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

Stock analysts were once excited about construction company Aecon as an investment.

Bull or Bear: Why Analysts Changed Their Tune on Aecon Stock

Analysts had been champing at the bit for the construction company, but the tides have turned.

Read more »

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

2 Interesting Buys in Any Market

Here are two intriguing buys in any market climate that offer defensive appeal as well as growth and income earning…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Should You Buy Bank Stocks Now?

Canadian bank stocks are getting cheap. Is this the right time to buy?

Read more »

stock data
Stocks for Beginners

2 Reliable Stocks Beginners Can Buy Amid the Market Selloff

As the broader market turmoil continues, new investors can buy these two reliable dividend stocks to get good returns on…

Read more »

Biotech stocks can be good yet risky investments.

Is Bellus Health Stock Still a Buy After 30% Earnings Jump?

The biotech continues to make progress on obtaining FDA approval for its chronic-cough therapy.

Read more »

Dividend Stocks

TFSA Investors: 3 TSX Stocks for Tax-Free Passive Income

These Canadian corporations have strong visibility over future earnings and dividend payouts.

Read more »

Piggy bank next to a financial report

Do You Have Cash Sitting in Your TFSA? Now Is a Great Time to Buy Stocks

If you have cash in your TFSA that you're looking to invest, now is a great time to buy high-quality…

Read more »