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.

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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 Wednesday, May 08, 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.

Continental AG (ADR)’s Value Grade

Value Grade:

Continental AG is a Germany-based company offering mobility solutions to automotive sector. The Company operates in four group sectors: Automotive, Tires, ContiTech and Contract Manufacturing. Automotive sector offers technologies for safety, brake, chassis, motion and motion-control systems, which is divided into five business areas: Architecture and Networking, Autonomous Mobility, Safety and Motion, Software and Central Technologies and User Experience. Tires sector offers solutions in tire technology, which is divided into five business areas: Original Equipment, Replacement APAC, Replacement EMEA, Replacement The Americas and Specialty Tires. ContiTech group sector develops products and systems made from rubber, plastic, metal, and textiles. It is divided into five business areas: Industrial Solutions Americas, Industrial Solutions APAC, Industrial Solutions EMEA, Original Equipment Solutions and Surface Solutions. Contract Manufacturing sector handles contract manufacturing.

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.

Continental AG (ADR) has a Value Score of 93, which is considered to be undervalued.

When you look at Continental AG (ADR)’s price-to-sales ratio at 0.31 compared to the industry median at 0.55, this company has a lower price relative to revenue compared to its peers. This could make Continental AG (ADR)’s stock more attractive for value investors.

Continental AG (ADR)’s price-earnings ratio is 10.96 compared to the industry median at 16.82. This means it has a lower share price relative to earnings compared to its peers. This could make Continental AG (ADR) more attractive for value investors.

Now, let’s assess Continental AG (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 4.6, when compared to the industry median of 7.3, 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. Continental AG (ADR)’s shareholder yield is higher 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. Continental AG (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.26. This could make Continental AG (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Continental AG (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Continental AG (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 13.42. This could make Continental AG (ADR) more attractive because the lower P/FCF ratio indicates that Continental AG (ADR) 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.

Chicago Rivet & Machine Co.’s Value Grade

Value Grade:

Chicago Rivet & Machine Co. operates in the fastener industry. The Company operates through two segments: fastener and assembly equipment. The fastener segment, which comprises the Company’s wholly-owned subsidiary, H&L; Tool Company Inc., and the Company’s fastener operations, which consists of the manufacture and sale of rivets, cold-formed fasteners and parts, and screw machine products. The assembly equipment segment consists primarily of the manufacture of automatic rivet setting machines and parts and tools for such machines. The principal market for the Company’s products is the North American automotive industry. Its Madison Heights, Michigan facility is used entirely in the fastener segment. Its Albia, Iowa facility is used exclusively in the assembly equipment segment. Its Tyrone, Pennsylvania and the Naperville, Illinois facilities are utilized in both segments.

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.

Chicago Rivet & Machine Co. has a Value Score of 94, which is considered to be undervalued.

Chicago Rivet & Machine Co.’s price-to-book ratio is higher than its peers. This could make Chicago Rivet & Machine Co. less attractive for value investors when compared to the industry median at 1.26.

You can read more about Chicago Rivet & Machine Co.’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.

China Yuchai International Limited’s Value Grade

Value Grade:

China Yuchai International Limited is a holding company. The Company operates through two segments: Guangxi Yuchai Machinery Company Limited (Yuchai) and HL Global Enterprises Limited (HLGE). The Yuchai segment primarily conducts manufacturing and sale of diesel engines, which are mainly distributed in the Republic of China (PRC) market. Yuchai engages in the manufacture, assembly and sale of a wide variety of light, medium and heavy-duty engines for trucks, buses, passenger vehicles, construction equipment, and marine and agricultural applications in China. Yuchai also produces engines for diesel power generators. Yuchai manufactures diesel and natural gas engines for trucks, buses and passenger vehicles, for marine and industrial applications. The HLGE segment is engaged in hospitality and property development activities conducted mainly in the PRC and Malaysia. The HLGE segment also operates Copthorne Hotel Cameron Highlands, a hotel in Cameron Highlands, Malaysia.

