Fiat Chrysler: Sexiest auto stock

Fiat Chrysler is way hotter than GM
Fiat Chrysler is way hotter than GM

Fiat Chrysler is the smallest of Detroit's Big Three car companies. But who says size matters on Wall Street? Fiat Chrysler is the best auto stock by far lately.

Shares of Fiat Chrysler (FCAU) have gained more than 30% since they started trading on the New York Stock Exchange in mid-October.

That's well ahead of the gains for GM (GM), Ford (F) and Toyota (TM)over the same time frame. Honda's (HMC) stock is down, likely due to the problems with the Takata air bag recall.

For Wall Street, it's all about sales growth.

A well-oiled sales machine. Fiat Chrysler announced Monday that its U.S. sales in December rose 20% from a year ago. The company has topped Joe DiMaggio: It's the 57th consecutive month of year-over-year sales increases.

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The company's Jeep, Ram and Chrysler brands were the standout performers.

And in a sign of just how well Fiat Chrysler has been doing lately, the stock actually fell Monday morning because auto analysts were expecting an even bigger gain in sales. (A big pullback in the broader stock market didn't help either.)

But take the longer-term view: Fiat Chrysler sold more than 2 million vehicles in 2014. That's the best annual figure since 2006.

chrysler leading stocks

It's a stunning turnaround for the company. Chrysler, like GM, was forced to go into a government-sponsored bankruptcy in 2009 as a result of the financial crisis.

Still, can Fiat Chrysler keep the motor running in 2015?

On the one hand, it may be difficult to build on last year's big sales gains. But with oil prices continuing to plunge, Fiat Chrysler (along with other automakers) could benefit from more demand for gas-guzzling trucks, SUVs and crossovers.

Related: Car sales best since at least 2006

Despite the stock's big run since its October debut, shares don't seem to be in danger of overheating. Fiat Chrysler trades at 10 times 2015 earnings forecasts, just a slight premium to rivals Ford and GM.

Shiny red sports car. There's another reason to be excited about Fiat Chrysler's prospects as well. The company is planning to spin off a portion of its Ferrari unit to shareholders via an initial public offering in the U.S. later this year. (I wonder if Cameron's father from "Ferris Bueller's Day Off" will buy some Ferrari shares?)

The Ferrari stock sale could raise more than $1 billion for Fiat Chrysler according to estimates from auto analysts. Fiat Chrysler also announced last month that it intends to sell 87 million new shares and $2.5 billion in convertible bonds this year in order to help finance its plans for growth.

CEO Sergio Marchionne has an ambitious plan to boost Fiat Chrysler's profits dramatically by 2018. He has said that the company wants to make Jeep more popular outside the U.S. and increase sales for its Alfa Romeo and Maserati brands by increasing production capacity.

Marchionne has hinted that he will step down after 2018. But Wall Street doesn't seem too worried yet.

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