Here are some of Deutsche Bank's best auto stock picks ahead of earnings

Published Thu, Oct 12 20174:15 PM EDT

Deutsche Bank shared with its clients the auto and auto parts stocks that its analysts are watching ahead of the earnings season. Firm analysts highlighted that many big players in the automobile industry present "disproportionately positive risk/reward," and reiterated several buy ratings. Investors are looking to capitalize on what many speculate will be an evolution toward self-driving, autonomous vehicles. "We're re-prioritizing our top picks," wrote Deutsche Banks analyst Rod Lache. "Key drivers this year included increased momentum behind Electrification, Connected Car, and Autonomous Driving." The report included price targets as well as company-specific insights. Here are three stocks Deutsche Bank is betting on into earnings. 1) General Motors ( GM ) " While we believe that 2018 will be a transition year for GM with the large truck volumes down 100-200k units (DB 180k), investor focus is clearly now shifting to the longer term strategy in mobility and their future prospects." "We'd buy on any short term weakness, as there is significant potential for significant value creation at GM if the company capitalizes on a first mover advantage in Autonomous Mobility Services. As we pointed out in our upgrade, even a small percentage of the 3+ trillion miles driven in the U.S., and 7 trillion globally, represents a massive opportunity." Though Lache forecasts softer sales volume in 2018, he was more optimistic on GM in the longer term, especially if autonomous vehicles take off. His $51 price target represents 12 percent upside from Wednesday's close. 2) American Axle ( AXL ) "AXL is our top supplier pick heading into 3Q earnings season, and we expect strong results. "We expect the focus to be on American Axle's free cash flow generation. AXL generated $200 million adjusted free cash flow in the first half of 2017. This was downplayed by investors based on the view that GM was overproducing large trucks & SUVs. But this quarter, we expect positive free cash flow (~$50 million) despite a GM inventory correction." The analyst has a $22 price target on the auto parts manufacturer, representing 25 percent upside from Wednesday's close. 3) Delphi ( DLPH ) "Given the recent run for the stock, we expect the bigger focus amongst investors will be on forecasts (and valuations) for the two entities (Aptiv (Remainco) and Delphi Technologies (Spinco))." "While we acknowledge that both businesses have very attractive long-term growth stories, we no longer see a large valuation disconnect (particularly after guidance at the company's Investor Day, which revealed significant post-split costs, which will take some time to work down)." Lache has a $104 price target on Delphi. That target is 5 percent higher than Wednesday's close.

A General Motors' worker assembles a Cadillac ATS on the assembly line at the General Motors Lansing Grand River Assembly Plant.

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Deutsche Bank shared with its clients the auto and auto parts stocks that its analysts are watching ahead of the earnings season.

Firm analysts highlighted that many big players in the automobile industry present "disproportionately positive risk/reward," and reiterated several buy ratings. Investors are looking to capitalize on what many speculate will be an evolution toward self-driving, autonomous vehicles.

"We're re-prioritizing our top picks," wrote Deutsche Banks analyst Rod Lache. "Key drivers this year included increased momentum behind Electrification, Connected Car, and Autonomous Driving."

The report included price targets as well as company-specific insights. Here are three stocks Deutsche Bank is betting on into earnings.