Key Insights
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Many tend to overlook Ferrari within the auto sector, which is a significant oversight.
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Unlike most car manufacturers, Ferrari’s profit margins are comparable to those of luxury brands.
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The nearly $4 million F80 model by Ferrari is poised to boost profits in the near future.
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Most investors don’t typically explore the auto industry for luxury stocks. This is due to the fierce competition, low margins, and capital-intensive nature of the industry. However, Ferrari (NYSE: RACE) stands out as a hidden treasure that defies the typical perceptions of automotive investments. Let’s delve into this remarkable luxury supercar manufacturer and highlight two reasons investors should consider it.
Unmatched Profit Margins
The first key point for potential investors to understand about Ferrari is its impressive profit margins. The company is strategic in its sales approach, tightly controlling production and often selling slightly fewer cars than demand, which enhances its pricing authority. Coupled with the innovative technologies introduced in its vehicles, developed in collaboration with its racing division, its pricing capability remains robust.
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Data sourced from YCharts.
The illustration above shows Ferrari’s exceptional margins compared to its competitors, consistently increasing over time. This trend indicates that the company possesses sustainable competitive advantages, allowing it to set its prices and still meet its limited demand.
Future Prospects
As the auto industry shifts from conventional internal combustion engines (ICE) to electric vehicles (EVs)—with regions like China leading the way—Ferrari can afford to take its time before launching its all-electric model. Interestingly, while awaiting this transition, Ferrari has already ventured into the hybrid vehicle market.
In fact, during the third quarter of 2025, Ferrari’s distribution showed a mix of 57% ICE and 43% hybrids. This contrasts sharply with mainstream U.S. automotive companies, which have faced setbacks by hastily transitioning to fully electric models. For instance, Ford recently announced a $19.5 billion loss as it adjusts its EV strategy.
In summary, Ferrari stands as a unique stock and business entity. It boasts lasting competitive strengths that have consistently elevated its operating margins, profits, and stock price over the past decade. Ferrari is likely to continue its success for investors willing to take a chance on this one-of-a-kind automaker.
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Daniel Miller holds positions in Ford Motor Company. The Motley Fool recommends Ferrari and Stellantis. The Motley Fool operates under a disclosure policy.
The views expressed here are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
