After several rough and tumble years, the market for cars and trucks is back on track. New-vehicle inventories have largely recovered to levels not seen since pre-2020-21, and automakers are once again ramping up sales and incentives. 

Prices, which had surged during supply shortages, have begun to stabilize and the average new car price even dipped about 1.2% year-over-year. By December of last year, the annualized sales rate hit 16.8 million units, the strongest pace in over three years. 

This improving backdrop, combined with the industry’s pivot toward electric vehicles and advanced technologies, has rekindled interest in automotive stocks. 

But which are the best stocks to add to your portfolio? After all, the sector features century-old giants and high-growth newcomers, steady dividend payers and speculative EV startups. 

We explore key areas of opportunity from top stocks to buy now, to EV leaders, as well as undervalued plays – all with a focus on U.S.-based automotive companies.

Top Automotive Stocks to Buy Now 

In the current market, many U.S. automakers are benefiting from resurgent vehicle demand and healthier supply conditions. Sales and earnings have improved for some industry leaders, suggesting momentum is on their side. 

Strong demand and effective cost management enabled many automakers to beat earnings expectations in multiple quarters, a sign of strong execution. Such results put a company on investors’ radar as a potential “buy now” candidate, especially if those trends are expected to continue. 

Beyond recent financial wins, top auto stocks include market disruptors and innovators. For example, one California-based EV leader has proven how a focus on innovation can redefine the industry. 

Established U.S. car companies are responding in kind, rolling out electric models and connectivity features to keep up. 

Balance sheets matter too because ample cash and manageable debt give a company flexibility to invest in new products or weather downturns. 

Ultimately, a “top automotive stock” these days must balance current profitability with future readiness. These tend to be firms that are capitalizing on today’s high demand, filling dealer lots and posting strong sales) while also investing in tomorrow’s technologies, like EVs, autonomous driving, and software services). 

Key Takeaways for Top Auto Stocks: 

• Strong Recent Performance: Look for companies posting solid sales and earnings growth as the auto cycle rebounds. 

• Future Catalysts: Favor automakers with clear EV strategies or other innovation pipelines driving future growth. 

• Financial Health: Top picks often have sturdy balance sheets and the cash to fund new initiatives without over-leveraging. 

• Market Position: Established market leaders or fast-emerging disruptors – both can be “buys” if they execute well in the current environment. 

By focusing on companies that are winning now and positioning for the future, investors can hone in on automotive stocks that merit a spot on the buy-now list. Next, we’ll look at those appealing to income-focused investors, the dividend-paying auto stocks that can provide cash returns even as the industry evolves.

Best Automotive Dividend Stocks for Income 

Among the best automotive dividend stocks are established, blue-chip car manufacturers who produce enormous cash flows, especially from their bread-and-butter gasoline vehicle businesses, and share a portion of profits with shareholders. 

U.S. automakers have had a mixed history with dividends because they’re cyclical businesses, so payouts can be paused during hard times but several have resumed or maintained dividends in recent years, making them attractive to income investors once again. 

Two of Detroit’s household names illustrate the dividend story.The Board at Ford has been particularly shareholder-friendly with dividend payouts. 

Ford pays out a yield just north of 7% which dwarfs the payout of General Motors.

This hefty yield stems from Ford’s commitment to return 40–50% of its annual free cash flow to shareholders, a target it has hit in part by issuing supplemental special dividends. 

The Board of Directors has authorized additional special dividends in recent years, thanks to gains on investments in an EV startup. 

Such policies have given Ford one of the highest dividend yields in the auto sector, over 7%, versus the S&P 500’s ~1.2% average, appealing to income-focused investors. 

General Motors’ Board suspended the firm’s dividend during the 2020-21 era and later reinstated it, albeit modestly. The Board of Directors authorized multi-billion-dollar repurchases to lower share count and boost earnings per share.

The result is that GM’s dividend yield of around 1% is much lower than Ford’s. For pure income seekers, GM may not be as enticing, but it’s a reminder that dividend strategies can vary even among similar companies. 

Yield seekers will do better with Ford but there’s more to the story than the big two, and auto parts suppliers or retail chains, for example, tire and parts companies, sometimes offer dividends too.

