The auto industry has gained momentum in recent years thanks to an increasing shift to electric vehicles. Despite global supply chain challenges, electric vehicle sales registered a 75% increase year-on-year, with 2 million EVs sold worldwide in the first quarter. This, along with moderate new vehicle production, has boosted the demand for auto parts†
The US automotive aftermarket is expected to $464.9 billion in 2026, growing at a CAGR of 3.08%. Innovations in electrification, connectivity, autonomous driving and technology implementation are expected to boost the sector’s long-term growth prospects. The global auto parts and accessories market is expected to reach $2.64 trillion by 2027, grow at a CAGR of 2.8%†
That’s why we think investors should see the dip in high-quality auto parts stocks Allison Transmission Holdings, Inc. should buy (ASSN), Ituran Location and Control Ltd. †ITRN), and Garrett Motion Inc. †GTX†
Allison Transmission Holdings, Inc. †ASSN†
ALSN is a manufacturer of fully automatic transmissions for medium and heavy commercial vehicles and electric hybrid and all-electric drive systems.
On June 21, the company’s Allison 9832 Oil Field Series (OFS) transmission outperformed one of the world’s largest oil fields in China. Due to its proven reliability, durability and high efficiency, it is expected to be in high demand from the energy sector.
On May 10, ALSN partnered with Xos, Inc. (XOS) to develop heavy-duty electric commercial vehicles. This one partnership could significantly enhance the growth prospects of both companies.
In the first quarter ended March 31, 2022, ALSN’s net sales increased 15% year over year to $677 million. Gross profit grew 10% from a year ago value to $320 million, while net income grew 7.5% to $129 million. The company’s earnings per share, attributable to common shareholders, rose 21.5% from the same value a year ago to $1.30.
The consensus EPS estimate of $1.56 for the fiscal second quarter (ending June 2022) represents a 42% year-over-year improvement. The consensus revenue estimate of $687.83 million for the current quarter indicates a 14.1% increase over the same period last year.
Shares of ALSN are down 5.8% in the past three months to close out yesterday’s trading session at USD 37.82.
ALSNs POWR ratings reflect solid prospects. The stock has an overall B rating, which translates to a buy in our proprietary rating system. It has an A grade for Quality and a B grade for Value. Within the B rating Car parts industry, it ranks 6 out of 69 stocks.
click here to view ALSN’s other ratings for growth, momentum, stability and sentiment.
Ituran Location and Control Ltd. †ITRN†
ITRN provides location-based services such as stolen vehicle recovery (SVR), fleet management services and other tracking services. It also offers wireless communication products used in connection with its location-based services and various applications.
On May 24, the company’s board of directors announced a cash dividend of $0.14 per share, payable July 14, 2022. This reflects the company’s strong cash flows.
ITRN revenue grew 7% year-over-year to $72.07 million in its first fiscal quarter (ending March 31, 2022). Gross profit grew 9% from a year ago value to $33.26 million, while net revenue attributable to the company increased 6% year-over-year to $8.73 over the period. million. The company’s earnings per share, attributable to the company’s shareholders, rose 7.5% from the same value a year ago to $0.43.
Analysts expect ITRN’s earnings per share and revenue to rise 4.6% and 6.6% year-over-year to $0.46 and $71, respectively, in its fiscal second quarter (ending June 2022). 94 million.
The stock is down 9.9% in the past year and 11% in the past year to close its last trading day at $24.04.
ITRN’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. ITRN also has an A grade for Stability and a B for Quality. The stock is number 1 out of 69 stocks in the same industry.
In addition to the POWR ratings I just highlighted, click here to view the ITRN ratings for growth, value, momentum and sentiment.
Garrett Motion Inc. †GTX†
GTX provides turbocharger and electric boost technologies for the automotive industry. The company offers gasoline for light vehicles, diesel for light vehicles and turbochargers for commercial vehicles; and provides automotive software solutions.
On April 26, GTX exhibited next-gen electrification and connected vehicle innovations at the Vienna Motor Symposium. The company’s advanced automotive software solutions are expected to attract strong demand from automakers worldwide.
During the first quarter of fiscal 2022 (ending March 31, 2022), GTX’s net income increased 183.8% year over year to $88 million. The company’s earnings per common share came in at $0.15, up 110.9% year over year.
Analysts expect GTX’s earnings per share to rise 40% year-over-year to $0.28 in its fiscal third quarter (ending September 2022). GTX’s revenue is expected to grow 11.4% year-over-year to $935 million in the next quarter.
Over the past year, the stock has fallen marginally to close out its latest trading session at $8.06.
The company has an overall rating of B, which equates to Buy in our POWR Ratings system. GTX also has an A rating for Value and a B for Stability, Sentiment and Quality. The stock is number 8 out of 69 stocks in the auto parts industry.
click here to see GTX’s other growth and momentum ratings.
ALSN shares traded at $37.25 a share Thursday morning, down $0.57 (-1.51%). Year-to-date, the ALSN is up 3.58%, compared to a -20.04% increase in the benchmark S&P 500 index over the same period.
About the author: Shweta Kumari
Shweta’s deep interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help private investors make informed investment decisions. More…