A $2.3 billion deal is shaking up car stocks Monday, adding to some bullish buzz around the industry.
Shares in Peugeot SA
are rallying about 4%, after the French auto maker agreed to buy General Motors Co.’s European car brands.
The companies now have inked a deal, with Peugeot promising to pay $1.4 billion for GM’s Opel and Vauxhall brands. The U.S. car giant’s European financial operations are to be jointly acquired by Peugeot and French bank BNP Paribas SA
for about $950 million. As part of the overall deal, GM will take a $4 billion charge.
Jonathan Krinsky, chief market technician at MKM Partners, sounded upbeat about the car industry in a note over the weekend, before details of the $2.3 billion deal rolled in.
“We see a potential massive breakout in auto makers vs. auto retailers after a ~600% underperformance over the last 11 years,” the technical analyst said in a note dated Sunday.
These are the motor-vehicle makers that Krinsky recommends buying: GM, Harley-Davidson
, Ferrari NV
, Peugeot, Volkswagen
, Renault SA
and Yamaha Motor Co.
The chart watcher offered this illustration as he suggested this is car manufacturers’ moment:
Krinsky also shared this chart showing the recent leap by GM’s stock, which was trading lower in premarket action Monday:
And the MKM technician highlighted these chart setups for American and European auto makers, suggesting there could be more gains ahead:
To be sure, other stock pundits are downbeat on companies who are producing motor vehicles. Barron’s, for example, has argued motorcycle giant Harley “could be headed for a nasty spill.”