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 Friday, September 20, 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.

China Automotive Systems, Inc.’s Value Grade

Value Grade:

China Automotive Systems, Inc., (China Automotive) is a holding company. The Company, through its subsidiary, Great Genesis Holdings Limited (Genesis), owns interests in over eight Sino-joint ventures and over five subsidiaries in the People's Republic of China (PRC), which manufacture power steering systems and/or related products for various segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil. Henglong USA Corporation (HLUSA), which is a subsidiary of the Company, engages in marketing of automotive parts in North America, and provides after sales service and research and development support. The Company's geographical segments include the United States, China and other foreign countries. One of its subsidiaries, Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., focuses on power steering parts for light duty vehicles.

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 Automotive Systems, Inc. has a Value Score of 96, which is considered to be undervalued.

When you look at China Automotive Systems, Inc.’s price-to-sales ratio at 0.18 compared to the industry median at 0.55, this company has a lower price relative to revenue compared to its peers. This could make China Automotive Systems, Inc.’s stock more attractive for value investors.

China Automotive Systems, Inc.’s price-earnings ratio is 2.97 compared to the industry median at 15.47. This means it has a lower share price relative to earnings compared to its peers. This could make China Automotive Systems, Inc. more attractive for value investors.

Now, let’s assess China Automotive Systems, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 3.1, when compared to the industry median of 6.2, 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. China Automotive Systems, Inc.’s shareholder yield is the same 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. China Automotive Systems, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.27. This could make China Automotive Systems, Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at China Automotive Systems, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. China Automotive Systems, Inc.’s price-to-free-cash-flow ratio is higher than its industry median ratio of 12.87. This could make China Automotive Systems, Inc. less attractive because the higher P/FCF ratio indicates that China Automotive Systems, 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.

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 96, which is considered to be undervalued.

Continental AG (ADR)’s price-earnings ratio is 13.5 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Continental AG (ADR) more attractive for value investors.

Continental AG (ADR)’s price-to-book ratio is higher than its peers. This could make Continental AG (ADR) less attractive for value investors when compared to the industry median at 1.27.

You can read more about Continental AG (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.

Commercial Vehicle Group, Inc.’s Value Grade

Value Grade:

Commercial Vehicle Group, Inc. is a global provider of systems, assemblies and components to the global commercial vehicle market, the electric vehicle market, and the industrial automation markets. The Company delivers solutions to complex design, engineering, and manufacturing problems. The Company's segments include Vehicle Solutions, Electrical Systems, Aftermarket & Accessories, and Industrial Automation. The Vehicle Solutions segment designs, manufactures and sells commercial vehicle seats and plastic and trim components. The Electrical Systems segment designs, manufactures and sells cable and harness assemblies for both high and low voltage applications, control boxes, dashboard assemblies and design and engineering for these applications. The Aftermarket & Accessories segment designs, manufactures, and sells seats and components, commercial vehicle accessories, and office seats. The Industrial Automation segment designs, manufactures and sells warehouse automation subsystems.

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.

Commercial Vehicle Group, Inc. has a Value Score of 96, which is considered to be undervalued.

Commercial Vehicle Group, Inc.’s price-earnings ratio is 3.7 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Commercial Vehicle Group, Inc. more attractive for value investors.

Commercial Vehicle Group, Inc.’s price-to-book ratio is higher than its peers. This could make Commercial Vehicle Group, Inc. less attractive for value investors when compared to the industry median at 1.27.

You can read more about Commercial Vehicle Group, 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.

Visteon Corp’s Value Grade

Value Grade:

Visteon Corporation is a global automotive technology company serving the mobility industry. The Company's platforms leverage hardware and software solutions that enable the digital, electric, and autonomous evolution of the Company's global automotive customers, including BMW, Ford, Geely, General Motors, Honda, Jaguar/Land Rover, Mahindra, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Renault, Stellantis, Tata, Toyota, and Volkswagen. The Company operates through the Electronics segment, which provides vehicle cockpit electronics products to customers, including digital instrument clusters, domain controllers with integrated advanced driver assistance systems (ADAS) displays, Android-based infotainment systems, and battery management systems. The Company designs and manufactures automotive electronics and connected car solutions, such as instrument clusters, information displays, infotainment, battery management systems, high-voltage power electronics, telematics solutions and others.

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.

Visteon Corp has a Value Score of 84, which is considered to be undervalued.

Visteon Corp’s price-earnings ratio is 4.9 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Visteon Corp more attractive for value investors.

Visteon Corp’s price-to-book ratio is lower than its peers. This could make Visteon Corp more attractive for value investors when compared to the industry median at 1.27.

You can read more about Visteon 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.

Valeo SE - ADR’s Value Grade

Value Grade:

Valeo SE is a France-based global automotive supplier. The Company is a technology company, which is focused on the design, production, and sale of components, integrated systems, modules, and services for the automotive sector. Its segments include Comfort & Driving Assistance Systems, Powertrain Systems, Thermal Systems, and Visibility Systems. The Comfort & Driving Assistance Systems segment includes three product groups including driving assistance, interior controls and connected cars. It offers smart sensors and features that improve vehicle safety and an automated driving system. The Powertrain Systems segment includes four product groups including electrical systems, transmission systems, combustion engine systems and electronics. The Thermal Systems segment has five product groups including Thermal Climate Control, Thermal Powertrain, Thermal Compressors, Thermal Front End and Thermal Bus Systems. The Visibility Systems segment includes lighting systems and wiper systems.

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.

Valeo SE - ADR has a Value Score of 99, which is considered to be undervalued.

Valeo SE - ADR’s price-earnings ratio is 9.9 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Valeo SE - ADR more attractive for value investors.

Valeo SE - ADR’s price-to-book ratio is higher than its peers. This could make Valeo SE - ADR less attractive for value investors when compared to the industry median at 1.27.

You can read more about Valeo SE - 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 & 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.

• China Automotive Systems, Inc. stock has a Value Grade of A.
• Continental AG (ADR) stock has a Value Grade of A.
• Commercial Vehicle Group, Inc. stock has a Value Grade of A.
• Visteon Corp stock has a Value Grade of A.
• Valeo SE - ADR 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 Friday, September 20
• 4 Undervalued Auto, Truck & Motorcycle Parts Stocks for Thursday, September 19
• Why Adient PLC’s (ADNT) Stock Is Up 4.15%
• Why BorgWarner Inc.’s (BWA) Stock Is Up 4.22%

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