New car sales plunged amid the COVID-19 pandemic, but the automotive industry seems now to be on a path to recovery. So, we think it is wise to bet on undervalued automotive companies Oshkosh (NYSE:), AutoNation (NYSE:), and Isuzu Motors (ISUZY) to reap maximum benefits. Let’s discuss.Global car sales fell sharply amid the COVID-19 pandemic as people retreated to their homes, where they spent most of their time under lockdown mandates with nary a thought for automobile purchasing. With the gradual economic recovery, however, companies in the sector are witnessing increase in demand. In fact, in March, the U.S. vehicle market witnessed a strong recovery and saw its first quarter 2021 sales rebound to pre-pandemic levels.
Governments worldwide are pushing for increased use of electric vehicles (EVs) to transition their countries to a clean energy future. The demand for conventional, internal combustion cars is also expected to increase with an anticipated decline in prices this year. Investors’ interest in the automotive space is evident in the First Trust NASDAQ Global Auto Index Fund’s (CARZ) 41% returns over the past six months compared to the SPDR S&P 500 ETF Trust’s (SPY) 23.5% gains over the same period.
While many automotive players are trading at lofty valuations, Oshkosh Corporation (OSK), AutoNation, Inc. (AN), and Isuzu Motors Limited (ISUZY) still look undervalued at their current price levels given their near-term growth prospects. So, we think it could be beneficial to bet on them now.
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