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, June 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.

Adient PLC’s Value Grade

Value Grade:

Adient PLC is an automotive seating supplier company. The Company’s automotive seating solutions include complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim covers. The Company designs, manufactures and markets a full range of seating systems and components for passenger cars, commercial vehicles and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles. The Company manages its business on a geographic basis and operates in three reportable segments: Americas, which is inclusive of North America and South America; Europe, Middle East, and Africa (EMEA), and Asia Pacific/China (Asia). The Company operates approximately 200 wholly- and majority-owned manufacturing or assembly facilities, with operations in approximately 29 countries. The Company provides production and service parts to its customers under multi-year programs.

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.

Adient PLC has a Value Score of 93, which is considered to be undervalued.

When you look at Adient PLC’s price-to-sales ratio at 0.15 compared to the industry median at 0.52, this company has a lower price relative to revenue compared to its peers. This could make Adient PLC’s stock more attractive for value investors.

Adient PLC’s price-earnings ratio is 15.24 compared to the industry median at 15.24. This means it has a similar share price relative to earnings compared to its peers. This could make Adient PLC less attractive for value investors.

Now, let’s assess Adient PLC’s EV/EBITDA ratio, also known as enterprise multiple. At 6.1, when compared to the industry median of 6.8, 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. Adient PLC’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. Adient PLC’s price-to-book ratio is lower than its industry median ratio of 1.23. This could make Adient PLC more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Adient PLC’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Adient PLC’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.02. This could make Adient PLC more attractive because the lower P/FCF ratio indicates that Adient PLC 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.

American Axle & Manufacturing Hldngs Inc’s Value Grade

Value Grade:

American Axle & Manufacturing Holdings, Inc. is an automotive and mobility supplier. The Company designs, engineers and manufactures driveline and metal forming technologies to support electric, hybrid and internal combustion vehicles. The Company operates through two segments: Driveline and Metal Forming. Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, sport utility vehicles (SUVs), crossover utility vehicles (CUVs), passenger cars and commercial vehicles. Its Metal Forming products consist primarily of engine, transmission, driveline and safety-critical components for traditional internal combustion engine and electric vehicle architectures including light vehicles, commercial vehicles, and off-highway vehicles, as well as products for industrial 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.

American Axle & Manufacturing Hldngs Inc has a Value Score of 85, which is considered to be undervalued.

American Axle & Manufacturing Hldngs Inc’s price-to-book ratio is lower than its peers. This could make American Axle & Manufacturing Hldngs Inc more attractive for value investors when compared to the industry median at 1.23.

You can read more about American Axle & Manufacturing Hldngs 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.

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 96, which is considered to be undervalued.

Iochpe Maxion SA - ADR’s price-earnings ratio is 17.5 compared to the industry median at 15.2. 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 1.23.

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.

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 70, which is considered to be undervalued.

Magna International Inc (USA)’s price-earnings ratio is 11.8 compared to the industry median at 15.2. 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 higher than its peers. This could make Magna International Inc (USA) less attractive for value investors when compared to the industry median at 1.23.

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.

Phinia Inc’s Value Grade

Value Grade:

PHINIA Inc. is an independent solutions and components provider. The Company develops, designs and manufactures integrated components and systems. The Company provides fuel systems, electrical systems and aftermarket products. Its segments include Fuel Systems and Aftermarket. Fuel Systems segment provides advanced fuel injection systems, fuel delivery modules, canisters, sensors, electronic control modules and associated software. Its highly engineered fuel injection systems portfolio includes pumps, injectors, fuel rail assemblies, engine control modules, and complete systems, including software and calibration services, that reduce emissions and improve fuel economy for traditional and hybrid applications. Aftermarket segment sells products to independent aftermarket customers and original equipment service customers. Aftermarket segment also includes sales of starters and alternators to original equipment manufacturers. Its brand portfolio includes DELPHI, DELCO REMY and HARTRIDGE.

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.

Phinia Inc has a Value Score of 84, which is considered to be undervalued.

Phinia Inc’s price-earnings ratio is 19.7 compared to the industry median at 15.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Phinia Inc less attractive for value investors.

Phinia Inc’s price-to-book ratio is higher than its peers. This could make Phinia Inc less attractive for value investors when compared to the industry median at 1.23.

You can read more about Phinia 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.

• Adient PLC stock has a Value Grade of A.
• American Axle & Manufacturing Hldngs Inc stock has a Value Grade of A.
• Iochpe Maxion SA - ADR stock has a Value Grade of A.
• Magna International Inc (USA) stock has a Value Grade of B.
• Phinia 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, June 26
• 3 Undervalued Auto, Truck & Motorcycle Parts Stocks for Tuesday, June 25
• Why Fox Factory Holding Corp’s (FOXF) Stock Is Down 7.95%
• Why Titan International Inc’s (TWI) Stock Is Down 4.07%

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