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.

China Yuchai International Limited has a Value Score of 99, which is considered to be undervalued.

China Yuchai International Limited’s price-earnings ratio is 8.6 compared to the industry median at 16.8. This means that it has a lower price relative to its earnings compared to its peers. This makes China Yuchai International Limited more attractive for value investors.

China Yuchai International Limited’s price-to-book ratio is higher than its peers. This could make China Yuchai International Limited less attractive for value investors when compared to the industry median at 1.26.

You can read more about China Yuchai International Limited’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.

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 89, which is considered to be undervalued.

Greenland Technologies Holding Corp’s price-to-book ratio is higher than its peers. This could make Greenland Technologies Holding Corp less attractive for value investors when compared to the industry median at 1.26.

You can read more about Greenland Technologies Holding 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.

Iochpe Maxion SA - ADR’s Value Grade

Value Grade:

Iochpe-Maxion S.A. is engaged in the production of automotive wheels. The Company is a producer of automotive structural components in the Americas, and a producer of railway equipment in Brazil. Its operations are focused on the automotive segment, and divided into the wheels and structural component segments. The Company operates through three divisions: Maxion Wheels, Maxion Structural Components and AmstedMaxion. At Maxion Wheels, the Company produces and sells a range of steel wheels for light and commercial vehicles, and agricultural machinery and aluminum wheels for light vehicles. At Maxion Structural Components, it produces side rails, cross members and full frames for commercial vehicles and structural components for light vehicles. At AmstedMaxion (a joint venture), the Company produces freight cars, railway wheels and castings, as well as industrial castings. The Company's and its subsidiaries' operations are carried out in over 30 units located in Brazil and abroad.

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.

Iochpe Maxion SA - ADR has a Value Score of 85, which is considered to be undervalued.

Iochpe Maxion SA - ADR’s price-earnings ratio is 90.0 compared to the industry median at 16.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Iochpe Maxion SA - ADR less attractive for value investors.

Iochpe Maxion SA - ADR’s price-to-book ratio is higher than its peers. This could make Iochpe Maxion SA - ADR less attractive for value investors when compared to the industry median at 1.26.

You can read more about Iochpe Maxion SA - 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.

OmniTek Engineering Corp’s Value Grade

Value Grade:

Omnitek Engineering Corp. (Omnitek) is a manufacturer in the automotive aftermarket parts industry and the developer of the patented HotWires spark plug wires. Omnitek develops and sells a technology to convert diesel engines to an alternative fuel, new natural gas engines, and complementary products. Omnitek products are available for stationary applications and the global transportation markets, which include light commercial vehicles, minibuses, heavy-duty trucks, municipal buses, as well as rail and marine applications. Its product line includes a conversion kit for converting diesel engines to run on an alternative fuel; new complete natural gas engines; high-pressure natural gas coalescing filter, and natural gas engine components. Its range of products include New Natural Gas Engines, Omnitek DNG Engines, Products for Diesel-to-Natural Gas Engine Conversions, Engine Management System (EMS) and Components, EFI for V-Twin Motorcycles, Small Engines and Hydrogen Engine System.

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.

OmniTek Engineering Corp has a Value Score of 71, which is considered to be undervalued.

You can read more about OmniTek Engineering 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 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.

• Continental AG (ADR) stock has a Value Grade of A.
• Chicago Rivet & Machine Co. stock has a Value Grade of A.
• China Yuchai International Limited stock has a Value Grade of A.
• Greenland Technologies Holding Corp stock has a Value Grade of A.
• Iochpe Maxion SA - ADR stock has a Value Grade of A.
• OmniTek Engineering Corp stock has a Value Grade of B.

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 Wednesday, May 08
• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Tuesday, May 07
• What You Need to Know About Dorman Products Inc's Q1 Earnings
• Why Commercial Vehicle Group, Inc.’s (CVGI) Stock Is Down 6.98%

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