Automakers looked like a dangerous proposition for investors as we headed into 2019, and this outlook has dimmed late into the year. The slowing auto market in China has dragged down earnings for some of the world’s top carmakers.
Today I want to look at two auto stocks that have been positive this year. Investors may want to exercise caution as we head into the final weeks of 2019.
Ford Motor (NYSE:F) stock has dropped 1.4% over the past three months. In its quarterly update, the company slashed its annual profit forecasts. Manufacturers are dealing with added pressure as they have been forced to invest in the electric vehicle market. This is to meet tighter emissions targets in Europe and China, and to meet rising global demand.
Toyota Motors (NYSE:TM) reached a 52-week high in trading over the past week. Shares have climbed 21% in 2019 as of close on November 4. The company is expected to release its second quarter fiscal 2020 results on November 6.
In the first quarter, Toyota beat analyst estimates and posted record sales and profits. A stronger yet ate into its profit outlook in its Q1 report, but the yen has softened due to dovish statements from the Bank of Japan in the summer and fall.
The ongoing U.S.-China trade dispute will bleed into this sector as we move into the next decade. The beginnings of a currency war have already started to impact forecasts. Investors should be wary of this sector as global economic headwinds build up.
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