As the demand for auto parts continues to rise with the growing demand for used cars, it could be wise to bet on fundamentally sound auto parts stocks Genuine Parts (GPC) and LKQ (NASDAQ:LKQ). These stocks have an overall ‘Strong Buy’ rating in our proprietary POWR Ratings system.The electric vehicle (EV) industry is expected to grow significantly in the long run. However, the ongoing semiconductor chip shortage continues to impact EV production. According to a Deloitte report, the semiconductor shortage is expected to last until early 2023. So, the new vehicle shortage has led to increased demand for used vehicles.
Used car prices have been soaring. However, according to J.D. Power, “As high as used-vehicle prices are, new-vehicle prices are even higher, well over $40,000 on average.” So, with the rising demand for used cars, the need for auto parts is expected to continue growing as people are still nervous about using public transport amid omicron coronavirus concerns. According to a 360 Research Report, the auto parts and accessories market is expected to reach $2.57 trillion by 2026, growing at a CAGR of 2.8%.
Given this backdrop, fundamentally-sound auto parts stocks, Genuine Parts Company (NYSE:GPC) and LKQ Corporation (LKQ), could be solid picks now. These stocks have an overall A (Strong Buy) rating in our proprietary POWR Ratings system.