Four auto stocks with plenty vroom to run

Various scandals and recalls have plagued the auto sector, but for risk-tolerant investors this may create buying opportunities.

Vikram Barhat 6 October, 2015 | 5:00PM
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The news of German automaker Volkswagen's use of emission-rigging software, dubbed "defeat device," in as many as 11 million cars and SUVs has been roiling the auto sector globally since it came to light on Sept. 18. In the immediate aftermath of the scandal, Volkswagen's stock lost more than 50% of its value, leading to a sharp industry-wide pullback.

The auto industry is no stranger to wrongdoings and recall controversies and their knock-on effects. Japanese carmakers Toyota and Nissan created a media storm after their cars were found to be fitted with faulty airbags. American car giant  General Motors (GM) had to recall more than 8 million cars for faulty ignition switches. Trans-Atlantic carmaker Fiat Chrysler was fined US$105 million by U.S. authorities in a recall incident related to defective steering parts.

However, consumers tend to have a short memory that fades almost as quickly as the news cycle. For that reason, no matter how bad the damage -- financial or reputational -- corporations often bounce back and their stocks recuperate.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Duke Energy Corp102.63 USD0.39Rating
Fortis Inc55.49 CAD0.07Rating
General Motors Co58.25 USD1.00Rating
Southern Co63.93 USD0.35Rating
Stellantis NV19.70 USD0.59Rating
Toyota Motor Corp ADR174.57 USD-1.79Rating
Volkswagen AG ADR22.46 USD3.47Rating

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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