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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 by more than $100 billion.
- Vehicle dealerships continually create new jobs.
- Auto dealerships have accounted for $1 trillion in sales in a single year.
- Dealership payrolls are approaching $100 billion per year.
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.
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.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
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.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- 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.
- No chat support
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
- Active traders
- Derivatives traders
- Retirement savers
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.
- Intermediate to Advanced traders
- High-volume traders
- Momentum traders
- Short sellers
- Unrivaled access to short inventory
- Flexible order routing for improved executions
- Discounts for active traders
- Advanced platform with fast executions
- Reliable customer service
- Not designed for beginner or low-volume traders
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.
Continue reading: BEST TRUCKING STOCKS