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However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
There are 57 stocks listed under "automotive" in the CAPS' screener, but more than a handful of them carry well-respected four- and five-star ratings. Those accolades mean our 170,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:
52-Week Price Change
5-Year Growth Rate
|Honda Motor (NYSE: HMC )||****||$38.77||10%||25%|
|Lear (NYSE: LEA )||*****||$49.03||20%||11%|
|Oshkosh (NYSE: OSK )||****||$34.96||(13%)||13%|
Source: Motley Fool CAPS; Yahoo! Finance.
The markets have been on a roller-coaster ride lately, but with the S&P 500 up 12% over last year, CAPS consumer automotive stocks have done significantly better. The average stock in the sector is up 45% from the year-ago period, so let's take a closer look at why investors think some of these other companies won't be jumping from the frying pan into the fire now that the markets are roiled again.
Some spring in its step
In the aftermath of Japan's earthquake and tsunami, automakers like Honda Motor, Toyota (NYSE: TM ) , and Nissan have naturally taken a hit to production. Investors may assume that American automakers will have an edge going forward, but because microchips and electronic components are typically sourced from Japan, Ford (NYSE: F ) and General Motors (NYSE: GM ) are also likely to suffer from sporadic production shutdowns. Look for Lear and U.S. parts suppliers to feel the effects, too.
Tight capacity issues were already causing problems for automakers before the devastation, as evidenced by several temporary shutdowns at Ford plants building the F-150 pickup. Ford, like Toyota, has also had to contend with vehicle recalls. Seat components made by Lear didn't meet federal safety standards and they had to recall 1,600 Explorers, and Ford has recalled more than 1 million vehicles so far this year for a variety of issues. Of course, that pales in comparison to the 14 million vehicles Toyota has recalled since November 2009.
Both Toyota and Honda say they're going to extend their own production shutdowns further. It's affecting nonautomotive production, too, with Sony suspending some of its consumer electronics manufacturing.
Honda's stock has peeled back about 13% from its recent highs, but that ought to represent an opportunity for investors. Before the quake, Honda and the other automakers enjoyed a huge spurt of car sales in February. Honda's sales were up 22% and Toyota's were up 42%. GM saw a 46% gain, fueled by a 49% increase in U.S. sales.
I think a lot of people left this company following the earthquake in Japan, but I think this is only a temporary problem for the company, not something holding back it's long term viability. Simply put, it was oversold.
Let us know on the Honda CAPS page whether the carmaker will drive off once normalcy returns, and add Lear to the Fool's free portfolio tracker to see if it's part and parcel of the industry's recovery.
It wasn't just auto sales that recovered in February. According to the industry watchers at ACT Research, North American commercial truck orders more than tripled from the year-ago period, although order volume was down sequentially from January.
The recovery is welcome news, though it hasn't meant much to YRC Worldwide (Nasdaq: YRCW ) . The company once again finds itself on the brink of bankruptcy as it technically went into default on its loans, although the lenders haven't pushed the issue yet.
Oshkosh makes a variety of specialty vehicles, including mine-resistant ambush-protected vehicles for the military, so its business is not dependent on the vagaries of the domestic truck market. Yet first-quarter sales overall dropped 30% as the company completed orders for a large defense contract, leading to a 41% plunge in profits.
The CAPS community remains bullish about Oshkosh's prospects, though, and the 11 Wall Street analysts following the specialty-vehicle maker are unanimous in their belief that it will outperform the broad market averages.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.