There's a buying opportunity in some auto stocks hit by Russia-Ukraine concerns, Credit Suisse says

Published Thu, Mar 10 202211:15 AM EST

A sell-off in the automotive industry amid Russia-Ukraine conflict is an emerging opportunity for investors, Credit Suisse said. "We believe auto stocks are currently assuming Europe auto production operating near trough levels, with incremental raw material inflation. … Yet given we don't believe trough EU auto production should be viewed as the base case, we see the current sell-off as an attractive buying opportunity," wrote analyst Dan Levy in a note Thursday. Tesla , General Motors , Ford and Aptiv are among the stocks Credit Suisse thinks are an attractive buying opportunity, although shares may descend into a deeper decline before fully recovering. Many of the stocks followed a similar pattern amid Covid-19 shutdowns in early 2020 and a Chinese auto sell-off in 2015. The conflict is driving what Levy describes as a "sell first, ask questions later" mentality among auto stockholders and even hitting companies with low Europe exposure. General Motors is down at least 10% from Feb. 22 through March 9, and shares are off by about 30% this year, while Tesla shares have dropped more than 5% this month. Meanwhile, shares of Ford, which recently announced it would split its legacy auto and electric vehicle operations , have fallen more than nearly 10% this month and roughly 24% since the start of the year. Auto stocks included by Credit Suisse are down on average more than 15% since the conflict began as investors weigh disruptions to the industry that's been hard-hit by pandemic-related supply chain issues. The conflict has led to a volatile market that is sending oil and some commodity prices including gold fluctuating near multi-year highs. Some auto parts suppliers are also feeling the pressure, with their stocks sinking roughly 17% on average since the conflict began, Levy noted. Aptiv, which pulls roughly a third of its revenue from the European Union, has seen its stock sink at least 24% since the conflict began, Credit Suisse found. While Russia accounts for a small supply of aluminum, steel and nickel, it is one of the largest suppliers of palladium, which is commonly used by automakers in catalytic converters that reduce emissions. Levy thinks the ongoing conflict and volatile oil prices could push consumers to transition to electric vehicles sooner. They may consider purchasing smaller, crossover vehicles and shy away from larger SUVs, which previously occurred when oil prices remained elevated.

The GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, March 16, 2021.

Rebecca Cook | Reuters

A sell-off in the automotive industry amid Russia-Ukraine conflict is an emerging opportunity for investors, Credit Suisse said.

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There's a buying opportunity in some auto stocks hit by Russia-Ukraine concerns, Credit Suisse says

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