Many newer EV companies do not pay any dividend because they’re focused on growth and often not profitable enough to distribute cash. Thus, the best dividend bets are usually the legacy automakers or related firms with established earnings. 

It’s also wise to check the payout ratio, the percentage of earnings paid as dividends, and the consistency of payments over time. 

What Should Income Investors Look For?

• Established Players Lead: Legacy U.S. automakers like Ford (and sometimes GM) have historically offered dividends when profitable, with Ford currently yielding well above market averages. 

• Dividend vs Buyback: Be aware of a company’s capital return strategy; some, like Ford, emphasize dividends, while others, like GM, favor buybacks. 

• Cyclical Caution: Auto dividends are not as rock-steady as utilities or consumer staples. 

• Income plus Growth: Ideally, find a balance, an automaker that yields a solid dividend and has plans to grow so that the dividend can be sustained or raised over time. 

Dividend-paying automotive stocks can provide a nice income stream for investors, effectively letting you “get paid to wait” as the company navigates the EV transition or other changes. 

EV and High-Growth Automotive Stocks to Watch 

Few areas in the stock market have generated as much buzz in recent years as electric vehicles and high-growth auto tech companies. 

The U.S. automotive landscape now features not just the traditional car makers, but also a crop of EV-focused firms, including the trailblazing market leader. 

Tesla, of course, set the template. The company’s meteoric rise showed that an upstart with a compelling EV product line could challenge incumbents and achieve scale. 

Tesla’s growth has been extraordinary and other than BYD it really doesn’t have an EV rival that can produce millions of units annually. That growth trajectory exemplifies why high-growth investors flock to the EV space. 

Tesla’s success also spurred a wave of newcomers aiming to carve out their own niche in the EV market, whether it be luxury sedans, pickup trucks, or commercial vans.

Two U.S.-based EV startups often in the conversation are Rivian Automotive and Lucid Group. 

Rivian, which focuses on electric pickups and delivery vans, has shown encouraging progress in scaling production. Last year, Rivian produced roughly 49,500 vehicles and delivered over 51,000; some inventory from prior orders. This was a big leap from just a few thousand a couple of years earlier.

Lucid, targeting the high-end luxury EV segment, has been slower out of the gate, delivering only a few thousand of its sleek Air sedans so far. These companies represent the high-growth, high-risk end of the spectrum because they are growing their top lines quickly, albeit from a very low base, but are still far from turning consistent profits as they burn cash to scale up. 

Investors who watch or invest in these names are betting on their long-term disruption, knowing there will be volatility along the way. Even the traditional automakers can become “high-growth” stories when they pivot successfully to new technologies. For instance, General Motors and Ford are legacy companies but have set ambitious targets for their EV businesses, essentially trying to behave like agile EV startups within their larger operations. 

General Motors planned to produce about 200,000 EVs in 2024 and aims for its EV division to be profitable by 2025, which is a rapid transformation considering GM was selling essentially zero pure EVs in volume just a few years prior. If achieved, that growth in EV sales would be remarkable for a company of GM’s size. 

Ford, while facing some hurdles, has seen its EV sales from models like the Mustang Mach-E and F-150 Lightning grow at high double-digit rates, even though it’s also incurring large losses during the build-out phase. 

When evaluating EV and other high-growth automotive stocks, consider a few points: 

• Market Opportunity: The EV market is expanding fast. EVs accounted for about 8% of U.S. new vehicle sales last year and that share is expected to keep rising. High-growth auto companies are all tapping into this growing pie, whether it’s passenger cars, electric SUVs, or commercial EV fleets. A larger market helps everyone grow, but competition is also intensifying. Technology and 

• Differentiation: Does the company have a technological edge or unique product? For example, a startup might have proprietary battery tech or a software advantage. Tesla’s lead in battery range and its Autopilot, the driver-assistance software, helped set it apart. Rivian’s focus on rugged adventure EVs and its big Amazon van order gives it a distinct story. High-growth investors often favor companies with some moat or innovative spark that can sustain rapid growth. 

