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SVTPerformance's Chain of Restaurants
Road Side Pub
Manufacturer 84 at 0%
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<blockquote data-quote="Weather Man" data-source="post: 16440323" data-attributes="member: 137766"><p><span style="font-size: 22px"><strong>J.P. Morgan favors these names for the stunning auto-sales recovery</strong></span></p><p>Jun. 19, 2020 4:51 PM ET|About: <a href="https://seekingalpha.com/symbol/GM" target="_blank">General Motors Company (GM)</a>|By: <a href="https://seekingalpha.com/user/427396/profile" target="_blank">Jason Aycock</a>, SA News Editor</p><p></p><p></p><p>Those trying to sort out the mismatch of economic figures and stock market surges could look to U.S. autos, J.P. Morgan says: which is "in the midst of a once fabled but clearly no longer mythical 'V-shaped recovery.' "</p><p></p><p> </p><p>New vehicle sales (seasonally adjusted annual rate) fell from 16.7M in February to 11.4M in March and 8.6M in April, before a 47% rebound to 12.6M in May, with what looks like a carry-over into June.</p><p></p><p> </p><p>Those end-of-May figures were enough for JPM to forecast another gain to 14.4M in June, but new information from Sonic Automotive potentially implies 15.5M SAAR (if figures end up down 10% Y/Y). And even that may be low, if the week-to-week trends keep accelerating, the firm says.</p><p></p><p> </p><p>Similarly, after expectations in April of a huge bear market in used vehicles, prices stabilized by the end of that month, then rose 8.9% in May. Prices are up another 6.6% sequentially for the first two weeks of June, according to Manheim - to a new record high.</p><p></p><p> </p><p>Lithia management on a nondeal roadshow the firm hosted last week even laid out a scenario for 15-18M SAAR in the second half, vs. an all-time record of 17.55M in 2016.</p><p></p><p> </p><p>Enthusiasm in the global market should be tempered, as other regions are lagging behind the U.S. and China in auto recovery, JPM adds.</p><p></p><p> </p><p>What's that mean for U.S. automakers? The firm prefers General Motors (NYSE:<a href="https://seekingalpha.com/symbol/GM" target="_blank">GM</a>) to Ford (NYSE:<a href="https://seekingalpha.com/symbol/F" target="_blank">F</a>), with an advantage in comparatively greater exposure to North America and China, with Ford's heavy presence in slower-rebounding Western Europe as a disadvantage. GM also enters the downturn from a position of relative strength, it says; it has a superior margin and free cash flow profile, and "the ability to replenish dealer inventory post-strike means less downside to sales vs. production in comparison to Ford."</p><p></p><p> </p><p>Its December 2020 price target of $33 on <a href="https://seekingalpha.com/symbol/GM" target="_blank">GM</a> implies 24% upside; its target of $7 for Ford implies 12.4% upside.</p><p></p><p> </p><p>Among auto parts suppliers, the firm had focused on quality (Aptiv (NYSE:<a href="https://seekingalpha.com/symbol/APTV" target="_blank">APTV</a>) has been its top pick), and now it's taking a more risk-on stance toward American Axle & Manufacturing (NYSE:<a href="https://seekingalpha.com/symbol/AXL" target="_blank">AXL</a>) and Dana (NYSE:<a href="https://seekingalpha.com/symbol/DAN" target="_blank">DAN</a>). Its $89 price target on APTV implies 14.5% upside, and a $16 target on DAN implies 35% upside. And for rental cars, it prefers Avis Budget (NASDAQ:<a href="https://seekingalpha.com/symbol/CAR" target="_blank">CAR</a>) to Hertz (NYSE:<a href="https://seekingalpha.com/symbol/HTZ" target="_blank">HTZ</a>), whose shares are now "highly unlikely to realize any recovery." The immediacy of the crisis seems to have passed for <a href="https://seekingalpha.com/symbol/CAR" target="_blank">CAR</a>, on which it has a $22 price target.</p><p></p><p> </p><p>The firm's also keeping an Underweight rating on Tesla (NASDAQ:<a href="https://seekingalpha.com/symbol/TSLA" target="_blank">TSLA</a>) - aside from Hertz, "by far the <a href="https://seekingalpha.com/news/3584603-jpmorgan-pitches-tent-in-tesla-bear-camp" target="_blank">most overvalued stock in our coverage group."</a> Its target is higher, to $275 from $240, but that still implies 73% downside from Tesla's $1000.90 close.</p><p></p><p></p><p>Now read: <strong><a href="https://seekingalpha.com/market-news/on-the-move?source=td_fidelityotm_nr_topnews" target="_blank">See all stocks on the move »</a></strong></p></blockquote><p></p>
