Related topics: cars, stock market, Ford, gas mileage, economy
The electricity in the air at the Detroit auto show wasn't coming solely from those high-profile, plug-in vehicles. Rather, the buzz earlier this month was all about how the auto industry had turned the corner on the turmoil of the past few years and was poised for a big return to profitability.
The auto sector picked up considerable steam in December, as U.S. auto sales rose 11%, the biggest monthly increase in 16 months. For the full year, U.S. sales also rose 11% over their anemic 2009 level.
Those numbers -- along with a rebounding economy, a recovering stock market and improving consumer sentiment -- prompted the major automakers to forecast strong sales in 2011.
The prospect of a return to prosperity for the industry hasn't been lost on Wall Street. There were some nice gains by many auto stocks last year, as the industry's fundamentals shifted into a higher gear.
Here are five auto stocks investors should consider:
BorgWarner
Auto components maker BorgWarner (BWA, news) makes engine and drivetrain products for the world's biggest carmakers. The Auburn Hills, Mich., company is a leading beneficiary of the drive for better fuel efficiency.
BorgWarner on Jan. 11 said per-share earnings may increase as much as 40% in 2011, citing "robust growth" in vehicle production worldwide. The company also said it expects revenue to increase by as much as 20%.
It is benefiting from the trend toward tighter emissions restrictions around the globe, as its turbocharger products help engines operate more efficiently. If this trend continues in 2011, the stock -- up 85% over the past 12 months -- should continue to turbocharge stock portfolios.
Ford Motor
No car company comes close to matching the kind of optimism Ford Motor (F, news) has been creating. The Dearborn, Mich., company made a big splash at the Detroit auto show with an all-electric version of its popular Focus model.
The host city was also giddy about Ford's announcement that it would hire 7,000 workers this year, a bullish development for the company's share price -- the stock is up 61% over the past 12 months as the company has consistently posted quarterly financial results that excite Wall Street.
Oh, and don't forget that last year Ford overtook Toyota Motor (TM, news) to regain the No. 2 sales spot in U.S. sales behind leader General Motors (GM, news).
Magna International
Magna International (MGA, news) is another supplier of auto parts and systems that recently delivered a strong forecast for 2011. The Aurora, Ontario, company said it expects "significant sales growth" in 2011 as the auto industry continues its recovery.
Those expectations are based on 12.9 million light vehicles being sold in North America this year, the company said, and 13.3 million units in Western Europe.
It upbeat forecast prompted several analysts to raise their price targets on the stock, which has doubled in price over the past 12 months.
Tata Motors
If you want a really booming area for auto sales, look overseas. Specifically, look to India, where car sales surged 31% in 2010. Tata Motors (TTM, news), India's largest automaker by sales, is benefiting as Indian consumers have more disposable income to spend on vehicles.
The Mumbai company reported a 21% increase in global sales in December, attributing the surge to robust demand for commercial vehicles. But Tata is more than just commercial vehicles -- it also owns luxury brands Jaguar and Land Rover.
This mix of commercial vehicles and luxury brands might just add up to a great mix in your auto-centric portfolio.
Tesla Motors
Boutique electric vehicle maker Tesla Motors (TSLA, news) went public in July 2010, the first U.S. automaker to do so since Ford's IPO on Jan. 17, 1956.
Tesla recently announced it had sold more than 1,500 vehicles since 2008, not a lot of cars but nonetheless a milestone that many thought Tesla would never reach.
At this stage, Tesla's story isn't about earnings. It is about perception, and interest in an electrified future for the automobile. If that interest ramps up in 2011, look for TSLA shares to get a nice spark.
This article was reported by Jim Woods for InvestorPlace.
