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Many experts predict the end of auto and truck dealerships over the next 10 to 15 years. Experts believe dealerships will fall victim to driverless vehicles, ridesharing, innovations in human mobility and changing consumer buying habits.
Over the past 2 decades, most auto and truck dealerships have prospered despite the Great Recession (the average dealership doubled its profits during that time), internet disruptors and even millennials’ decreased desire to own vehicles compared to previous generations.
This industry’s resiliency is worth banking on. Here are 5 auto and truck dealership stocks with potential.
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Overview: Auto and Truck Dealership Stocks
Auto and truck dealership stocks are in a cyclical industry — success is dependent on consumer confidence. When consumers get nervous about the economy, dealerships feel the pinch and operate under low profit margins. This causes a common dilemma for dealership management during low demand periods. They can either bite into their profits by offering customer incentives or they can protect their profit margin while giving up sales to their competitors.
It’s true that auto and truck dealerships have felt the impact of Tesla, Uber, Lyft and other auto and truck market disruptors. However, most of these new entrants struggle to be profitable.
Consider these facts as you research this industry:
- Since 2013, total annual sales for new vehicles rose from $390 billion to $520 billion.
- In 2018, vehicle dealerships created over 2 million jobs.
- That same year, vehicle dealerships generated $1 trillion in total sales.
- The 2018 dealership payroll was $66.6 billion.
Understanding an industry’s influencing forces helps you make better trading and investing decisions — including understanding consumer demand. Do careful research as you select the right car and truck dealer stocks for you.
Best Online Brokers for Auto and Truck and Dealership Stock
Most investments come with some amount of risk. Online brokers can provide you with the resources to help you manage the risks associated with stocks. Here are some of the best online brokers.
Best For
Intermediate Traders and Investors
N/A
1 Minute Review
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
Best For
- Active traders
- Intermediate traders
- Advanced traders
Pros
- Commission-free trading in over 5,000 different stocks and ETFs
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Leverage of 4:1 on margin trades made the same day and leverage of 2:1 on trades held overnight
- Intuitive trading platform with technical and fundamental analysis tools
Cons
- Does not support trading in mutual funds, bonds or OTC stocks
Best For
Futures Trading
N/A
1 Minute Review
TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.
Best For
- Advanced traders
- Options and futures traders
- Active stock traders
Pros
- Comprehensive trading platform and professional-grade tools
- Wide range of tradable securities
- Fully-operational mobile app
Cons
- Confusing pricing structure to leave new traders with a weak understanding of what they pay
- Cluttered layout to make navigating TradeStation’s platform more difficult than it should be
Best For
Options Trading
N/A
1 Minute Review
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
Best For
- Novice investors
- Retirement savers
- Day traders
Pros
- World-class trading platforms
- Detailed research reports and Education Center
- Assets ranging from stocks and ETFs to derivatives like futures and options
Cons
- Thinkorswim can be overwhelming to inexperienced traders
- Derivatives trading more costly than some competitors
- Expensive margin rates
Best For
Advanced traders
N/A
1 Minute Review
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
Best For
- Cost-conscious traders
- Novice traders
- Active/Advanced traders
Pros
- Free Level 2 market data for all users who open an account
- Commission-free trading in over 5,000 different stocks and ETFs
- Over 8,000 different stocks that can be sold short
- $0 contract fee for trading options, no commission either
- Strong market data and analysis tools with over 50 technical indicators
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- Active trading community with more than 100,000 app users
Cons
- No phone or chat support
Features to Look for in Auto and Truck Dealership Stock
You’ll want to understand each company in detail, but here are 3 things you can research to be sure you’re choosing the right stock for your needs:
- Price-to-earnings ratio (P/E ratio): Since car and truck dealer stocks are cyclical, the P/E ratio is a useful evaluation metric. It indicates the investors’ present valuation of a stock by comparing the amount they are willing to pay with the stock’s actual earnings. You can calculate a stock’s P/E ratio by dividing the market price per share by the earnings per share.
- Revenue/long-term revenue growth: Checking present and historical revenue can give you an idea of a stock’s future potential. Current revenues prominently appear on a company’s income statements and quarterly earnings reports.
- Debt levels: A company’s debt levels can have a tremendous effect on its stock performance. Sometimes, a company must utilize a good portion of its assets to stay competitive. Check debt-to-equity ratios — divide the dealers’ total debt by total assets.
Auto and Truck Dealership Stocks for the Long Haul
Auto and truck dealerships have endured tough times in this country. Throughout these changing times, this sector has shown a consistent pattern of growth. If you are looking for an investment with relatively safe exposure and consistent growth, auto and truck dealership stocks may fit that category.
Turn to Webull
0 Commissions and no deposit minimums. Everyone gets smart tools for smart investing. Webull supports full extended hours trading, which includes full pre-market (4:00 AM - 9:30 AM ET) and after hours (4:00 PM - 8:00 PM ET) sessions. Webull Financial LLC is registered with and regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is also a member of the SIPC, which protects (up to $500,000, which includes a $250,000 limit for cash) against the loss of cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm.