[QUOTE="Weather Man, post: 16440323, member: 137766"] [size=6][b]J.P. Morgan favors these names for the stunning auto-sales recovery[/b][/size] Jun. 19, 2020 4:51 PM ET|About: [URL='https://seekingalpha.com/symbol/GM']General Motors Company (GM)[/URL]|By: [URL='https://seekingalpha.com/user/427396/profile']Jason Aycock[/URL], SA News Editor Those trying to sort out the mismatch of economic figures and stock market surges could look to U.S. autos, J.P. Morgan says: which is "in the midst of a once fabled but clearly no longer mythical 'V-shaped recovery.' " New vehicle sales (seasonally adjusted annual rate) fell from 16.7M in February to 11.4M in March and 8.6M in April, before a 47% rebound to 12.6M in May, with what looks like a carry-over into June. Those end-of-May figures were enough for JPM to forecast another gain to 14.4M in June, but new information from Sonic Automotive potentially implies 15.5M SAAR (if figures end up down 10% Y/Y). And even that may be low, if the week-to-week trends keep accelerating, the firm says. Similarly, after expectations in April of a huge bear market in used vehicles, prices stabilized by the end of that month, then rose 8.9% in May. Prices are up another 6.6% sequentially for the first two weeks of June, according to Manheim - to a new record high. Lithia management on a nondeal roadshow the firm hosted last week even laid out a scenario for 15-18M SAAR in the second half, vs. an all-time record of 17.55M in 2016. Enthusiasm in the global market should be tempered, as other regions are lagging behind the U.S. and China in auto recovery, JPM adds. What's that mean for U.S. automakers? The firm prefers General Motors (NYSE:[URL='https://seekingalpha.com/symbol/GM']GM[/URL]) to Ford (NYSE:[URL='https://seekingalpha.com/symbol/F']F[/URL]), with an advantage in comparatively greater exposure to North America and China, with Ford's heavy presence in slower-rebounding Western Europe as a disadvantage. GM also enters the downturn from a position of relative strength, it says; it has a superior margin and free cash flow profile, and "the ability to replenish dealer inventory post-strike means less downside to sales vs. production in comparison to Ford." Its December 2020 price target of $33 on [URL='https://seekingalpha.com/symbol/GM']GM[/URL] implies 24% upside; its target of $7 for Ford implies 12.4% upside. Among auto parts suppliers, the firm had focused on quality (Aptiv (NYSE:[URL='https://seekingalpha.com/symbol/APTV']APTV[/URL]) has been its top pick), and now it's taking a more risk-on stance toward American Axle & Manufacturing (NYSE:[URL='https://seekingalpha.com/symbol/AXL']AXL[/URL]) and Dana (NYSE:[URL='https://seekingalpha.com/symbol/DAN']DAN[/URL]). Its $89 price target on APTV implies 14.5% upside, and a $16 target on DAN implies 35% upside. And for rental cars, it prefers Avis Budget (NASDAQ:[URL='https://seekingalpha.com/symbol/CAR']CAR[/URL]) to Hertz (NYSE:[URL='https://seekingalpha.com/symbol/HTZ']HTZ[/URL]), whose shares are now "highly unlikely to realize any recovery." The immediacy of the crisis seems to have passed for [URL='https://seekingalpha.com/symbol/CAR']CAR[/URL], on which it has a $22 price target. The firm's also keeping an Underweight rating on Tesla (NASDAQ:[URL='https://seekingalpha.com/symbol/TSLA']TSLA[/URL]) - aside from Hertz, "by far the [URL='https://seekingalpha.com/news/3584603-jpmorgan-pitches-tent-in-tesla-bear-camp']most overvalued stock in our coverage group."[/URL] Its target is higher, to $275 from $240, but that still implies 73% downside from Tesla's $1000.90 close. Now read: [b][URL='https://seekingalpha.com/market-news/on-the-move?source=td_fidelityotm_nr_topnews']See all stocks on the move »[/URL][/b] [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
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