Auto Sales are Soaring, Why Aren’t the Stocks?

Could the great news already be baked in?

| More on:
The Motley Fool

One of the big business stories of the day is the recently released North American auto sales figures from August.  In a word, they were “spectacular”!

In the U.S., August was the best month for the industry in 6 years and 2013 sales are now on track to hit 16 million vehicles for the first time since 2007.

The story was similar on this side of the border as the seasonally adjusted annual sales rate hit 1.77 million vehicles in August.  The previous record for annual Canadian sales was 1.73 million.

But in the face of these uber-bullish headlines, the stocks of the two publicly traded North American OEMs, namely General Motors (NYSE:GM) and Ford (NYSE:F), as well as the Canadian auto-parts suppliers, are having nice, but relatively ho-hum days.

At the moment, GM and Ford are up 1.6% and 1.8% respectively, while Magna (TSX:MG), Martinrea (TSX:MRE), and Linamar (TSX:LNR) are each currently up 1.5%, 0.5%, and 0.1%.

What gives?

Today’s reaction by this collection of stocks could be an indication that the market is beginning to realize that it can’t get much better in North America for these companies.  Yes, business is booming, but these stocks have potentially priced most of this good news in.

In the table below, check out how each of the 5 stocks has performed over the past year:

Company Name

1 Year Performance











S&P 500


Source:  Google Finance

Each has substantially outperformed the S&P 500 over this period and while price appreciation alone doesn’t mean the run is ready to end, today’s reaction has to at least make one stop and wonder.

The auto industry is cyclical.  Today’s boom could be tomorrow’s bust.  For a smoother ride to riches, click here now and we’ll send you our special FREE report “3 U.S. Stocks That Every Canadian Should Own”.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler owns shares of Martinrea.  David Gardner owns shares of Ford.  The Motley Fool owns shares of Ford.    

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

data analyze research
Bank Stocks

Better Buy: Royal Bank Stock or Bank of Nova Scotia?

Bank stocks appear cheap after the latest plunge. Is Royal Bank or Bank of Nova Scotia a buy today?

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the…

Read more »

Metals and Mining Stocks

Better Metals Buy: Gold Stocks vs. Lithium Stocks

Gold is the evergreen choice as a hedge against inflation and weak markets. In contrast, battery metals may offer unique…

Read more »

Man making notes on graphs and charts
Bank Stocks

TD Bank Stock: A TSX Top Pick Amid U.S. Banking Rout?

TD Bank (TSX:TD) stock could prove a worthy bet for brave investors who aren't fearful over the recent wave of…

Read more »

edit Sale sign, value, discount
Tech Stocks

2 Cheap Tech Stocks to Buy Right Now

Many tech stocks offer exceptional returns compared to other stock sectors when the market is bullish. You can add to…

Read more »

money cash dividends
Dividend Stocks

3 Solid Dividend Stocks That Cost Less Than $30

Given their solid financials and healthy cash flows, the following under-$30 dividend stocks are a good buy in this volatile…

Read more »


Is Now the Right Time to Buy Fortis Stock?

Fortis stock looks cheap today. Should you buy now or wait?

Read more »

edit Woman calculating figures next to a laptop

TFSA Investors: 2 Stocks to Make the Most of a Sad-Trombone Economy

TFSA investors can make the most of the heightened volatility by taking positions in stocks with tremendous resiliency amid the…

Read more »