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 27, 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.

Cooper-Standard Holdings Inc’s Value Grade

Value Grade:

Cooper-Standard Holdings Inc. is a manufacturer of sealing and fluid handling systems (consisting of fuel and brake delivery and fluid transfer systems). Its products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (OEMs) and replacement markets. It operates through four segments: North America, Europe, Asia Pacific, and South America. The Company’s product lines include sealing systems and fluid handling systems (consisting of fuel and brake delivery and fluid transfer systems). The Company's brands include FlushSeal, Gen III Posi-Lock, Easy-Lock, MagAlloy, Ergo-Lock +, PlastiCool and Fortrex. FlushSeal is an advanced integrated solution for frame under glass static sealing systems. Its Easy-Lock is a small package coolant and fuel vapor quick connect. Its MagAlloy is a processing technology for brake lines that increases long term durability through superior corrosion resistance.

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.

Cooper-Standard Holdings Inc has a Value Score of 86, which is considered to be undervalued.

When you look at Cooper-Standard Holdings Inc’s price-to-sales ratio at 0.10 compared to the industry median at 0.54, this company has a lower price relative to revenue compared to its peers. This could make Cooper-Standard Holdings Inc’s stock more attractive for value investors.

Now, let’s assess Cooper-Standard Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 7.2, 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. Cooper-Standard Holdings 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 Cooper-Standard Holdings Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Cooper-Standard Holdings Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 15.40. This could make Cooper-Standard Holdings Inc more attractive because the lower P/FCF ratio indicates that Cooper-Standard Holdings 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.

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.

You can read more about Garrett Motion 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 14.6 compared to the industry median at 15.1. 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 1.35.

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.

Magna International Inc (USA)’s Value Grade

Value Grade:

Magna International Inc. is a Canada-based global automotive supplier. The Company has complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting, and roof systems. Its Veoneer Active Safety provides sensor, software and systems engineering solutions to a range of customers. The Company's segments include Body Exteriors & Structures; Power & Vision; Seating Systems; and Complete Vehicles. Its Body Exteriors & Structures include body structures, chassis structures, exterior, energy storage systems and other. Its Power & Vision products include electrified powertrain technologies, powertrain subsystems and other. Its Complete Vehicles consist of complete vehicle engineering and complete vehicle manufacturing. The Company's global network includes 341 manufacturing operations and 88 product development.

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.

Magna International Inc (USA) has a Value Score of 65, which is considered to be undervalued.

Magna International Inc (USA)’s price-earnings ratio is 12.6 compared to the industry median at 15.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Magna International Inc (USA) more attractive for value investors.

Magna International Inc (USA)’s price-to-book ratio is lower than its peers. This could make Magna International Inc (USA) fairly attractive for value investors when compared to the industry median at 1.35.

You can read more about Magna International Inc (USA)’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.

Power Solutions International Inc’s Value Grade

Value Grade:

Power Solutions International, Inc. is engaged in the design, engineering, and manufacturing of a range of advanced, emission- certified engines and power systems. The Company provides integrated turnkey solutions to global original equipment manufacturers (OEMs) and customers within the power systems, industrial and transportation end markets. The Company's in-house design, prototyping, engineering, and testing capabilities allow it to customize clean high-performance engines using a fuel agnostic strategy to run on a variety of fuels, including natural gas, propane, gasoline, diesel, and biofuels. It develops and delivers complete power systems that are used globally in stationary and mobile power generation applications supporting standby, prime, demand response, microgrid, and co-generation power (CHP) applications, and industrial applications that include forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, and construction equipment.

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.

Power Solutions International Inc has a Value Score of 99, which is considered to be undervalued.

Power Solutions International Inc’s price-earnings ratio is 2.1 compared to the industry median at 15.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Power Solutions International Inc more attractive for value investors.

You can read more about Power Solutions International 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.

• Cooper-Standard Holdings Inc stock has a Value Grade of A.
• Garrett Motion Inc stock has a Value Grade of B.
• Lear Corp stock has a Value Grade of B.
• Magna International Inc (USA) stock has a Value Grade of B.
• Power Solutions International Inc stock has a Value Grade of A.

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 27
• 7 Undervalued Auto, Truck & Motorcycle Parts Stocks for Tuesday, March 26
• 4 Undervalued Auto, Truck & Motorcycle Parts Stocks for Monday, March 25
• 6 Undervalued Auto, Truck & Motorcycle Parts Stocks for Friday, March 22

AAII Disclaimer

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