Analyst Favorites: 3 Top Stock Picks in the Automotive Sector

Stocks to buy

Recently, the narrative surrounding the auto industry’s top stock picks has focused on which company can perfect the electric car. That question may be the wrong one to focus on for investors, however. Discussing electric car companies alongside traditional automakers is like comparing luxury restaurants to grocery stores. Customers can get food at both, but grocery stores are a more sustainable option for the vast majority of people.

The correct answer for picking automotive stocks lies in companies that provide the most value to the most consumers. Though that answer may not be as exciting as the electric car industry, it does provide for more affordable investing.

To truly classify a car stock as a top pick, its market performance should be as reliable as its products. Here are three automotive industry top stock picks rooted in accessibility and customer satisfaction to help round out your portfolio.

Honda Motor (HMC)

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Through diversification and commitment to quality, Honda Motor (NYSE:HMC) has become one of the most reputable car brands in the world. This reputation usually comes with a lower price tag than competing brands with similar offerings. Unlike more classically luxurious brands, its commitment to durability has helped its vehicles stay viable for over 200,000 miles after being built, on average.

Yet, it’s not just that these cars last for a long time, it’s that they do so while being relatively inexpensive to maintain. The reason for this stems from Honda’s design simplicity and part commonalities that allow for replacement part mass production. By keeping production costs low, Honda prices the car more reasonably than competitors while offering plenty of features.

Its 5% market share of consumer vehicles worldwide, paired with substantial motorcycle sales has made Honda stock a strong contender. Thanks to this approach, Honda enjoys stable financial performance and a Moderate Buy rating.

BMW (BMWYY)

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While value can sometimes be subjective, the sheer money BMW (OTCMKTS:BMWYY) devotes to driver experience defines its approach to value. Though not considered affordable to own and maintain, BMWs hold a reputation for delivering superb vehicle performance. BMW knows this and caters to the types of drivers who care about enjoying their driving more than cost-effectiveness.

That focus on the luxury market has taken BMW from a high-quality German import to a continuously innovating pure luxury brand. Customers and investors alike can observe this in the way the company has shaped itself as a brand. Gone are the days of high-speed racing cars, as BMWs now represent the height of luxury.

Furthermore, BMW has committed to at least half of newly manufactured vehicles being electric by 2030. By focusing on constantly progressing the driving experience, BMW remains a Moderate Buy and one of the top stock picks among car companies.

Toyota Motor (TM)

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With many of the fastest-selling car models in the world being made by Toyota Motor (NYSE:TM), the company and its stock have nowhere to go but up. Toyota leads the world in passenger vehicle sales while still endlessly improving its designs and offerings. This dedication to growth puts Toyota in a league of its own when it comes to quality and overall perception.

Furthermore, it recently announced the launch of the new 2025 Camry model. The improvements to this year’s Camry highlight Toyota’s focus on hybrid-electric vehicles, paving a bright future for the company’s stock. That’s because its Toyota Hybrid System 5 features all of the best performance features of electric motors while staying practical.

By focusing on functionality and accessible pricing, Toyota remains one of the top stock picks in the car industry. Whether customers are looking for a new car or a new stock, the signs say Toyotas are a strong option.

On the date of publication, Viktor Zarev did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.

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