• Financial Sustainability: Growth is great, but can they fund it? Many EV upstarts have gone public to raise billions for factory building and R&D. It’s important to monitor their cash burn and balance sheet. A company that grows fast but runs out of cash will hit a wall. This is where legacy automakers have an edge and they have profitable gasoline vehicle businesses that can, in theory, bankroll their EV ventures, though this can drag down current profits. 

• Stock Valuation Volatility: High-growth auto stocks tend to trade on big valuations of future potential, not current earnings. This means their stock prices can be very volatile, swinging on news of production numbers, factory delays, or even broader tech stock sentiment. It’s not uncommon to see double-digit percentage moves in a day on an EV stock after a production report. Investors need to be prepared for a bumpy ride and have a long-term conviction if they jump into these names.

Undervalued Automotive Stocks for Value Investors 

Value investors love nothing more than a good bargain, stocks that trade at low valuations relative to their earnings or assets. 

These might be established automakers whose stocks are beaten down due to short-term challenges, or companies that have solid assets and cash flows but a low market valuation. 

Legacy U.S. automakers often find themselves in the value stock category. For example, consider that in early 2025 General Motors was trading around just 7 times earnings (P/E ~7.4). That’s a fraction of the broader market’s P/E. 

One Wall Street firm actually labeled GM as its top pick partly for this reason, calling the stock undervalued at those levels. In GM’s case, it had strong profits from its truck and SUV franchise and was buying back shares, yet the market was still pricing it cautiously – an inviting scenario for value investors who believe those earnings are sustainable or growing. 

Ford has similarly been viewed as a value play. At one point in 2024, Ford’s share price was hovering around $10, which was roughly equal to the cash per share on its balance sheet and even below its book value per share. In other words, the market valued the entire business barely above the cash it had in the bank and the net worth of its assets, implying very low expectations for growth. 

For a value investor, such pricing can signal a margin of safety because you’re paying for the company’s tangible assets and current business but not paying anything for its future potential. 

Of course, the flip side is that sometimes those low valuations exist for good reasons, they’re value traps. For example, if an automaker is facing structural declines or heavy losses in new ventures, the market may be discounting those risks appropriately. 

To identify undervalued auto stocks, investors might screen for metrics like: Low P/E or Low EV/EBITDA: Companies with earnings but low multiples relative to peers or historical ranges. 

Often Ford, GM, and Chrysler’s successor, now part of Stellantis, have traded at single-digit P/Es when the market is skeptical about the auto cycle. 

• High Dividend Yield (relative to peers): A high yield can mean the stock price is depressed (provided the dividend is sustainable). As noted, Ford’s yield spiked above 6% when its stock fell, a potential value signal (though one must ensure the dividend won’t be cut). 

• Discount to Book Value: If a company’s price-to-book ratio is near or below 1, it means the market thinks the assets are worth only what’s on the balance sheet or less. In autos, book value includes factories, inventory, etc. During crises, auto stocks have traded below book – if one believes those assets and brands still have earning power, that’s a value opportunity. 

• Strong Fundamentals, Weak Sentiment: Sometimes an automaker might actually be doing okay financially but the stock is down due to headline fears (recession worries, trade tariffs, etc.). For example, say an automaker has plenty of cash, manageable debt, and is still profitable, but its stock is down because investors are fixated on expensive EV investments or labor strikes. 

A value investor could see an overreaction there. It’s worth noting that “value” in auto stocks can be a waiting game. The industry is notorious for boom-bust cycles. A stock can look cheap for a while if the market believes a downturn is on the horizon. For instance, both GM and Ford had low valuations in 2024 because investors were worried about their costly EV transitions and big picture headwinds. 

Patience and a contrarian mindset are often required, one might have to endure some volatility before the market recognizes the value. On the positive side, if the prospects improve or fears ease, the upside can be significant. 

We saw instances where analysts set ambitious targets on undervalued names; one analyst even projected GM’s stock could roughly double, reflecting how cheap it appeared relative to its potential. That kind of re-rating can reward value investors handsomely if it materializes. 

The recipe for success is identifying which companies are simply undervalued versus those that are undercut by real problems. Value investors do deep homework on balance sheets, competitive advantages, and management strategy to tell the difference. Next, we’ll shift from pure valuation to the thematic side: companies that are riding the biggest trends (EVs and autonomous vehicles) which could drive growth and stock performance. In other words, which automotive stocks are most leveraged to the EV and self-driving wave – and how are they balancing the excitement with execution?

