4 Ways To Play The Auto Stocks Selloff

According to preliminary results issued on Tuesday, January U.S. auto sales figures will be better than expected, driven by low oil (and thus, gasoline) prices, uncomplicated access to credit and a recovering economy. However, major carmakers’ stocks tumbled after the results were out.

Shares of General Motors Company GM were down 1.53 percent on Tuesday, and an extra 2.6 percent on Wednesday, while Ford Motor Company F lost 4.56 percent on Tuesday, and another 1 percent on Wednesday.

One of CNBC’s Fast Money’s traders, Steve Grasso, who is also the Director of Institutional Sales at Stuart Frankel & Co. Inc., said that he thinks GM’s stock seems stronger than Ford's at the time. However, he continued, both have lost more than 10 percent since the begging of the year, adding that he “would stay away from any automaker stocks amid sluggishness in the U.S. economy.”

Below is a look into four ways to play the selloff in the auto industry, according to Fast Money’s traders:

• Timothy Seymour recommended Ferrari N.V. RACE. After the stock’s 21.7 percent decline since its IPO, the expert sees an opportunity open there. It’s not only valuation that makes it attractive, but also the luxuriousness and limited supply of the brand, and the strength of the aftermarket.
• Stay away from Ford, Grasso recommended.
• Also avoid GM in this economy – especially if you we are pricing in a recession, he added.
• Finally, Guy Adami looked into Tesla Motors Inc TSLA. “You rarely have a triple bottom, which is what we are trying to get here,” he expounded. “Below 180 it gets dicey; well, it might be about to get really dicey here; and quickly,” he added.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.