2 Hugely Overlooked Auto Stocks With Massive Upside

The automotive industry is evolving into a higher-margin business as software becomes a bigger part of the vehicle.

Ferrari has a long list of competitive advantages, and it's a buying opportunity after the Luce failed to impress with its design.

Stellantis has a big turnaround plan, and after shedding 70% of its value over the past three years, it offers significant upside.

The automotive industry is poised to potentially evolve more over the next decade than it has in the past 50 years -- arguably even longer.

A massive shift from internal combustion engine powertrains to electric vehicles (EVs) has also spurred the development of software-defined vehicles and driverless vehicles, and driven a rise in services and subscription offerings, which are rapidly changing how savvy investors view auto stocks as new high-margin businesses.

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Investors looking to get in early on the evolving auto industry should start by considering these two stocks with massive upside potential.

Ferrari (NYSE: RACE) is a unicorn in the automotive industry with a long list of competitive advantages, lucrative margins that dwarf the industry, a powerful brand and racing heritage , and a loyal, ultra-wealthy consumer base that is less impacted by typical economic downturns, making the stock more recession-resilient. But over the past year, it has traded well below its average price-to-earnings ratio, allowing investors to buy an excellent business at a discount.