Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 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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3 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 3 undervalued stocks in the Auto, Truck & Motorcycle Parts industry for Friday, April 26, 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.

Greenland Technologies Holding Corp’s Value Grade

Value Grade:

Greenland Technologies Holding Corporation is a developer and manufacturer of drivetrain systems for material handling machinery and electric vehicles, as well as electric industrial vehicles. The Company operates through its wholly owned subsidiaries, which include Zhongchai Holding (Hong Kong) Limited (Zhongchai Holding) and HEVI Corporation (HEVI). Through Zhongchai Holding, the Company develops and manufactures traditional transmission products for material handling machinery in the People’s Republic of China (the PRC). Through its PRC subsidiaries, it offers transmission products, which are the components for forklift trucks used in manufacturing and logistic applications, such as factories, workshops, warehouses, fulfillment centers, shipyards, and seaports. HEVI promotes sales of alternative products for the heavy industrial equipment industry, including electric industrial vehicles in the North American market.

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.

Greenland Technologies Holding Corp has a Value Score of 88, which is considered to be undervalued.

When you look at Greenland Technologies Holding Corp’s price-to-sales ratio at 0.23 compared to the industry median at 0.50, this company has a lower price relative to revenue compared to its peers. This could make Greenland Technologies Holding Corp’s stock more attractive for value investors.

Now, let’s assess Greenland Technologies Holding Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.1, when compared to the industry median of 7.2, 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. Greenland Technologies Holding Corp’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.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Greenland Technologies Holding Corp’s price-to-book ratio is lower than its industry median ratio of 1.26. This could make Greenland Technologies Holding Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Greenland Technologies Holding Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Greenland Technologies Holding Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 12.98. This could make Greenland Technologies Holding Corp more attractive because the lower P/FCF ratio indicates that Greenland Technologies Holding Corp 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 automotive aftermarket products for car and truck enthusiasts primarily in the United States, Canada and Europe. The Company's products span a number of automotive platforms and are sold across multiple channels. It manufactures a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners and automotive performance plumbing products. Its portfolio consists of over 70 brands spanning across over 30 product categories. Its brands include Holley EFI, Holley, MSD, Simpson, Powerteq, Accel and Flowmaster, among others. Its Holley EFI brand focuses on electronic fuel injection technology and showcases its new product development engine. Simpson brand is focused on motorsport safety products including helmets, head and neck restraints, seat belts and fire suits.

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 64, which is considered to be undervalued.

Holley Inc’s price-earnings ratio is 25.0 compared to the industry median at 13.9. 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 1.26.

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 80, which is considered to be undervalued.

Lear Corp’s price-earnings ratio is 13.8 compared to the industry median at 13.9. 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 1.26.

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.

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 3 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.

• Greenland Technologies Holding Corp stock has a Value Grade of A.
• Holley Inc stock has a Value Grade of B.
• Lear Corp stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 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.

• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Friday, April 26
• 5 Undervalued Auto, Truck & Motorcycle Parts Stocks for Thursday, April 25
• What You Need to Know About Visteon Corp's Q1 Earnings
• 7 Undervalued Auto, Truck & Motorcycle Parts Stocks for Wednesday, April 24

AAII Disclaimer

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