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This week, we use AAII’s A+ Investor Stock Grades to provide insight into three automobile component stocks. With the rise of electrification and digital parts in vehicles, should you consider the three stocks of BorgWarner Inc. (BWA), Lear Corp. (LEA) and Magna International Inc. (MGA)?

Automobile Component Stocks Recent News

The automotive parts industry is undergoing significant transformation, driven by vehicle electrification, the rise of software-defined vehicles and rapid growth in digital parts distribution. According to Mordor Intelligence, the global automotive parts market is estimated to be valued at $116.67 billion in 2026 and is projected to reach $146.23 billion by 2031, reflecting a 4.61% compound annual growth rate (CAGR). Electrification is emerging as a foundational force reshaping component demand. The battery electric vehicle (EV) market is expected to grow 34.1% through 2031, while simultaneously eroding demand for traditional internal combustion engine components such as exhaust systems and fuel injection parts.

Semiconductors are playing a dual role in shaping the market’s trajectory. On one hand, semiconductor content is expected to rise from $800 per vehicle in 2023 to $1,350 per vehicle by 2030, fueled by the shift toward advanced computing units, domain controllers and artificial intelligence (AI). On the other hand, persistent chip shortages have caused automotive production reductions of up to 40% during peak shortage periods, with vulnerabilities persisting due to concentrated geographic production and long lead times for automotive-grade components.

Given the outlook for the automotive parts industry, might companies such as BorgWarner, Lear and Magna International benefit?

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Grading Automobile Component Stocks With AAII’s A+ Stock Grades

When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.

Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three automobile component stocks—BorgWarner, Lear and Magna International—based on their fundamentals.

AAII’s A+ Stock Grade Summary for Three Automobile Component Stocks

What the A+ Stock Grades Reveal

BorgWarner Inc. (BWA) is a global automotive components and technology company operating in the U.S., Europe, Asia and beyond. It offers propulsion solutions for combustion, hybrid and electric vehicles serving automotive and commercial vehicle markets. The company operates through two segments: air management and products & fuel systems. BorgWarner produces a broad range of automotive components, including turbochargers, electric motors, power electronics, transmission systems and thermal management products. It also provides electrified vehicle solutions such as high voltage battery systems, onboard chargers and eDrive technologies, supporting the automotive industry’s transition toward vehicle electrification. The company was founded in 1928 and is headquartered in Auburn Hills, Michigan.

BorgWarner has a Momentum Grade of A, based on its Momentum Score of 91. This means that the stock’s momentum has been very strong in terms of its weighted relative price strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The ranks are 90, 86, 45 and 87, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 19.2%.

BorgWarner has a Quality Grade of A, based on a score of 92, which is very strong. A higher-quality stock possesses traits associated with upside potential and reduced downside risk. The A+ Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, though, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The company ranks strongly in terms of its F-Score and buyback yield. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position based on its profitability, leverage, liquidity and operating efficiency. BorgWarner’s F-Score is 7 and its buyback yield is 5.5%, ranking in the 83rd and 92nd percentiles, respectively, among all U.S.-listed stocks.

The company has a Growth Grade is A, which is very strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. The company has generated positive annual cash from operations in the past five consecutive years and has a strong five-year annualized sales growth rate of 7.1%.

Lear Corp. (LEA) is a global automotive seating and electrical distribution systems company operating in the U.S., Europe, Asia, Africa and beyond. It offers seating systems, electrical systems and related components for automotive original equipment manufacturers (OEMs) worldwide. The company operates through two segments: seating and e-systems. Lear produces a broad range of automotive seating products, including seat structures, mechanisms, foam, leather and complete seat assemblies, as well as electrical distribution systems such as wire harnesses, terminals and connectors. It also provides advanced software and electronic systems for vehicle connectivity, power management and charging solutions, supporting the shift toward electric and autonomous vehicles. The company was founded in 1917 and is headquartered in Southfield, Michigan.

Lear has a Value Grade of A, based on its Value Score of 90, which is deep value. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA).

The company has a price-earnings ratio of 14.2, ranking in the 34th percentile. A lower price-earnings ratio is considered a better value. Its enterprise-value-to-EBITDA ratio is 7.9, ranking in the 24th percentile. Lear’s shareholder yield of 7.5% ranks in the 8th percentile.

Earnings estimate revisions indicate how analysts view a firm’s short-term prospects. Lear has an Earnings Estimate Revisions Grade of B, based on a score of 70, which is positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months. Lear reported a positive earnings surprise for first-quarter 2026 of 10.4%, and in the prior quarter reported a positive earnings surprise of 21.8%. Over the last three months, the consensus earnings estimate for second-quarter 2026 has increased from $3.790 to $3.867 per share. Over the last three months, the consensus earnings estimate for full-year 2026 has increased from $14.459 to $14.809 per share.

Lear has a Growth Grade of B, which is strong. The company has a five-year annualized sales growth rate of 6.4% and has generated positive annual cash from operations in the past five consecutive years.

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Magna International Inc. (MGA) is a global automotive supplier and mobility technology company operating in the U.S., Canada, Europe, Asia and beyond. It offers a broad range of automotive systems, assemblies, modules and components for OEMs worldwide. The company operates through four segments: body exteriors & structures, power & vision, seating systems, and complete vehicles. Magna International produces a diverse array of automotive components, including body and chassis systems, mirrors, lighting, seating, powertrain systems, and advanced driver assistance technologies. It also provides complete vehicle engineering and assembly services, EV systems, and autonomous driving solutions, serving nearly all major global automakers. The company was founded in 1957 and is headquartered in Aurora, Ontario, Canada.

Magna International has a Quality Grade of A, based on a score of 88, which is very strong. The company ranks highly in terms of its accruals to assets and buyback yield. Its accruals to assets of –11.1% ranks in the 76th percentile, and its buyback yield of 1.4% ranks in the 78th percentile.

The company has a Value Grade of A, based on a score of 87, which is deep value. Its price-to-free-cash-flow ratio of 7.8 and its price-to-sales ratio of 0.44 both rank in the 17th percentile. Its enterprise-value-to-EBITDA ratio of 4.7 ranks in the 9th percentile.

Magna International has a Momentum Grade of B, based on its Momentum Score of 80. This means that the stock’s momentum is strong in terms of its weighted relative price strength over the last four quarters. The ranks are 72, 79, 68 and 80, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 8.8%.