The automotive sector faces a lot of uncertainty in the next few years. It’s far from certain whether a post-COVID-19 world will usher in a gradual recovery in the auto sector, or a protracted downturn. So fir investors, it makes sense to prepare for a range of scenarios.
However, I think three automotive stocks have the potential to snap back after the coronavirus pandemic is contained. Here’s why.
Three scenarios, three automotive stocks
- For an initial recovery followed by a recession, auto-parts O’Reilly Automotive (NASDAQ:ORLY) is an attractive stock.
- For an initial recovery followed by a period of flat growth, you might favor automotive-repair toolmaker Snap-on (NYSE:SNA).
- If the economic recovery is followed by a period of growth that includes a rise in light-vehicle sales, rearview-mirror manufacturer Gentex (NASDAQ:GNTX) offers significant upside potential.
1. O’Reilly Automotive
Probably the two most important factors determining revenue growth at auto-parts retailers are