Automotive Stocks Riding the EV and Autonomous Vehicle Wave 

The auto industry is in the midst of two transformational waves, the first being the rise of electric vehicles and the second is autonomous driving technology. 

How are U.S. automotive stocks riding the EV and autonomous vehicle wave, and what that means for investors? 

Virtually every U.S. automaker now has an EV strategy. Companies riding this wave successfully are those rapidly expanding their EV lineup, securing battery supplies, and converting or building factories for EV production. 

General Motors, for instance, has gone all-in on EVs and it has launched models like the Cadillac Lyriq and Chevy Bolt (and upcoming Silverado EV, Blazer EV), and even set a goal to eliminate tailpipe emissions from its new vehicles by 2035, essentially aiming to be all-EV by then. 

GM’s multi-billion-dollar investment in battery plants and its Ultium EV platform is a big bet to ride the EV wave. 

Likewise, Ford is pushing forward with electric versions of its most iconic products, the F-150 Lightning EV pickup and the Mustang Mach-E SUV. 

However, riding the EV wave hasn’t been a smooth journey for incumbents. Developing EVs and related technology is expensive, and consumer adoption, while accelerating, might not be as fast as initially hoped for certain segments. 

Last year, both GM and Ford made news by tapping the brakes slightly on their EV rollout plans. Ford announced it would delay some EV models, like a planned electric three-row SUV and scale back the ramp-up of a new EV truck, refocusing on profitability and increasing its mix of hybrids for the time being. 

Ford’s management candidly noted that EV sales growth was not quite living up to early expectations and that the company’s EV unit was on track to lose $5+ billion last year amid pricing pressures. Adjustments were needed to ensure these investments pay off in the long run. 

Similarly, GM slowed the introduction of certain EV models and even sold its stake in a joint battery venture, opting to be prudent with capital as it chases EV growth. These course corrections show that while the EV wave is the future, automakers must balance ambition with financial reality. Investors should watch for which companies manage this balance best, those who can steadily grow EV sales and move toward profitability in that segment will be true winners of the trend. 

The other huge wave is autonomy, cars that drive themselves. This has proven even more challenging than EVs, but the potential rewards of robotaxis, self-driving delivery vehicles, are enormous. 

Many U.S. auto stocks have a stake in autonomous tech development. Tesla famously has its Full Self-Driving software in beta, aiming eventually for true autonomy for consumer cars. 

Ford and GM took different approaches. Ford invested in Argo AI (a self-driving startup) for several years, and GM bought Cruise Automation in 2016 to develop a commercial robotaxi service. For a while, it looked like Cruise under GM was at the forefront, it was testing robo-taxis in San Francisco and other cities. 

Riding the AV wave, however, has proven to be a costly marathon rather than a sprint. In late 2024, GM made a striking decision: it announced it would stop funding its Cruise robotaxi operation and wind down Cruise as a standalone service. This came after GM had invested over $10 billion into autonomous driving R&D since 2016. What happened? 

Essentially, GM determined that getting to wide-scale, fully driverless taxi deployment would take too much time and money, in an increasingly competitive arena. They faced stiff competition from players like Waymo (Alphabet) and others, and technical hurdles were higher than anticipated. 

So GM chose to fold Cruise’s technology back into the main company, focusing instead on applying autonomous features to personal vehicles (like its advanced Super Cruise driver-assist system) rather than trying to run a fleet of robotaxis immediately. 

This decision emphasizes an important lesson that the autonomous wave is real, but the timeline is longer than many hoped. With that said, GM isn’t abandoning autonomous technology but rather is just integrating it differently. And Ford, after shutting its Argo AI venture in 2022, similarly refocused on simpler forms of automation (like hands-free highway driving features) for now. 

Tesla is still working on consumer-level autonomy through incremental software updates. Other companies touching the AV wave include parts suppliers (for sensors, LIDAR) and technology firms partnering with automakers. 

But the key for investors is to calibrate expectations. Those companies that promised robo-taxis on every corner years ago obviously had to revise their goals. 

