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ASX car stocks are underrated, but here’s why they might be about to accelerate
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Arguably the most under-rated group of stocks on the ASX is the car sector.
While it is rarely put into the same category as the gold, lithium or tech sectors, it has a clean sheet in the past 12 months – that is to say all 15 stocks have notched up gains.
Here’s a list of all ASX car stocks…
| Code | Company | Price | %Yr | MktCap |
|---|---|---|---|---|
| APE | Eagers Automotive | 16 | 353 | $4.2B |
| MTO | Motorcycle Hldg | 2.61 | 314 | $161.1M |
| NTD | National Tyre&Wheel | 0.95 | 280 | $108.0M |
| ASG | Autosports Grp Ltd. | 2.48 | 240 | $506.5M |
| VMT | Vmoto Limited | 0.45 | 210 | $128.0M |
| ARB | ARB Corporation. | 38.46 | 185 | $3.1B |
| SUL | Super Ret Rep Ltd | 12.18 | 122 | $2.8B |
| ATL | Apollo Tourism | 0.4 | 90 | $76.3M |
| SFC | Schaffer Corp. Ltd. | 21.51 | 89 | $293.5M |
| FDV | Frontier Digital Ltd | 1.41 | 87 | $488.7M |
| ABV | Adv Braking Tech Ltd | 0.045 | 80 | $15.9M |
| BAP | Bapcor Limited | 8.25 | 77 | $2.8B |
| PWH | PWR Holdings | 6.16 | 70 | $617.1M |
| CAR | Carsales.Com Ltd. | 20.12 | 55 | $5.0B |
| GUD | G.U.D. Holdings | 13.4 | 53 | $1.2B |
| PWR | Peter Warren | 3.37 | 16 | $483.0M |
| SIX | Sprintex | 0.082 | 0 | $17.5M |
One of the rare big events of interest in this sector occured yesterday – a listing of a car sales company. Peter Warren (ASX:PWR) completed an IPO at $2.90 and closed at $3.46 on its inaugural trading day.
Peter Warren (ASX:PWR) share price chart
The company actually has a very long history, dating back to its first dealership in 1958.
Today it has 70 car dealerships under various franchises and represents 27 OEMs across the volume, prestige and luxury volume segments.
Why it’s a good time to be in car sales
Although Peter Warren declined an interview with Stockhead yesterday it told shareholders in its prospectus there were several positive aspects in its favour.
These included:
- Record low interest rates for financing leading to increased purchasing and borrowing capability of consumers
- Vehicle purchasing power trending upwards over the last 20 years
- Household savings at all time highs, reflecting greater cash savings during COVID-19 and resulting pent-up demand
Factors other ASX car stocks have credited to hot demand during COVID-19 include car imports being at nine-year lows and people shunning public transport.
On top of all this, cars have also been pursued as an investment option, particularly vintage cars even if they’re not worthy.
One non-ASX listed company that has benefited is car auction platform Collecting Cars.
Collecting Cars boss Richard Fowler said the growth in sales was coming from multiple sources including as an investment option but also as something just to enjoy.
“With COVID you’ve got people who perhaps might spend $20-30-40k spend that on a holiday or a couple of holidays in a year but can’t and they think it would be good to have a home project, something to with their kids, go on a drive, do an event,” he told Stockhead earlier this month.
“Stocks are hot but they’re a bit volatile and the COVID thing has made people think life is short, maybe they should just have something that they can enjoy as well, a bit of a reward.”
Which other ASX car stocks are out there?
The car sector is diverse containing dealerships, accessories sellers, classifieds sites and even sellers of unique vehicles.
But the average ASX car stock is up 150 per cent in the last 12 months.
Coming out on top is car dealer A.P. Eagers (ASX:APE) which is up 353 per cent in a year. It owns several car outlets across Australia including Mercedes-Benz and Jaguar.
Like its peers it saw demand crash as a result of COVID-19 but quickly rebound as restrictions eased.
Classified sites have been going well too including Australia-focused Carsales.com (ASX:CAR) and Frontier Digital Ventures (ASX:FDV).
Only a couple of months ago it acquired Chilean classifieds portal Yapo for US$19.5 million. While it is not exclusively focused on auto classifieds, it has the number one position in this vertical.
There are also a handful of companies that sell individual car components or offer car servicing.
Examples include tyre seller National Tyre & Wheel (ASX:NTD), aftermarket parts and servicing outlet Bapcor (ASX:BAP), braking tech stock Advanced Braking Technology (ASX:ABV) and engine supercharger manufacturer Sprintex (ASX:SIX) which recently relisted after raising $6.5m.
Niche vehicle stocks
Of course not all ASX vehicle stocks specialise in conventional road vehicles.
One niche stock is caravan operator Apollo Tourism and Leisure (ASX:ATL).
This company took a big hit from COVID-19 travel restrictions but has mitigated the harm somewhat from the boom in domestic tourism.
Two other niche vehicle sellers include motorbike specialist Motorcycle Holdings (ASX:MTO) and electric scooter seller Vmoto (ASX:VMT).
Both companies have impressed investors with strong financial performances even in spite of lockdowns in their local markets.
MotorCycle Holdings made a $17.2 million net profit after tax in the six months to 31 December 2020 – well up from the $4.8 million it made in the prior corresponding period – and it sold 30 per cent more motorcycles.
VMoto meanwhile made $61 million in revenue and earnings of $5.8 million for the 2020 calendar year which is up 34 per cent and 102 per cent from the year before.
It sold 23,547 electric two-wheel vehicles, up 18 per cent from 2019 and up 117 per cent from 2018.
At Stockhead we tell it like it is. While Vmoto and Sprintex are Stockhead advertisers, they did not sponsor this article.
