The best investment in the auto sector last year might come as a big surprise (F, GM, TSLA, FCAU, RACE)

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January 3, 2018 5:41 PM

FCA was the big winner for 2017. Ferrari was a close second.

At Business Insider, we follow the stocks of five automakers: General Motors, Ford, Fiat Chrysler Automobiles, Ferrari, and Tesla.

Based on the news, you might think the upstart Tesla would have turned in the best stock-market performance in 2017. Tesla, after all, surged at the beginning of the year and almost crossed the $400 barrier. Its market cap surpassed Ford's and FCA's.

Tesla did well, no doubt about it, up over 40% for the year. But with a nearly 90% yearly uptick, FCA was the big winner for 2017. Ferrari was a close second, posting an 80% return. And if you take GM's 4% dividend payment into account, its 21% return looks retrospectively appealing for risk-averse investors.

Ford was the laggard, with a mere 5% improvement. But even Ford investors were rewarded with a dividend yield of more than 5%. Of the five stocks we monitor, investors might think Ford shares at $13 look attractive relative to its peers, given the potential for upside in 2018.

Investors need only seek the example of FCA of Ferrari. FCA rose from about $10 to $18 over 2017, while Ferrari rose from about $60 to north of $100.

For what it's worth, Ford changed CEOs in 2017 due to a sluggish market performance — but the carmaker posted profits every quarter and with its new hot-selling pickup trucks racked in cash. The company has a nearly $40-billion war chest on its balance sheet.

The year ahead could continue to see a strong overall stock market. For automakers, however, US sales could fall below a 17-million pace for the first time in three years. They might be able to compensate with better sales in China and Latin America, but a tougher US market could weaker stock returns.

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