It is no secret that the automobile industry is undergoing a rapid evolution. Electric vehicles are here but that isn’t the only change. Vehicle autonomy is another huge area of growth. That means autonomous driving stocks offer a lot of the same opportunities that EV stocks have over the past few years. Namely, that means growth and the potential for rapid returns. This has led to the rise of autonomous driving stocks to buy.
The market is expected to grow by nearly 23% annually between now and 2028. That alone will cause investors’ ears to perk up. The rule of 72 dictates that an investor who places their capital in an average firm in the space will see it double in just over 3 years.
The autonomous driving stocks discussed here are better than average.
Luminar Technologies (LAZR)
Luminar Technologies (NASDAQ:LAZR) is an attractive autonomous driving stock first and foremost because of its fundamentals.
In the second quarter, its revenues increased by 62%, reaching $16.2 million. Luminar’s losses remain large and are continuing to grow. However, those losses grew at a pace that was slower (48.4%) than its headline growth. I won’t sugarcoat it, they’re still a real problem and totaled $141.75 million during the period. Further, in H1 losses grew by more than $100 million on a year-over-year basis, surpassing $288 million.
Those losses mattered all throughout 2023. They arguably matter more now given that interest rates are expected to remain higher for longer.
Despite all of that, Luminar’s headline growth is really what matters most. 62% growth is exceptionally high. It’s higher than the annual expectations highlighted in the beginning of the article. It doesn’t mean that Lumniar will continue to grow at that rate either. However, the company is pushing toward a goal to add $1 billion to its order book during Q3 and Q4. There’s a lot to look forward to and the company has already emerged as one of the leading names in the space.
Magna International (MGA)
Magna International (NYSE:MGA) is an OEM manufacturer stock that serves a broad portion of the automotive industry. Many readers will be familiar with it as the company that manufactured Fisker’s Ocean SUV which debuted recently. It is clearly a major maker in the EV space and its capability extends to the advanced driver assistance system (ADAS) field.
Magna International is more diversified than its pure-play counterparts in the autonomous driving field. That fact will make it more appealing to investors seeking a lower-risk approach to capturing profits from the emerging sector. That said, there’s a clear and immediate upside in MGA stock. Once you factor in the quarterly dividends into target price assumptions, there’s more than a 28% return expected currently. It’s one of the better overall emerging EV firms that offers safety and upside.
The company has been addressing the opportunity in ADAS for quite some time and added 120 engineers for that purpose in early 2022. Magna International is a great firm to understand for those interested in the shape of the future EV industry in general and a good investment for the same reason. All in all, it’s one of those autonomous driving stocks to buy.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) stock is synonymous with Google in the minds of most investors. It is the search engine, YouTube, and ad revenues of the latter that most investors imagine when the word Alphabet is mentioned. In actuality, Alphabet is the parent company of Google and includes many other companies in emerging growth areas. Google funds the so-called ‘other bets’, with the entire group being Alphabet.
Waymo is among the best-known, and most promising of those other bets. The self-driving vehicle arm of Alphabet doesn’t trade as a stand-alone stock. Rather, it’s part and parcel of Alphabet or Google, whichever you like. Right now, that means that if you want to invest in Waymo you’re stuck funneling capital into GOOG shares in the hope that they make their way into Waymo’s coffers. Nobody knows whether Waymo will IPO or when that might potentially happen. But this still makes it one of the autonomous driving stocks to consider.
If it does, expect it to be big because Waymo has been doing autonomous driving since 2009 and if Alphabet decides to IPO, it’ll be huge. For now, investors will just have to content themselves with one of the best-performing stocks ever.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.