The winners in autonomy might be those taking a prudent step-by-step approach – enhancing vehicles with advanced driver assistance today, collecting data, and slowly increasing capability, rather than burning cash chasing a moonshot in one go. 

So, which automotive stocks are “riding” these waves effectively? 

Arguably, the ones to watch are those successfully bridging their present to the future. For EVs, companies like Tesla are pure-plays all in on the wave, whereas companies like GM are trying to leverage current profits (trucks and SUVs) to fund the EV push, some analysts view that favorably, noting GM’s strong execution in its legacy business gives it an edge in funding the transition. 

In fact, a bullish analyst report highlighted GM’s multiple avenues for growth and strong execution, including its EV strategy and even potential in future autonomous or AI applications, as reasons for a top rating. 

Ford, while facing more near-term profit pressure from EV losses, still has valuable franchises, the F-Series truck line and is adjusting strategy, boosting hybrids, targeting cost reductions, to stay in the race. 

Investors should keep an eye on milestones, such as battery cost breakthroughs, EV profit margin improvements, new self-driving feature rollouts, and partnerships (e.g., automakers partnering with tech companies for AI or software).

Those will indicate who is truly ahead in the EV/AV wave. Also, policy support like EV tax credits and infrastructure spending can amplify this wave for certain stocks. In conclusion for this section, the EV and autonomous trends are megatrends. 

Virtually all U.S. auto stocks are touched by them but the billion dollar question is who harnesses them best. 

Those that fall behind risk being left with shrinking legacy businesses. As an investor, gaining exposure to these themes is important, but so is picking the right horses and understanding the risks. 

Long-Term Automotive Stocks to Buy and Hold 

Long-term automotive stocks to buy and hold are typically those with strong brands, extensive moats, like large dealer networks or scale advantages, and management teams that can navigate change. 

These are companies an investor can feel comfortable owning for years, collecting dividends or steady growth, without worrying too much about quarter-to-quarter swings. 

First, it’s important to acknowledge the nature of the industry because, historically, auto stocks have not been the very top performers of the market over the long run. They’re known for cyclical ups and downs, boom times when the economy is strong and lean times during recessions. 

In fact, surveys have often found that both short-term and long-term investors expect relatively low capital appreciation from auto stocks, but relatively high dividends compared to other sectors. 

This suggests that, in the past, much of the return from long-term holding an auto stock might come from its dividend and the fact that you bought it cheap in a downturn. But the future might break from the past if the EV and tech transformations open new profit avenues. 

With that said, a few qualities to look for in a long-term automotive investment including: 

Companies that have been around for decades (or a century+) and have a loyal customer base. A prime example is Ford, founded in 1903, it has survived countless economic cycles, wars, oil shocks, and now is reinventing itself for EVs. 

Brands like Ford’s F-150 truck or Mustang have enduring appeal. This kind of brand equity is hard to replicate and can sustain a business through industry transitions (for instance, loyal F-150 buyers might eventually transition to the electric F-150 Lightning with Ford, rather than jumping to a competitor). 

General Motors, likewise, with brands like Chevrolet and Cadillac, has an entrenched position in the market. These companies are unlikely to disappear, which is a key consideration for a very long-term hold. 

A long-term stock should ideally have a strong balance sheet or at least prudent financial management. Automotive manufacturing is capital-intensive so look for companies with manageable debt levels and enough liquidity to invest in future projects. Many long-standing automakers also have sizable financing arms (captive finance units that handle auto loans/leasing) – these can be both a source of profit and risk, but when well-managed, they add to resilience by supporting sales via credit. An investor planning to hold for many years will prefer a company that isn’t over-leveraged. 

The auto industry is changing fast. A long-term winner must show that it can innovate, or at least adapt by partnering. Think of how some companies missed past shifts (like how a once-major player, Blockbuster, failed to adapt in its industry and vanished – in autos, one doesn’t want a “Blockbuster” story). In today’s context, an automaker that invests smartly in EVs, autonomous tech, connectivity, and even new business models (like car-sharing or subscription services) could be better positioned for long-term success. For example, GM’s strategic plan includes expanding into electric delivery vans, software services (OnStar, etc.), and other mobility solutions by 2030, all attempts to diversify and future-proof its business. Long-term investors should evaluate these roadmaps. 

