Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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.

Click the button below to learn more about A+ Investor and subscribe today.

6 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 6 undervalued stocks in the Auto, Truck & Motorcycle Parts industry for Tuesday, March 19, 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 0.51, 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 7.4, 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 (0.03%). 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 15.46. 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 62, which is considered to be undervalued.

Holley Inc’s price-earnings ratio is 26.1 compared to the industry median at 15.5. 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 1.31.

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.

Lear Corp’s Value Grade

Value Grade:

Lear Corporation is a global automotive technology company. The Company supplies complete seat systems, key seat components, complete electrical distribution and connection systems, high-voltage power distribution products, including battery disconnect units (BDUs), low-voltage power distribution products, electronic controllers and other electronic products to automotive manufacturers. The Company’s segments include Seating and E-Systems. Its Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components. Its E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems, high-voltage power distribution products, including BDUs, and low-voltage power distribution products, electronic controllers and other electronic products. Its software offerings include embedded control, cybersecurity software and software to control hardware devices.

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.

Lear Corp has a Value Score of 77, which is considered to be undervalued.

Lear Corp’s price-earnings ratio is 14.5 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Lear Corp more attractive for value investors.

Lear Corp’s price-to-book ratio is lower than its peers. This could make Lear Corp more attractive for value investors when compared to the industry median at 1.31.

You can read more about Lear Corp’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 34.7 compared to the industry median at 15.5. 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 1.31.

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.

Valeo SE - ADR’s Value Grade

Value Grade:

Valeo SE is a France-based global automotive supplier. The Company is a technology company, which is focused on the design, production, and sale of components, integrated systems, modules and services for the automotive sector. Its segments include Comfort & Driving Assistance Systems, Powertrain Systems, Thermal Systems, and Visibility Systems. The Comfort & Driving Assistance Systems segment includes three product groups including driving assistance, interior controls and connected cars. It offers smart sensors and features that improve vehicle safety and an automated driving system. The Powertrain Systems segment includes four product groups including electrical systems, transmission systems, combustion engine systems and electronics. The Thermal Systems segment has five product groups including Thermal Climate Control, Thermal Powertrain, Thermal Compressors, Thermal Front End and Thermal Bus Systems. The Visibility Systems segment includes lighting systems and wiper systems.

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.

Valeo SE - ADR has a Value Score of 97, which is considered to be undervalued.

Valeo SE - ADR’s price-earnings ratio is 12.4 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Valeo SE - ADR more attractive for value investors.

Valeo SE - ADR’s price-to-book ratio is higher than its peers. This could make Valeo SE - ADR less attractive for value investors when compared to the industry median at 1.31.

You can read more about Valeo SE - ADR’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.

Westport Fuel Systems Inc’s Value Grade

Value Grade:

Westport Fuel Systems Inc. is engaged in engineering, manufacturing, and supplying alternative fuel systems and components for transportation vehicles. The Company’s segments include OEM and IAM. Its OEM segment sell systems and components, including HPDI 2.0 fuel system products, to engine OEMs and commercial vehicle OEMs. Its fully integrated HPDI 2.0 fuel systems, enables diesel engines using primarily natural gas fuel to match the power, torque, and fuel economy benefits found in traditional compression ignition engines and the capability to cost effectively run on renewable fuels. The IAM segment sells alternative fuel systems and components across a range of brands, primarily through a global network of distributors that consumers can purchase and have installed onto their vehicles to use LPG or CNG fuels, in addition to gasoline. Its products and services are available for passenger car and light-, medium- and heavy-duty truck and off-road applications.

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.

Westport Fuel Systems Inc has a Value Score of 83, which is considered to be undervalued.

Westport Fuel Systems Inc’s price-to-book ratio is higher than its peers. This could make Westport Fuel Systems Inc less attractive for value investors when compared to the industry median at 1.31.

You can read more about Westport Fuel Systems 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 6 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.
• Lear Corp stock has a Value Grade of B.
• Mayville Engineering Company Inc stock has a Value Grade of B.
• Valeo SE - ADR stock has a Value Grade of A.
• Westport Fuel Systems Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Auto, Truck & Motorcycle Parts Stocks for Tuesday, March 19
• 6 Undervalued Auto, Truck & Motorcycle Parts Stocks for Monday, March 18
• Why Cummins Inc’s (CMI) Stock Is Up 4.10%
• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Friday, March 15

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.