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 Manufacturers 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 Manufacturers 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 Manufacturers 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 Manufacturers industry for Friday, July 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 Manufacturers 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.

General Motors Co’s Value Grade

Value Grade:

General Motors Company designs, builds and sells trucks, crossovers, cars and automobile parts and provides software-enabled services and subscriptions worldwide. The Company provides automotive financing services through its General Motors Financial Company, Inc. (GM Financial) segment. GM North America (GMNA) and GM International (GMI) develop, manufacture and/or markets vehicles under the Buick, Cadillac, Chevrolet and GMC brands. The Company's segments include GMNA, GMI, Cruise and GM Financial. Its Cruise segment is engaged in the development and commercialization of autonomous vehicle technology. Its software-enabled services and subscriptions, including OnStar, our advanced driver-assistance systems (ADAS), including Super Cruise driver assistance technology, and its end-to-end software platform. The Company is also focused on investing in electric vehicles (EVs) and AVs, software-enabled services and subscriptions and new business opportunities.

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.

General Motors Co has a Value Score of 98, which is considered to be undervalued.

When you look at General Motors Co’s price-to-sales ratio at 0.33 compared to the industry median at 1.23, this company has a lower price relative to revenue compared to its peers. This could make General Motors Co’s stock more attractive for value investors.

General Motors Co’s price-earnings ratio is 6.07 compared to the industry median at 8.53. This means it has a lower share price relative to earnings compared to its peers. This could make General Motors Co more attractive for value investors.

Now, let’s assess General Motors Co’s EV/EBITDA ratio, also known as enterprise multiple. At 7.0, when compared to the industry median of 10.9, 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. General Motors Co’s shareholder yield is higher than its industry median ratio of (2.46%). 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. General Motors Co’s price-to-book ratio is higher than its industry median ratio of 0.78. This could make General Motors Co less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at General Motors Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. General Motors Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 16.87. This could make General Motors Co more attractive because the lower P/FCF ratio indicates that General Motors Co 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.

Harley-Davidson Inc’s Value Grade

Value Grade:

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. The Company operates in three segments: Harley-Davidson Motor Company (HDMC), LiveWire, and Harley-Davidson Financial Services (HDFS). HDMC designs, manufactures and sells Harley-Davidson motorcycles. HDMC also sells motorcycle parts, accessories, and apparel as well as licenses its trademarks. LiveWire segment sells electric motorcycles, electric balance bikes for kids, parts and accessories and apparel in the United States and certain international markets. HDMC conducts business on a global basis, with sales in the United States, Canada, Europe/Middle East/Africa (EMEA), Asia Pacific, and Latin America. HDMC's products are sold to retail customers primarily through a network of independent dealers. HDMC also distributes its motorcycles through an independent distributor in India. HDMC offers internal combustion engine motorcycles under the Harley-Davidson brand.

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.

Harley-Davidson Inc has a Value Score of 83, which is considered to be undervalued.

Harley-Davidson Inc’s price-earnings ratio is 8.0 compared to the industry median at 8.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Harley-Davidson Inc more attractive for value investors.

Harley-Davidson Inc’s price-to-book ratio is lower than its peers. This could make Harley-Davidson Inc more attractive for value investors when compared to the industry median at 0.78.

You can read more about Harley-Davidson 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.

Niu Technologies - ADR’s Value Grade

Value Grade:

Niu Technologies is a China-based company mainly engaged in the manufacture of smart electric two-wheeled vehicles. The Company is mainly engaged in the design, manufacture and sales of high-performance motorcycles, scooters, bicycles and kick-scooters. The Company's products mainly include electric scooter and motorcycle series, NQi, MQi, UQi and Gova, electric kick-scooter series, KQi and e-bike series, NIU Aero. In addition, its products also include two high-performance motorcycle series, RQi and TQi, a hybrid motorcycle series, YQi and an e-bike series, BQi. The Company mainly operates in the domestic 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.

Niu Technologies - ADR has a Value Score of 72, which is considered to be undervalued.

Niu Technologies - ADR’s price-to-book ratio is lower than its peers. This could make Niu Technologies - ADR more attractive for value investors when compared to the industry median at 0.78.

You can read more about Niu Technologies - 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.

Other Auto & Truck Manufacturers 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 Manufacturers stocks as well as other industrys.

Choosing Which of the 3 Best Auto & Truck Manufacturers 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.

• General Motors Co stock has a Value Grade of A.
• Harley-Davidson Inc stock has a Value Grade of A.
• Niu Technologies - ADR 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 Manufacturers 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 Manufacturers Stocks

Want to learn more about Auto & Truck Manufacturers 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 Manufacturers Stocks for Friday, July 19
• Why Shyft Group Inc’s (SHYF) Stock Is Down 4.74%
• Why Rivian Automotive Inc’s (RIVN) Stock Is Down 4.18%
• Why Zeekr Intellignt Tchnlgy Hldng Ltd (ADR)’s (ZK) Stock Is Down 4.69%

AAII Disclaimer

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