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Riding past the impact of the severe winter on sales, automobile companies have started reaping benefits from the spring selling season. U.S. light-vehicle sales surged 11% year over year to 1.61 million in May 2014. Year-to-date sales also increased 5% to 6.75 million, despite weak sales in January and February.

Though the inclement weather led to a disappointing couple of months in the beginning of the year, auto sales rebounded strongly thereafter, with the seasonally adjusted annualized rate (SAAR) staying above the 16 million mark in each of the three consecutive months. In fact, the SAAR hit 16.8 million in May, which is the highest since Jul 2006.

All major automakers reported strong sales figures, led by General Motors Company (GM - Analyst Report), which had the highest sales of 284,694 vehicles, up 13% from May 2013. Toyota Motor Corp. (TM - Analyst Report), Nissan Motor Co. Ltd. (NSANY) and Chrysler also reported double-digit sales growth.

Consumers remained unfazed by the unending stream of recalls by General Motors, leading to the company’s best May sales in seven years. Meanwhile, Ford Motor Co. (F - Analyst Report) reported its best May retail sales in 10 years, while Toyota had its best monthly sales in 6 years. Chrysler Group – controlled by Italy’s Fiat S.p.A (FIATY) – also reported its highest May sales since 2007.

Major Growth Drivers

The automobile industry is cyclical in nature and depends significantly on macroeconomic factors. The current growth in auto sales is buoyed by low interest rates, rising employment rates, growing consumer confidence and recovery of the housing market. Moreover, with the improvement in the general economic situation, banks are offering more car loans with lower interest rates and longer repayment periods. Further, the high average age of cars on the U.S. roads is resulting in high replacement demand for cars as well as car parts.

Moreover, automakers continue to offer ample incentives to attract customers. Five weekends in May and an early Memorial Day acted as the icing on the cake.

3 Auto Stocks to Buy Now

Considering the robust sales figures, it would be a good idea to invest in some auto stocks that are expected to perform well. Here are three auto stocks that have strong fundamentals and favorable Zacks Rank:

Ohio-based Cooper Tire & Rubber Co. (CTB - Analyst Report) manufactures and markets tires and related products. This Zacks Rank #1 (Strong Buy) stock is the 11th largest tire company globally on the basis of sales as well as the 4th largest tire manufacturer in North America.

Cooper Tire is currently trading at a forward price-to-earnings (P/E) ratio of 10.6x, which is significantly lower than the industry average of 16.6x. It has a price-to-book (P/B) ratio of 1.7x, which is also at a considerable discount to the industry average of 3.1x. Its return on equity (ROE) is 9.4%.

Long Island City, NY-based Standard Motor Products Inc. (SMP - Analyst Report) is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. The company primarily focuses on engine management and temperature control products.

This Zacks Rank #2 (Buy) stock has a P/E ratio of 15.4x, which offers a small discount on the industry average. Its P/B ratio of 2.7x is also marginally lower than the industry average. Its ROE of 16.4% surpasses the industry average of 14.4%. Moreover, its long-term growth rate is projected to be about 10.6%.

Magna International Inc. (MGA - Analyst Report), based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks.

Magna International currently carries a Zacks Rank #2. The company has a P/E ratio of 12.6x, significantly below the industry average. Its P/B ratio of 2.4x is also lower than the industry average. Moreover, the 17.6% ROE is significantly higher than the industry average. Its long-term growth rate is expected to be 11.63%.

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