Auto stocks may be in favor again, as prices for used cars continue to plummet on excess supply. The auto market has been functioning at odds with economic laws recently, and at times prices of used cars have been higher than their new model counterpart.  But as the money supply starts to tighten up used car prices are once again starting to moderate, and sales are increasingly starting to increase for new cars. The age of cars on the road is at record levels, and consumers have slowly started to come back to the market leading to an increase in sales of new cars, which should translate in turn higher profits for car markers. Consider the following stocks as the automotive markets start to recover from a couple of years of being on the back foot.

Ford (NYSE: F)

Ford is slowly starting to witness a recovery, as the introduction of the EVs to its lineup starts to translate into higher sales. The biggest success remains its EV trucks, and when combined with sales of the Ford Mustang Mach model revenue is once again starting to rise. Ford in recent times has made an increasing number of deals and has tapped battery makers to push its sales of EVs towards 600,00 vehicles by 2023, and production could eventually head towards 2 million vehicles. Should Ford execute its plans, the carmaker could see a comeback in developing and semi-developed markets such as China, where continues to retain market share.

And with revenue on a 12-month trailing basis increasing by 8.5%, investors will be taking closely watching the company. Furthermore, considering lockdowns are slowly reducing in China, and the auto-market continues to see improvements to margins, which are slowly heading into the high single-digits, Ford's stock may be flying under the radar after years of poor performance. Forward P/E remains around 5-6, which is not expensive, but a wait-and-watch approach is likely prudent, given the company's history.

Polestar (NASDAQ: PSNY)

Polestar has introduced a number of models, and with consumers increasingly looking at new cars again, the company might be set to witness a boom in sales, leading to significant improvements to the stock.  Polestar is set to produce a record number of cars in 2022, and total sales increased by 125% during the first quarter. Similarly, sales could increase at a similar rate during the second-quarter, as production smoothens out.

Revenue came in at a total of $1 billion during the first-half of 2022 and given the current outlook, revenue could increase to $2.5 billion for the year. This would put price-to-sales at around 6.8x, which would be slightly expensive if margins were similar to other makers. But if margins were to come in the double-digits, the auto-maker might be quite cheap, especially if sales continue to grow at a rapid pace.

Rivian (NYSE: RIVN)

Rivian is another automaker that is set to see significant increases in revenue in the coming years, as production on the back of new manufacturing capacity leads to increased sales. Rivian initially beat estimates during the first-half with production coming in better than expected, with a total of 7000 vehicles produced during the period. As production ramps up the company is set to produce 25,000 vehicles for the year.  Furthermore, the carmaker has indicated that it is likely to increase sales to 150,000 vehicles in 2023, and sales could go as high as 200,000 vehicles. In addition, as production increases, the company is looking to quickly tap global markets, which could lead to materially higher sales.

Rivian currently trades at a significant premium, but since management’s guidance has come through in previous, there is no reason to believe they will not manage to execute their plans as guided in the coming quarters. Supply chains specifically raw materials are usually the biggest issues during the initial stages, and Rivian has done a good job of ensuring suppliers of raw materials are in order for when production increases. The stock is slightly priced to perfection, which could mean a correction if earnings don’t match estimates. Regardless, the future currently looks bright for the company.