Stocks to Invest in to Profit from Autonomous Vehicles
The popular consensus is that autonomous; or self-driving vehicles, are almost on our roads. Thus, many investors will ask “what stocks will self-driving vehicles boost?”
To answer that question I have assembled a list of some publicly traded companies that could profit from autonomous vehicles. Some companies popularly associated with self-driving cars; including Uber (NASDAQ: UBER) and Tesla Motors (NASDAQ: TSLA) are absent because they lose money.
However, I have assembled a list of money-making companies that could profit from autonomous vehicles. Those companies include:
1. The Avis Budget Group (NASDAQ: CAR)
The car rental giant is servicing the self-driving Chrysler Pacifica minivans, Waymo is testing in the Phoenix area.
In addition, Avis Budget is a big player in the short-term rental market through its Zipcar subsidiary. I think short-term rentals will be one of the biggest uses for autonomous vehicles.
Currently, Zipcar places vehicles in neighborhoods for its customers to use. The obvious evolution of that business is an autonomous short-term rental vehicle that drives itself to the customers. Avis Budget’s rental locations are logical places to base and service such vehicles.
Since, Avis claims to offer 600,000 hire vehicles at 11,000 locations in 180 countries. It has the experience and infrastructure to take autonomous car-sharing to the masses. Interestingly, Avis Budget (NASDAQ: CAR) is cheap; its shares traded at $35.38 on 9 January 2020. Unfortunately, Avis Budget pays no dividend.
2. Fiat-Chrysler Automobiles (NYSE: FCAU)
This company has been working with Alphabet’s Waymo subsidiary on autonomous vehicles for several years. In fact, Chrysler Pacifica vans compose most of Waymo’s current fleet. In addition, Waymo is using Chrysler Pacifricas in its Waymo One robotaxi service.
Moreover, Fiat-Chrysler is merging with the French PSA Group. The Merger will give Fiat Chrysler 11 auto brands to make autonomous. Those brands could include: Fiat, Chrysler, Dodge, Jeep, Ram, Citroen, Peugeot, Maserati, Alfa Romero, Opel, and Vauxhall. Hence, Fiat Chrysler could be able to deploy Waymo self-driving vehicles in dozens of countries.
Fiat Chrysler stock is cheap it was trading at $14.26 on 9 January 2020. However, Fiat Chrysler pays no regular dividends, but it occasionally issues a big dividend.
3. Tata Motors Limited (NYSE: TTM)
The other automaker working with Waymo is Tata Motors, the owner of Jaguar-Land Rover (JLR).
Tech Crunch reports that Waymo is testing self-driving Jaguar I-Paces around its Mountain View California headquarters. The I-Pace is Jaguar’s electric crossover. Waymo plans to buy up to 20,000 I-Pace vehicles for the Waymo One robotaxi project.
Waymo One could start using I-Paces as early as this year, TechCrunch claims. I think there will be a big demand for self-driving versions of the I-Pace and a Land Rover. Limousine, rideshare, and taxi operators, in particular, will find Land Rover and Jaguar autonomous vehicles attractive.
Currently, Tata stock is cheap, Mr. Market was paying $13.29 a share for Tata Motors Limited (NYSE: TTM) on 9 January 2019. Tata pays no dividend, but it is in a good position to profit from autonomous vehicles.
4. Ford Motor Company (NYSE: F)
Ford is testing autonomous vehicles in Austin, Miami, Pittsburgh, and Washington, D.C., The Verge reports. Ford is also conducting autonomous vehicle tests in Michigan and Arizona.
Furthermore, Ford hopes to unveil a purpose-built self-driving vehicle this year and launch its own autonomous delivery and taxi services in 2021. In fact, the Ford Smart Mobility project’s goal is to build a fully autonomous vehicle next year in 2021.
Beyond vehicles Ford is developing a Transportation Mobility Cloud to cash in on Big Data. To explain, the Cloud’s goal is to elect data from self-driving vehicles Ford can sell.
Other Ford assets include its growing partnership with the world’s largest automaker and leader in electric vehicles (EVs); Volkswagen AG (VWAPY). Volkswagen CEO Herbert Diess hopes to build 50 million EVs in five years.
Impressively, Ford manufactures America’s most popular vehicle the F-Series pickup trucks. The Ford Authority estimates Ford sold 909,300 F-Series in 2018 and 662,574 F-Series vehicles in the first three quarters of 2019.
