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Investors’ pessimism regarding the auto manufacturing industry is evident in the First Trust NASDAQ Global Auto Index Fund’s (CARZ) 3.7% returns over the past three months versus the tech-heavy Nasdaq’s 6.4% gains. While some auto manufacturers may be able to weather these trying conditions, we think it is wise to avoid fundamentally weak stocks in this space that are trading at premiums to their peers.
Ferrari N.V. (RACE), and Workhorse Group Inc. (WKHS) look significantly overvalued at their current price levels. Also, Wall Street analysts have recently downgraded their ratings on these stocks. So, we think these two stocks are best avoided now.