Some auto stocks have actually delivered reasonable long-term returns if bought at the right time. Reinvesting dividends can significantly boost total returns for a stock like Ford or GM if the purchase was made when valuations were low. 

Also, consider stock buybacks as part of returns – GM, for instance, has been using buybacks to return value to shareholders, which over time increases the value of remaining shares if done consistently. Which U.S. automotive stocks might fit a long-term buy-and-hold approach? 

A few categories stand out: 

1. Legacy Leaders (with a twist)

Ford and General Motors come to mind again. They have the scale, the dealer networks, and the manufacturing know-how that newcomers can’t replicate easily. Both pay dividends (which long-term holders can reinvest). 

Both are aggressively investing in EVs to ensure they aren’t left behind as the fleet gradually electrifies. There will be bumps in the road, but if one believes that in 10-15 years these companies will still command significant market share – albeit with more electric and high-tech vehicles – then current low valuations could make them rewarding long-term holds. 

These stocks might require patience; as one analyst quipped about Ford, for long-term investors historically the dividend has often been the main source of returns given the stock’s lackluster appreciation. But going forward, if Ford can execute its turnaround (cutting costs, focusing on profitable segments, and growing EV and hybrid sales), there’s potential for both dividend yield and stock price growth. GM’s longer-term strategy, including possibly monetizing software (GM estimates future revenue from software services and subscriptions), could bolster its long-term investment case if successful. 

2. The Dominant EV Player

On the other end, Tesla is sometimes considered a long-term hold by those who believe it will be the next-generation Ford of the EV era. It doesn’t pay a dividend, and it’s had its share of volatility, but many investors see Tesla as a company you simply own for the long run if you believe EVs will dominate. 

Tesla has established a brand with almost Apple-like loyalty in autos and has vertically integrated operations (from batteries to charging network) which could yield sustained competitive advantages. 

Long-term holders here are betting Tesla will keep innovating and maintaining a lead in EV tech and possibly autonomous driving. It’s a different profile (growth-oriented long-term hold vs. value-oriented for Ford/GM), and certainly carries different risks, but it’s a key piece of the U.S. auto landscape. 

3. Picks and Shovels (Auto Suppliers)

Though our focus is on automakers, one could argue some of the best long-term auto-related investments are suppliers or adjacent companies that benefit no matter which car brand wins. For example, companies making critical components (semiconductors for cars, batteries, etc.) or auto parts retailers that profit from the large vehicle population on the road. 

However, these might not fall under "automotive stocks" in the narrow sense of manufacturers, so we’ll stick to the automakers themselves for now. In summary, long-term investing in this sector means identifying companies that you believe will still be profitable and relevant 5, 10, 20 years from now. U.S. automotive icons like Ford and GM have been through countless tests and still stand – they offer income and deep value, which can reward patience. 

Up-and-comers like Tesla offer a different kind of long-term proposition – high growth and industry disruption – which has its own appeal if one is confident in their continued leadership. For a buy-and-hold strategy, it’s crucial to tune out short-term noise. Auto stocks will definitely have rough quarters (supply chain issues, recalls, spikes in raw material costs, etc.). A long-term investor focuses on the big picture: Is market share being maintained or grown? Are new technologies being adopted successfully? Is the company financially solid enough to get through downturns? If those answers are positive, holding through the cycles can yield solid results. 

Finally, let’s consider another angle that can guide investment choices: which automotive stocks boast strong fundamentals and earn buy ratings from analysts. Essentially, which companies check all the boxes in terms of financial health and are also endorsed by the experts?

Automotive Stocks with Strong Fundamentals and Buy Ratings 

Sometimes the best clues for investment ideas come from the intersection of fundamental strength and analyst confidence. In the automotive sector, certain stocks stand out for having strong financial metrics – healthy profits, solid balance sheets, good management efficiency, and as a result, they garner “Buy” ratings from Wall Street analysts. 

Focusing on automotive stocks with strong fundamentals and widespread buy ratings can be a strategy to find relatively safer bets in a volatile industry. What do we mean by strong fundamentals? 

