October 4, 2023

Dealers choose auto favorites as the electric vehicle race accelerates.

Between the old automakers Ford and General Motors, GM appears to have a stronger position in the charts, Mark Newton, president and founder of Newton Advisors, told CNBC’s “Trading Nation” on Friday.

Wedbush began reporting GM on Friday with an outperform rating and said the company will benefit from “a renaissance in EV growth in Detroit”.

GM has done below Ford for the year to date, just 40% more than Ford’s 64% profit.

“Both stocks have seen tremendous uptrends in the past 16 months,” Newton said, up more than 200% each. “However, for me, GM is really the clear favorite between the two.”

Referring to a ratios chart of GM’s performance versus Ford, Newton pointed out that not only is the ratio oversold, but it has just hit a key trend line suggesting it is time to buy GM.

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“It was right to use such ratio charts for a lot of different pairings. I recommend people do this. But in general, it looks attractive to some people to buy Ford at 14 versus GM at 58,” he said. “GM has been a much better technical stock over the years, and to me it looks a lot more attractive than Ford at that level.”

Two macro drivers could boost numerous auto stocks in the near future, said Steve Chiavarone, portfolio manager, equity strategist and vice president at Federated Hermes.

“We believe there are two key issues that have a kind of nexus here. One is the EV issue itself, which we believe is a long-term growth driver, ”said Chiavarone from a fundamental and sustainable perspective in the same“ Trading Nation ”. Interview.

“Second, these are cyclical value stocks. Any slowdown or weakness we’ve seen in auto sales over the past few months is really related to … lack of supply, certainly not demand,” he said. “We think you’ll see these supply chain problems resolve on their own.”

That short-term growth spurt, ongoing EV history, and still low automotive valuations make this an attractive trade, Chiavarone said.

“They’re talking about an 8.5x multiple for these stocks, or at least high single digits, which we think is tremendous value,” he said.

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