- Understanding the implications of UAW strikes can help you identify opportunities in the car industry.
- Analysts expect certain stocks to perform well amid the automotive industry decline.
- EPS expectations reinforce the investment thesis.
- Consider these stocks as potential investments to mitigate the impact of the decline.
By now, most market participants are aware of the UAW (United Auto Workers) union strikes and the risks they pose to domestic auto manufacturers and their profitability. However, understanding the broader implications of these strikes can lead to identifying pockets of opportunity in the automotive industry.
One possible outcome of the strikes is higher prices for new vehicles, which may weaken the market, especially when combined with higher financing costs. On the other hand, if striker demands are rejected, there could be a supply bottleneck, creating scarcity and increased demand for vehicles. Analysts and markets have identified potential investment opportunities amid these scenarios.
Analysts have found value in the after-market products industry, particularly in XPEL (NASDAQ: XPEL). Despite experiencing a recent decline, analysts remain optimistic about the company’s future upside potential. XPEL’s strong financials, including a 34% gross margin and a net income margin of nearly 14%, indicate potential value.
Another potential investment opportunity lies in the used car market, with CarMax (NYSE: KMX) at the forefront. Despite a recent decline, analysts believe there is a significant gap between the company’s current price and its actual value. They anticipate a 12.5% price increase and a 25.6% EPS growth in the next twelve months.
In the after-market products industry, Gentex (NASDAQ: GNTX) stands out with its strong financials and potential for compounding growth. Though the stock experienced a decline, its expected EPS growth of 24% in the next twelve months suggests untapped potential. Analysts may need to adjust their price targets to align with these expectations.
These stocks are interconnected by the underlying trend of money and value flowing into certain segments of the automotive industry. Considering these stocks as potential investments can help mitigate the impact of the industry decline.