4 Top-Ranked Foreign Auto Stocks to Add to Your Portfolio

The auto industry had a very strong run over the last two years but sales are now under pressure with a decline in new-vehicle buyers. Last week, the National Automobile Dealers Association (NADA) maintained its forecast of 17.1 million new car and light truck sales in the U.S. for 2017. Meanwhile, a look at the scorecard for the first half of 2017 shows that 8,401,715 new light-vehicles were sold, representing a year-over-year decline of 2.2%.

Major domestic auto carmakers like General Motors GM reported a decline in U.S. retail sales for the month of Jun 2017 while Ford said that its Jun 2017 U.S. sales declined 5.1% from the year-ago period.

Despite giving hefty discounts and providing easier lending terms, an influx of nearly new used vehicles has resulted in stiff competition for new vehicle sales. This is expected to weigh on new vehicle sales in the coming quarters along with a challenging pricing environment.

In fact, the Zacks-categorized Automotive-Domestic industry is currently among the bottom 9% of the 256 Zacks-ranked industries. Given the challenges being faced by automakers in the U.S. and concerns regarding a decline in domestic sales, it might make sense to look at some top-ranked stocks in the Zacks-categorized Automotive-Foreign industry, which is among the top 6% of the 256 Zacks-ranked industries.

Daimler AG DDAIF: Germany based Daimler operates through several divisions including Mercedes-Benz Cars, Daimler Trucks,  Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services. The company’s earnings track record is strong with earnings surpassing expectations in three of the last four quarters with an average surprise of 96.5%. Earnings estimates for 2017 are up 11.7% over the last 7 days. Estimated earnings growth for the current year is 15.6%. Earlier this month, the company reported that Mercedes-Benz sales grew 13.7% in the first half of 2017 representing the strongest half-year unit sales in the history of Mercedes-Benz.

In addition to being a Zacks Rank #1 (Strong Buy) stock, Daimler also has a VGM style score of “A”. The VGM style score is a useful tool that allows investors to gain an insight into a stock’s strengths and weaknesses. While “V” stands for Value, “G” stands for Growth and “M” for Momentum -- the score is a weighted combination of these three metrics. Our research shows that stocks with a VGM Score of “A” or “B” when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Renault SA RNLSY: French automaker Renault sells and services vehicles all around the world and in each segment. The company’s brands include Renault, Dacia, and Renault Samsung Motors. The company recently reported that its Passenger cars (PC) segment recorded its best half-year in six years with the Dacia brand setting a new sales record. Renault expects to continue benefiting from its renewed PC range in the second half of the year.

2017 earnings estimates are up 37.5% over the last 7 days. Estimated earnings growth for the current year is 25%. Renault is also a Zacks Rank #1 stock with a VGM score of “A”. YTD, Renault has performed better than the industry with shares up 2.2%.

Peugeot SA PUGOY: Peugeot, another French auto company, is part of the PSA Group which includes the Citreon and DS Automobiles brands. The Zacks Rank #1 stock has been witnessing upward revisions in earnings estimates for 2017 with estimated earnings growth for the current year being 55.1%. Peugeot also holds a VGM score of “A”. Peugeot’s shares are up 28% YTD, outperforming the industry which has declined 6.3% during this period.

Volkswagen AG VLKAY: Germany based Volkswagen comprises brands like Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN. The Group offers a wide range of financial services as well including dealer and customer financing, leasing, banking and insurance activities, and fleet management.

2017 earnings estimates for the Zacks Rank #1 stock are up almost 14% over the last 30 days. Estimated earnings growth for the current year is 122.5%. The Volkswagen brand saw worldwide deliveries increase in June as well as the first half of the year, with strong growth being recorded in China and other key regions. Volkswagen, which has gained 12% YTD, also boasts of a VGM score of “A”.

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General Motors Company (GM) : Free Stock Analysis Report
 
Daimler AG (DDAIF) : Free Stock Analysis Report
 
Volkswagen AG (VLKAY) : Free Stock Analysis Report
 
PEUGEOT SA (PUGOY) : Free Stock Analysis Report
 
RENAULT SA (RNLSY) : Free Stock Analysis Report
 
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