Do we have a eagerness for a new set of wheels? If we do, we aren’t alone. Americans are shopping new cars during a fastest gait in a decade. Sustained alleviation in a labor market, low gasoline prices and easier credit accessibility are pushing a bang in U.S. automobile sales.
For investors scouring a marketplace for new opportunities, automotive-related bonds might be staid to advantage from this certain consumer trend.
New automobile sales have been on a tear. For September, engine automobile sales surged to a seasonally practiced annual rate of 18.2 million, adult from 17.8 million in August. “It wasn’t too prolonged ago that engine automobile manufacturers were some-more than confident with monthly sales levels using in a seasonally practiced annual rate operation of 16 million. Now engine automobile manufacturers are looking to set chronological annals each month,” according to Briefing.com, a Chicago-based eccentric live marketplace investigate firm.
The considerable auto sales numbers are a “testament to a absolute force of restrained demand,” says Ryan Sweet, handling executive during Moody’s Analytics in suburban Philadelphia. “During and right after a recession, people gathering their cars into a ground. Now, there is altogether certainty in a pursuit market, and seductiveness rates are still really low. We are during a tip turn of automobile sales given 2005.”
The automobile sales trend bodes good for a economy. “Typically, consumers don’t buy cars if they are shaken about their jobs,” Sweet says. Also, a clever gait of light lorry sales reflects a ongoing strength in a housing market. Light lorry sales totaled 8.9 million in September, adult from 8.5 million in August, 8.4 million in Jul and 7.8 million in June. The rising trend in lorry sales corresponds to an boost in housing starts, Sweet says. “We are saying homebuilders and contractors replacing their aged light trucks with new ones,” he says.
Motor automobile manufacturers posted year-over-year sales gains in September, led by Ford Motor Co., that saw year-over-year sales boost 23 percent. Automotive zone gain are approaching to boost 21.2 percent in a third entertain of 2015, fixation it during a tip of sectors lonesome by Zacks Investment Research, a Chicago-based eccentric equity investigate firm.
Tire and rubber bonds in a Standard Poor’s 500 index are adult 14.4 percent year to date contra a 1.3 percent decrease in a altogether SP 500, according to SP Capital IQ data.
Looking ahead, a brood of factors are seen ancillary continued strength in U.S. auto sales.
And a normal age of vehicles is removing older, so they’ll need some-more maintenance. The normal age of light vehicles in a U.S. is approaching to boost from 11.4 years in 2013 to 11.7 years by 2019, according to forecasts by IHS, a business investigate organisation formed in Englewood, Colorado.
Bottom line? “Sales will sojourn really strong. There are really few weights on automobile sales. It’s still rock-solid,” Sweet says.
Here’s a demeanour during automobile and auto-related bonds that could advantage from positive automobile sales trends.
The Goodyear Tire Rubber Co. (ticker: GT) is a largest U.S. manufacturer of tires and one of a biggest worldwide. SP Capital IQ gives GT batch a five-star ranking. “We see rising tellurian automobile prolongation in 2015 as good as expanding tellurian direct for tires. We design increases in both strange apparatus tires and deputy tires,” says Efraim Levy, equity researcher during SP Capital IQ. “Our elemental 12-month opinion for a tires and rubber sub-industry is positive. We trust formula in 2014 were helped by aloft volume due to an improving U.S. economy as good as by a flourishing tellurian economy.”
Cooper Tire Rubber Co. (CTB) manufactures and markets tires domestically and worldwide. “The association is benefiting from a high-performance products, share repurchases and improving business operations,” according to Zacks Investment Research.
Ford Motor Co. (F) was a sales personality in a U.S. in September.
All 3 reportable segments for Ford (cars, utilities and trucks) posted double-digit increases, trimming between 19 percent and 27 percent. “Ford’s many essential automobile is roughly positively a F-Series pickup trucks, that posted a 16.4 percent boost and a 28 percent sell channel increase,” says David Whiston, strategist during Chicago-based Morningstar, an eccentric investment investigate firm.