Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Auto, Truck & Motorcycle Parts industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Auto, Truck & Motorcycle Parts Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Auto, Truck & Motorcycle Parts Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Auto, Truck & Motorcycle Parts industry for Wednesday, March 13, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Auto, Truck & Motorcycle Parts industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Garrett Motion Inc’s Value Grade

Value Grade:

Garrett Motion Inc is a Switzerland-based automotive technology company. The Company designs, manufactures and sells turbocharger and electric boosting technologies for light and commercial vehicle original equipment manufacturers (OEMs) and the aftermarket. The Company offers turbochargers for gasoline, diesel, natural gas and electrified (hybrid and fuel cell) powertrains. In addition, the Company provides products and services for the connected vehicle market, including software focused on automotive cybersecurity and integrated vehicle health management (IVHM). The Company has a number of research and development (R&D;) centers, engineering facilities and factories around the world, as well as a global distribution network. It is a spin-off of Honeywell International Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Garrett Motion Inc has a Value Score of 68, which is considered to be undervalued.

When you look at Garrett Motion Inc’s price-to-sales ratio at 0.59 compared to the industry median at 0.53, this company has a higher price relative to revenue compared to its peers. This could make Garrett Motion Inc’s stock less attractive for value investors.

Now, let’s assess Garrett Motion Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.9, when compared to the industry median of 7.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Garrett Motion Inc’s shareholder yield is lower than its industry median ratio of -0.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

Lastly, let’s take a look at Garrett Motion Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Garrett Motion Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 15.52. This could make Garrett Motion Inc more attractive because the lower P/FCF ratio indicates that Garrett Motion Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Holley Inc’s Value Grade

Value Grade:

Holley, Inc. is a designer, marketer, and manufacturer of performance automotive aftermarket products for car and truck enthusiasts. The Company's products span a number of automotive platforms and are sold across multiple channels. Its portfolio consists of over 70 brands spanning across 30 product categories. Its brands include Holley EFI, Holley, MSD, Simpson, Powerteq, Accel and Flowmaster. Its Holley EFI brand focuses on electronic fuel injection technology and showcases its new product development engine. Its Holley brand offers a variety of products across multiple categories. Its MSD brand is focused on developing electronics for the powertrain category. Its Simpson brand is focused on motorsport safety products including helmets, head and neck restraints, seat belts and firesuits. Its Powerteq brand is focused on exhaust, intakes, drivetrain and engine tuning products and accessories. Its Flowmaster brand's main focus is on developing exhaust products.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Holley Inc has a Value Score of 63, which is considered to be undervalued.

Holley Inc’s price-earnings ratio is 25.3 compared to the industry median at 16.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Holley Inc less attractive for value investors.

Holley Inc’s price-to-book ratio is higher than its peers. This could make Holley Inc less attractive for value investors when compared to the industry median at 1.39.

You can read more about Holley Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Mayville Engineering Company Inc’s Value Grade

Value Grade:

Mayville Engineering Company, Inc. is a value-added manufacturing partner that provides a full suite of services from concept to production, including prototyping and tooling, production fabrication, coating, assembly, and aftermarket components. The Company focuses on producing metal components that are used in a range of heavy- and medium-duty commercial vehicles, construction and access equipment, powersports, agricultural, military and other products. Its capabilities include metal fabrication, metal stamping, tube bending and forming, robotic part forming, robotic welding, resistance welding, five-axis tube and fiber laser cutting and custom coatings, including high heat and chemical agent resistant coating (CARC) painting, which are used in a variety of applications. It also a manufacturer of custom aluminum extrusions and fabrications and offers value-added services that include design, engineering, extrusions, fabrication, anodizing and finishing, assembly, and packaging.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mayville Engineering Company Inc has a Value Score of 61, which is considered to be undervalued.

Mayville Engineering Company Inc’s price-earnings ratio is 35.0 compared to the industry median at 16.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Mayville Engineering Company Inc less attractive for value investors.

Mayville Engineering Company Inc’s price-to-book ratio is higher than its peers. This could make Mayville Engineering Company Inc less attractive for value investors when compared to the industry median at 1.39.

You can read more about Mayville Engineering Company Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Miller Industries Inc’s Value Grade

Value Grade:

Miller Industries, Inc. is a manufacturer of towing and recovery equipment. The Company is engaged in the manufacturing of the bodies of wreckers and car carriers, which are installed on truck chassis manufactured by third parties. It purchases the truck chassis for integration with its towing and recovery equipment and then resale to its customers. It manufactures a line of wreckers, car carriers and transport trailers products. The Company's products brands include Century, Challenger, Holmes, Champion, Eagle, Titan, Jige, Boniface, Vulcan and Chevron. Its products are sold through independent distributors that serves Canada and Mexico, and other foreign markets, including Europe, the Pacific Rim, the Middle East, South America and Africa, and through prime contractors to governmental entities. It also specializes in the manufacture and supply of custom-built, welded hydraulic cylinders for various industries. Its domestic manufacturing operations are in Tennessee and Pennsylvania.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Miller Industries Inc has a Value Score of 85, which is considered to be undervalued.

Miller Industries Inc’s price-earnings ratio is 9.5 compared to the industry median at 16.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Miller Industries Inc more attractive for value investors.

Miller Industries Inc’s price-to-book ratio is lower than its peers. This could make Miller Industries Inc more attractive for value investors when compared to the industry median at 1.39.

You can read more about Miller Industries Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sypris Solutions Inc’s Value Grade

Value Grade:

Sypris Solutions, Inc. is a diversified provider of truck components, oil and gas pipeline components and aerospace and defense electronics. The Company produces a range of manufactured products, often under multi-year, sole-source contracts. It has two segments: Sypris Technologies and Sypris Electronics. Sypris Technologies segment supplies forged and machined components, serving the commercial vehicle, off-highway vehicle, recreational vehicle, automotive, industrial and energy markets in North America. It has the capacity to produce drive train components, including axle shafts, transmission shafts, gear sets, steer axle knuckles and other components for use by automotive, truck and recreational vehicle manufacturers. Sypris Electronics segment circuit card and full box build manufacturing, high-reliability manufacturing, systems assembly and integration, design for manufacturability and design to specification, for customers in the aerospace and defense electronics markets.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sypris Solutions Inc has a Value Score of 67, which is considered to be undervalued.

Sypris Solutions Inc’s price-to-book ratio is lower than its peers. This could make Sypris Solutions Inc more attractive for value investors when compared to the industry median at 1.39.

You can read more about Sypris Solutions Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Auto, Truck & Motorcycle Parts Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Auto, Truck & Motorcycle Parts stocks as well as other industrys.

Choosing Which of the 5 Best Auto, Truck & Motorcycle Parts Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Garrett Motion Inc stock has a Value Grade of B.
• Holley Inc stock has a Value Grade of B.
• Mayville Engineering Company Inc stock has a Value Grade of B.
• Miller Industries Inc stock has a Value Grade of A.
• Sypris Solutions Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Auto, Truck & Motorcycle Parts industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Auto, Truck & Motorcycle Parts Stocks

Want to learn more about Auto, Truck & Motorcycle Parts stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Auto, Truck & Motorcycle Parts Stocks for Wednesday, March 13
• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Tuesday, March 12
• Why Modine Manufacturing Co’s (MOD) Stock Is Up 4.51%
• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Monday, March 11

AAII Disclaimer

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