Autonomous vehicles can drive rich returns for these stocks down the road

Tech companies and auto parts suppliers are a great way for investors to profit from the driverless car trend.

Vikram Barhat 26 January, 2016 | 6:00PM
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It only takes a quick Google search for "self-driving cars" to know how close we are to the reality of driverless vehicles. A fantasy conjured up in many sci-fi films, intelligent cars are now routinely paraded at consumer shows. Automakers Audi, Mercedes-Benz and Tesla, as well as tech giants Google and Apple, are all betting on these vehicles with ongoing projects and testing prototypes.

Some tech firms are hastily joining hands with auto manufacturers, others quietly innovating, in a race to capture a large slice of what is expected to become a US$50 billion market over the next decade, according to French bank Exane BNP Paribas. In fact,  Toyota Motor Corp. (TM) has already disclosed its plans to have self-driving vehicles available for sale by 2020.

A great way for investors to play this market in the long term is to buy tech companies and parts suppliers that are making components -- sensors, chips, cameras and communications devices -- that will enable vehicles to function autonomously in real-world conditions. At the forefront of autonomous vehicle technology, these companies could be big winners when the self-driving car market takes off. Moreover, these companies have diversified product ranges which will continue to drive future growth and profitability, according to Morningstar equity research.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Apple Inc146.06 USD-1.83Rating
International Business Machines Corp135.23 USD-0.88Rating
Magna International Inc Class A96.80 CAD0.08Rating
Skyworks Solutions Inc175.26 USD-1.95Rating
Texas Instruments Inc196.25 USD-0.29Rating
Toyota Motor Corp ADR180.95 USD-0.54Rating

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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