I think Mr. Market undervalued Ford at $9.22 a share on 9 January 2019. Additionally, Ford paid a 15₵ quarterly dividend on 21 October 2019. Dividend.com estimates Ford shares offered a dividend yield of 6.29%, an annualized payout of 60₵, and a payout ratio of 48.5% on 9 January 2019. Thus, Ford is a dividend stock for autonomous vehicles.
5. Arrow Electronics (NYSE: ARW)
This electronic components distributor is the autonomous car company you have never heard of. Arrow has built self-driving cars for years and builds components for autonomous vehicles including sensors.
Arrow Electronics has some value characteristics. For example, Arrow is obscure and cheap. Notably Mr. Market paid $84.30 for Arrow shares on 9 January 2019.
Arrow pays no dividends. However, Arrow reported revenues of $7.078 billion and a gross profit of $798.84 billion on 30 September 2019. Therefore, Arrow Electronics Inc. could make money by supplying components to automakers such as Ford and Fiat Chrysler.
6. NVIDIA (NASDAQ: NVDA)
This super-profitable chip maker could make the most money from autonomous vehicles. To explain, NVIDIA builds the “brains” that run autonomous cars.
In fact, NVIDIA is trying to adapt artificial intelligence (AI) for autonomous vehicles with its NVIDIA Drive Scalable AI Platform for Autonomous Driving. Thus NVIDIA could make money from autonomous vehicles in the same way it profits from gaming.
Instead of building and marketing the vehicles, NVIDIA will provide the AI Platform. Meanwhile, Ford; Chrysler, or Tata will build the vehicle and have the expense of marketing it. For instance, Ford, or Tata, will pay for the dealers and have the hassle of dealing with the autoworkers’ unions. All NVIDIA will provide is the chip.
NVIDIA is a lucrative company that reported a gross profit of $1.921 billion; revenues of $3.181 billion, and a net income of $1.23 billion 28 October 2019. Plus, NVIDIA reported $9.765 billion in cash and equivalents in October 2019.
The NVIDIA Corporation (NASDAQ: NVDA) reported a 16₵ quarterly dividend on 27 November 2019. Dividend.com credits NVIDIA with six years of dividend growth, a per-share dividend yield of 0.28%, an annualized per-share payout of 64₵, and a 9.65% per-share payout on 9 January 2020.
If you are looking for a safe, moneymaking income investment in autonomous vehicles, NVIDIA is it. NVIDIA is a proven income stock with a history of making money from technologies. I think NVIDIA was a little overpriced at $243.17 on 9 January 2020, but I believe you will make money from it.
7. Alphabet (NASDAQ: GOOGL)
I think the Google owner is the current leader in the autonomous vehicle race. To my knowledge, Alphabet (NASDAQ: GOOG) is the only company with a robotaxi service; Waymo One, up and running.
Importantly, Waymo is testing its Driver operating system in a variety of Autonomous vehicles. In particular, Waymo has hundreds of self-driving Chrysler Pacifica vans on the streets and plans to put hundreds of Jaguar I-Pace autonomous SUVs on the roads. Plus, Waymo is testing Driver in Peterbuilt 8 semi-tractors, Transport Topics notes.
Interestingly, Waymo autonomous vehicles had logged over 20 million miles on public roads by January 2020, TechCrunch estimates. That means Waymo could have far more data about autonomous vehicles than its rivals. I think all the data could give Waymo over an insurmountable edge over its competitors.
I think Alphabet is the leader in autonomous vehicles because Waymo has control of the tests. Thus, Waymo collects and processes all the data while taking few risks. Given Google’s history of monetizing data, I think Alphabet could monetize transportation data.
Finally, Alphabet has the money to develop and deploy autonomous vehicles. In fact, Alphabet had $121.177 billion in cash and short-term investments on 30 September 2019.
I think the cash gives Alphabet an advantage other companies could not match. Alphabet, could for instance, finance the building of self-driving vehicles at automakers such as Fiat Chrysler, or Tata Motors.
I think Mr. Market overpriced Alphabet at $1,417.97 a share on 9 January 2019. Therefore, I think you will take a few risks by owning Alphabet.
There are other companies that could make money from autonomous vehicles including Toyota (NYSE: TM), the truck maker PACCAR Inc. (NASDAQ: PCAR), General Motors (NYSE: GM), Hertz Global Holdings (NYSE: HTZ), and Lyft (NYSE: LYFT). However, I think the seven companies I listed above are in the best position to cash in on autonomous vehicles.