It refers to things like consistent earnings (or improving earnings trends), good profit margins relative to peers, reasonable debt levels, positive free cash flow, and maybe a history of returning cash to shareholders (dividends/buybacks) without kindizing growth. Essentially, a fundamentally strong automaker is running its core business well – building cars that sell, managing costs, and converting sales to profits. General Motors in recent times provides a good example. 

As of last year, GM was delivering very solid financial results. Its revenue and profits were hitting highs – for the first nine months of 2024, GM had $8.9 billion in net income, up from $8.0 billion the prior year, on $139 billion revenue, and it was on track for possibly record annual profitability. 

Margins were benefiting from a strong mix of trucks/SUVs and cost-cutting initiatives that aimed to save $2 billion by the end of 2024. These are the kind of fundamentals that give analysts confidence. Indeed, GM raised its earnings outlook for the year, projecting adjusted EBIT of $14-15 billion – a sign of management’s confidence in performance. When a company in a tough sector like autos can raise guidance, it tends to turn heads on Wall Street. 

Not surprisingly, analysts have taken note. GM currently carries a majority of buy or overweight ratings from brokerage analysts. One particularly bullish call came from TD Cowen, which initiated coverage with a Buy rating and a “street-high” $105 price target for GM stock in March 2025. 

At the time, GM shares were around the $40s, so $105 implied a huge upside. What was the rationale? Cowen’s analyst pointed to GM’s strong fundamentals – a modest valuation (P/E around 7), multiple avenues for growth (electric vehicles, its dominant truck or franchise, software), and strong execution track record. 

They highlighted that a significant portion of GM’s earnings comes from its truck business (a cash cow), giving it stability, while its EV strategy could add incremental value over time. GM was also praised for having a strategy in place for stock buybacks, a healthy free cash flow yield, and even its investments in autonomous and AI technologies (notwithstanding the Cruise adjustment) as potential value-adders. In short, GM checked a lot of boxes: strong current profits, a plan for the future, and a cheap stock – earning it enthusiastic buy ratings. 

Another company that often earns strong marks on fundamentals is Toyota (though not U.S.-based, Toyota is a major player in the U.S. market). Toyota is frequently cited by analysts for its fortress balance sheet and steady margins. 

However, focusing on U.S. companies, one could argue Tesla has developed a version of strong fundamentals in its own way: it has high gross margins (even after recent price cuts, Tesla’s margins are healthy for an automaker), strong revenue growth, and has been consistently profitable for a few years now – something many doubted it would achieve in its early days. Many analysts do rate Tesla a Buy, citing its growth and leading position in EVs. Though Tesla’s valuation multiples are high, its fundamental performance (sales, cash flow, etc.) has been impressive, which is why it maintains a large following of bullish analysts and investors. 

Ford is a mixed case – it has some strong fundamental points (like a lot of cash, as noted, and profitable gas vehicle lines), but also some weaknesses (its margins have been eroded by EV losses and some quality/warranty issues). 

As of late last year, analysts were more divided on Ford, partly evidenced by it having a hold rating consensus while GM was closer to buy territory. That shows the importance of fundamentals: Ford’s were seen as shakier (declining net income in 2024, and cutting guidance), hence fewer strong buy ratings. 

So if one is screening for “strong fundamentals and buy ratings,” they’d likely lean toward GM over Ford at that moment, for example. Other automotive-related stocks with strong fundamentals might include some of the large auto dealers or parts companies (some of these have very consistent profits and are liked by analysts), but again focusing on manufacturers, the pool is fairly small. 

Many analysts also favor companies like Stellantis (which includes Chrysler, Dodge, Jeep in the U.S.) because it has strong cash flows and a commitment to return capital to shareholders. Although Stellantis is headquartered in Europe, it’s partly an American automaker by heritage and has had eye-popping fundamentals at times (huge cash, low valuation, high dividend, analysts often call it undervalued). In evaluating fundamentals, investors should look at recent earnings reports and metrics like: operating margin, return on equity, debt-to-equity, free cash flow, and unit sales trends. 

A company with strong numbers in these areas likely will have management touting them on earnings calls, and analysts issuing positive notes. It’s always a good sign when you read an analyst report and see phrases like “record revenue” or “better-than-expected margins” or “strengthening balance sheet” – those often accompany Buy recommendations.