scale of 1 to 5 (Strong Buy to Strong Sell) and are witnessing upward earnings estimate revisions.
Auto Stocks Finding Favor With Brokers
Blue Bird: A prominent manufacturer of school buses and related parts, the company is a leader in alternative power. Six of the seven brokers covering BLBD stock have Strong Buy recommendations, giving the company an attractive ABR of 1.14.
Image Source: Zacks Investment Research
Blue Bird is trading close to its 52-week high of $54.26/share and has rocketed around 96% so far this year. With a robust market demand and an order backlog of approximately 5,900 units valued at around $850 million, Blue Bird is experiencing notable growth. Initiatives like product enhancements for EVs, new safety features, complexity reduction and quality improvements are contributing to its success. Manageable debt and sufficient liquidity add to its strengths. Significant improvements in pricing, EV mix and parts sales resulted in record results for the first half of fiscal year 2024, prompting Blue Bird to raise its forecasts for the year.
The Zacks Consensus Estimate for Blue Bird’s fiscal 2024 and 2025 sales implies year-over-year growth of 17.3% and 13%, respectively. Over the trailing four quarters, the stock surpassed earnings estimates on all occasions, the average surprise being 92.4%. The consensus mark for EPS implies year-over-year growth of 140% and 2%, respectively. BLBD is witnessing northbound estimate revisions for the current and next fiscal year. The stock currently carries a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
You can see the complete list of today’s Zacks #1 Rank stocks here.
General Motors: One of the world’s largest automakers, General Motors’ hot-selling brands in America — namely Chevrolet, Buick, GMC and Cadillac — are boosting the top line. Out of the 23 brokers covering GM stock, 14 have Strong Buy recommendations. Including one Buy rating, seven Hold ratings and one Strong Sell Rating, General Motors’ ABR of 1.83 is still favorable.
GM has surged roughly 26% year to date and is currently trading at around $45/share, with the possibility of more upside. The Zacks average price target of $52.6/share suggests a nearly 17% upside for the stock from the current levels.
Image Source: Zacks Investment Research
General Motors’ compelling EV and ICE portfolio, with strong demand for its quality pickups and full-size SUVs, bodes well for delivery growth. The company is swiftly advancing in its electrification journey, bolstered by a remarkable 300% surge in battery module production over the last six months. Its cost-reduction efforts, superior liquidity profile (total automotive liquidity of $33.3 billion as of Mar 31, 2024) and investor-friendly moves also instill confidence. GM is also attractively valued, trading at forward earnings multiple of 4.82, below its median of 6.02 over the last five years.
Image Source: Zacks Investment Research
GM currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for General Motors’ 2024 sales and earnings implies year-over-year growth of 1.7% and 22.4%, respectively. The consensus mark for GM’s 2024 and 2025 EPS has moved north by 32 cents and 29 cents, respectively, over the past 30 days. In the trailing four quarters, the stock surpassed estimates on all occasions, the average surprise being 18%.
Dorman Products: The company is a key player in the motor vehicle aftermarket industry, focusing on replacement and upgrade parts. Of the three brokers covering Dorman Products stock, two have a Strong Buy rating and the other has a Hold rating, with the ABR being 1.67. The stock has risen roughly 11% so far this year and seemingly has more upside. The Zacks average price target of $108.67 is still 17% above the current levels.
Image Source: Zacks Investment Research
Dorman consistently expands its product line, introducing hundreds of new direct replacement parts and assemblies designed to match or improve upon the performance of original equipment. In 2023, the company reached record annual sales of $1.93 billion, marking a 13% increase year over year. The acquisition of Super ATV has significantly boosted the company's overall prospects. Dorman's dedication to regular product launches and ongoing innovation fuels its sustained growth. With a strong balance sheet, a manageable debt-to-capitalization ratio of 29% (compared to the industry average of 42%) and ample liquidity, Dorman is well-poised for success. Investor-friendly moves via share buybacks further instill confidence.
The Zacks Consensus Estimate for Dorman Products’ 2024 and 2025 sales implies year-over-year growth of 4% and 5%, respectively. The consensus mark for EPS implies year-over-year growth of 24% and 12%, respectively. DORM is witnessing northbound estimate revisions for the current and next year. The stock currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Motors Company (GM) : Free Stock Analysis Report
Dorman Products, Inc. (DORM) : Free Stock Analysis Report
Blue Bird Corporation (BLBD) : Free Stock Analysis Report
