There’s been a lot of talk about how the advent of electric vehicles would wipe out our automotive industry.
But these auto stocks still appear to have plenty of grunt and growth in the pipeline.
PWR Holdings Ltd (ASX: PWR)
Motorsports cooling solutions company PWR Holdings Ltd has a stronghold in the Formula 1 and NASCAR market, despite being a relatively small company with just a $335 million market cap.
PWR has recently reported it will go after more of the US automotive aftermarket segment after the release of solid FY18 results, with NPAT of $11 million, EBITDA of $16 million and revenue of $52 million and its total share dividend up 30% to 7.3c per share.
PWR has steadily increased its staff over three continents in the last two years, indicating the seriousness of its global expansion plans with reports its UK and European growth has been particularly strong with several European competitors exiting the market.
With more than three decades experience in the cooling technology space, PWR is leveraging off this solid base with ongoing R&D to continue to add value to current customers and up its offerings.
FY19 and FY20 look positive for PWR as its business growth program picks up pace with lower international corporate tax rates to be leveraged going forward.
One to keep on the watchlist.
GUD Holdings Limited (ASX: GUD)
Cleaning and automotive product manufacturer GUD Holdings Limited has piqued the interest of investors lately after Chairman Mark Smith bought up 8,000 shares back in mid-August.
GUD shares have been steadily on the incline in the last 12 months, but have dropped back today to close off the trading week, down 2.4% at the time of writing to $14.29.
Fundamentally, things look good for GUD on the whole after it delivered reported NPAT of $101.8 million for FY18 – up from a $7.3 million loss in FY17 with underlying NPAT up 20% to $55.2 million, automotive sales growth of 16%, net debt reduction to $92.4 million and a final fully-franked dividend of 28c per share – up from 25c per share.
GUD has worked to reposition its portfolio throughout FY18 and will formally acquire Disc Brakes Australia to kick off FY19 after the acquisition of AA Gaskets in FY18 and disposal of Oates.
As an industry, the automotive aftermarket is growing, with GUD expected to maintain its growth rate in the space with the potential for further acquisitions if opportunities present.
As a whole, GUD looks to have a solid future with inter-business synergies opening up in shipping, transport, insurance and fleet purchasing and a firm handle on its operations, by the looks of things.
One to watch.
MotorCycle Holdings Ltd (ASX: MTO)
Motocycle dealership company MotorCycle Holdings was riding high after it handed down its FY18 results in late August, despite reporting an NPAT drop of 2%, with a revenue rise of 28.5% and EBITDA up 21.3%.
But the stock is in the red today, down 1.5% to $3.29 with investors likely unsure of how things will pan out with a 42.4% increase in costs no doubt spooking some.
But if the recommendation of Wilsons and Morgans is anything to go by you might consider this one as a speculative buy, with both brokers listing it on their buys lists recently after the company met EBITDA forecasts.
Another automotive stock to watch if you’re looking to get in on a low is ARB Corporation Limited (ASX: ARB) after its August 22 results saw shares drop back, down another 2.2% at the time of writing to $19.49.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.