The tire industry has a couple of notable stocks with upside in the long-term.
The tire industry is an essential part of the automobile sector. The demand for electric vehicles is growing at a rapid speed and the shift toward green transportation is the hottest trend in today’s date.
Though the demand for combustion vehicles may have been affected by the emergence of EVs. However, both the vehicles need tires to run, which keeps the demand for tires steady despite the changing ecosystem of auto space.
As per ResearchAndMarkets.com, the global tire market is expected to cross 2.7 billion units by 2025. This shows that the tire market has much upside as the growth is quite swift. So, let’s have a look at the best tire stocks in the market to buy for long-term investment.
The Goodyear Tire (GT)
The Goodyear Tire (GT) is one of the biggest tire producers and has a stronghold in the market. After a bumpy 2020, the company is set to gain its momentum this year. GT has made a strong bullish movement in Feb. and with the announcement of Q4 results, the shares are on a roll.
The company released its quarterly results with profits and top sales, beating estimates by a wide margin. Goodyear reported a profit of $63 million compared to a loss of $392 million in the past year. While the adjusted earnings per share were $0.44, surpassing the FactSet consensus estimate of $0.16. The sales dropped 2% to $3.7 billion but toppled FactSet estimates of $3.6 million.
After a tough first half in the last year, things improved for the company in the second half of 2020. The CEO of Goodyear Tire, Richard J. Kramer highlighted that they have good momentum heading into 2021. The commercial business is outperforming the industry and the consumer replacement business is also getting stronger.
Kramer added that their consumer OE pipeline has shown robust improvements. So, the company expects this year’s outlook to be profitable with an increase in sales.
Cooper Tire (CTB)
Cooper Tire (CTB) is another prominent US firm that manufactures tires. The company has much potential in the long run as the market is expected to grow in the coming years. However, the company has a handful of debts to pay in the coming 12-month period.
The liabilities of Cooper due within 12-months are around $640.3 million, while $891.5 million beyond that. Whereas, to fulfill the obligations, the company had cash of $496 million and has receivables worth $584.6 million due in 12 months. So, the liabilities are almost $451.6 million more than both the cash and short-term receivables.
In case of emergency funding, Cooper Tire is big enough to generate finances to fulfill its due obligations. The company is worth more than $2 billion, which shows that Cooper can raise capital to keep up its balance sheet.
Whereas, the rest of the quarterly outcomes were on the positive side as the company continues to improve. After a hard-fought battle early in 2020 amid the pandemic, Copper Tire’s global unit volume soared 0.5% from the prior year—in Q3 2020. While the net sales surged over 8.6% to $765 million. The profit was around $172 million compared to $53 million in 2019.
So, Goodyear Tire (GT) and Cooper Tire (CTB) are the two most suitable investment options for investors in the tire industry.
