Even though Ford (F) is one of the well-known names in the auto manufacturing industry, its vehicle sales declined last month, and its near-term prospects don’t look very promising. So, we think it could be wise to instead bet on fundamentally sound auto manufacturing stocks Toyota (TM) and Honda (HMC) to capitalize on the industry’s gradual recovery.Ford Motor Company (NYSE:F), in Dearborn, Mich., operates through three segments: Automotive; Mobility; and Ford Credit, and it also holds an ownership position in Argo AI, a developer of autonomous driving systems. Ford’s shares have surged to a seven-year high on investors’ optimism surrounding its third-quarter earnings. The stock has gained more than 28% in price over the past month to close yesterday’s trading session at $19.36.
However, Wall Street analysts expect the stock to hit $18.08 in the near term, which indicates a potential 6.6% decline.. F’s total vehicle sales fell 4% year-over-year to 175,918 in October 2021. Furthermore, analysts expect the company’s revenue and EPS to decline 0.4% and 47.2%, respectively, year-over-year to $33.41 billion and $0.47 for the quarter ending March 31, 2022. So, we think it could be wise to wait for a better entry point in the stock.
The auto manufacturing industry continues to be impacted by the ongoing semiconductor chip shortage. However, according to a Yahoo finance report, there is tremendous pent-up car demand, which should help the industry recover. So, we think it could be wise to invest in quality auto manufacturing stocks Toyota Motor Corporation (NYSE:TM) and Honda Motor Co., Ltd. (HMC) instead. They both have an overall A (Strong Buy) or B (Buy) rating in our proprietary POWR Ratings system.