Is it possible that U.S. auto stocks are hot? Only five years ago the industry was left for dead amid the Great Recession. General Motors and Chrysler filed for bankruptcy. Ford mortgaged its logo and undertook a difficult overhaul. Annual U.S. car sales plunged to 10.4 million units in 2009, a number not seen since World War II.
Now profits have returned to Detroit. The market is on the road to 16 million in sales this year thanks to the domestic economic recovery and pent-up demand to replace aging cars and pickup trucks. Even Europe's long-suffering market is showing signs it might shake off its torpor. Little surprise, then, that GM's shares have accelerated, rising 57% over the past year, while Ford's zipped up 76% (to say nothing of electric-vehicle newbie Tesla, whose shares rocketed 478%).