Despite high interest rates, U.S. auto sales rose nearly 5% last quarter versus the same period a year earlier. On the other hand, the average sales price for U.S. autos dropped 3.6% year-over-year in March as discounts climbed sharply, the Associated Press quoted research firm J.D. Power as saying. Still, with raw material costs decelerating after large price increases in 2021 and 2022, many U.S. automakers likely will report strong Q1 financial results. Also noteworthy is that the sector should get a positive catalyst from rate cuts by the Fed later in the year. Finally, boding well for some automakers, the China Passenger Car Association estimated that the combined sales of electric vehicles and hybrid-electric vehicles soared 84% year-over-year last month to more than 820,000. For investors looking to exploit the sector’s positive trends, here are the best auto stocks to buy in April
Toyota (TM)
Toyota’s (NYSE:TM) U.S. sales surged roughly 20% in Q1, driven by strong growth in its crossover and hybrid-electric vehicles.
The Japanese automaker handed over nearly 125,000 of its Rav4 crossover vehicles in Q1, representing a 47.4% year-over-year gain. The hybrid-electric models of the Rav4 have reportedly become extremely popular in America. Meanwhile, Toyota’s sales of its hybrids, EVs and hydrogen fuel cell vehicles soared 74% YOY to nearly 207,000.
In general, the Japanese automaker is getting a lift from incredibly strong demand in America for hybrid-electric vehicles, and that trend is likely to continue, as JPMorgan has predicted that the sales of such vehicles will surge 22.6% YOY.
Further, TM stock has become very popular with the Street. The shares have jumped 33% in the last three months and 72% over the last year. Despite the rally, the name still has a low price-earnings ratio of 10.3 times. Given all of these points, TM is certainly one of the best auto stocks to buy in April.
Volkswagen (VLKAF)
Boding well for Volkswagen’s (OTCMKTS:VLKAF) outlook, the automaker’s unit sales in the U.S. jumped 21% YOY. while the sales of the company’s Jetta sedan surged an incredible 185% YOY to more than 13,000 vehicles. Additionally, the deliveries of its Atlas SUV climbed 43% YOY to 16,260, suggesting that the German firm is poised to become a major player in the American SUV market.
Moreover, the automaker is likely to benefit significantly from the strength of the Chinese electric-vehicle market that I described in the introduction to this column. That’s because the firm sold nearly 200,000 EVs in China last year.
Like Toyota, Volkswagen’s shares already have a great deal of momentum as they have surged 25% in the three months that ended on April 3. Nonetheless, the shares’ price-earnings ratio is a tiny 4.6 times.
BYD (BYDDF)
Chinese automaker BYD (OTCMKTS:BYDDF), in which Warren Buffett famously has a stake, delivered stellar first-quarter sales data which show that the company is growing rapidly both in China and overseas.
The company’s unit sales jumped 13.4% last quarter versus the same period a year earlier to over 626,000. And BYD’s combined overseas sales of plug-in hybrids and EVs soared 156% year-over-year in Q1 to nearly 98,000.
The company delivered phenomenal results in March, following the completion of the Chinese New Year holiday. Specifically, its combined overall sales of plug-in hybrids and EVs soared 147% to over 302,000, while its overseas sales in March came in at an all-time record of over 38,400. That performance eclipsed the old record of slightly over 36,000, set in January, by a healthy margin.
Despite BYD’s strong growth, it has a relatively low, attractive forward price-earnings ratio of 16 times.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines