The automotive industry is a cornerstone of the global economy, and within it, the auto parts sector plays a crucial role. From essential replacement components to cutting-edge technology for new vehicles, auto parts companies are integral to keeping the world moving. For investors looking to tap into this vital industry, identifying strong Car Part Stocks is key. This article delves into the top auto parts stocks currently favored by hedge funds, offering insights for informed investment decisions.
Based on Insider Monkey’s analysis of over 900 elite money managers and their investment portfolios, we have compiled a list of the best auto parts stocks to consider right now. These companies are not only leaders in their respective niches within the automotive supply chain but also demonstrate strong financial health and market potential. Our methodology focused on identifying companies within the auto parts industry that are most widely held by hedge funds, indicating strong institutional confidence. These stocks are ranked in ascending order based on the number of hedge funds holding stakes.
10. Goodyear Tire & Rubber Company (NASDAQ:GT)
Number of Hedge Fund Holders: 25
The Goodyear Tire & Rubber Company (NASDAQ:GT) stands as a global giant in the tire industry, manufacturing and distributing tires and related products worldwide. Despite recent analyst revisions, such as Deutsche Bank’s price target adjustment by Emmanuel Rosner to $9 from $11 with a Hold rating in February, Goodyear remains a compelling option within car part stocks.
Currently trading at an attractive PE multiple of around 14x as of April 25th, Goodyear presents a potentially undervalued investment opportunity. Hedge fund interest further underlines this point. In the fourth quarter of 2022, 25 hedge funds held positions in Goodyear, with a total investment value of $178.6 million. AQR Capital Management emerged as the top investor among these, holding a substantial stake worth $37.9 million. For investors seeking established auto parts stocks with brand recognition and global reach, Goodyear warrants consideration.
9. Visteon Corporation (NYSE:VC)
Number of Hedge Fund Holders: 25
Visteon Corporation (NYSE:VC) is a leading force in automotive technology, specializing in designing and manufacturing automotive electronics and connected car solutions for vehicle manufacturers globally. Visteon’s stock performance has been robust, with a surge of 16.88% over the past six months, highlighting investor confidence in this auto parts stock.
Analysts remain optimistic about Visteon’s future. Citi, for instance, increased its price target to $165 from $145 this March, maintaining a Neutral rating. Hedge fund sentiment reflects this positive outlook. At the end of Q4 2022, Visteon was present in 25 hedge fund portfolios, with total holdings valued at $260.3 million. Driehaus Capital held the largest stake, valued at $61.7 million. Visteon’s focus on automotive technology positions it favorably within the evolving landscape of automotive stocks.
8. Gentex Corporation (NASDAQ:GNTX)
Number of Hedge Fund Holders: 26
Gentex Corporation (NASDAQ:GNTX) is a key supplier to the automotive industry, providing digital vision systems, connected car features, dimmable glass, and fire protection products. As of April 25th, Gentex offers a forward dividend yield of 1.79% and has experienced a stock price increase of 5.84% over the last six months, making it an attractive car part stock for both growth and income investors.
Baird reiterated its Outperform rating and a $35 price target for Gentex on April 6th, further reinforcing positive analyst sentiment. Ranked eighth among the best auto parts stocks by hedge funds, Gentex enjoys significant institutional backing. By the close of Q4 2022, 26 hedge funds held positions in Gentex, with a total value of $510.7 million. Ariel Investments is the top shareholder, with a stake worth $241.3 million. Gentex’s diversified product portfolio within the auto parts stocks sector adds to its investment appeal.
7. Lear Corporation (NYSE:LEA)
Number of Hedge Fund Holders: 28
Lear Corporation (NYSE:LEA) is a major American manufacturer specializing in automotive seating and electrical systems for original equipment manufacturers (OEMs) across North America, Europe, Africa, Asia, and South America. In February, Barclays analyst Dan Levy initiated coverage of Lear with an Equal Weight rating and a $155 price target, signaling a stable outlook for this car part stock.
Lear has delivered a year-to-date return of 4.85% to investors as of April 25th and offers a forward dividend yield of 2.30%. This combination of growth and income potential makes Lear a noteworthy auto parts stock. At the end of Q4 2022, 28 hedge funds were invested in Lear, with total stakes amounting to $1.35 billion. Pzena Investment Management is the largest investor, holding a substantial position valued at $851.4 million. Lear’s established market presence and dividend yield enhance its attractiveness as an automotive stock.
6. Mobileye Global Inc. (NASDAQ:MBLY)
Number of Hedge Fund Holders: 29
Mobileye Global Inc. (NASDAQ:MBLY) is at the forefront of automotive innovation, focusing on the design and development of advanced driver assistance systems (ADAS) and autonomous driving technologies. With a global operational footprint, Mobileye is a key player in the future of transportation and a compelling car part stock for investors looking towards technological advancements in the automotive sector.
Daiwa analyst Louis Miscioscia initiated coverage of Mobileye in April with a Buy rating and a $50 price target, reflecting strong confidence in the company’s growth prospects. Mobileye was held by 29 hedge funds at the end of Q4 2022, with a total investment value of $334.2 million. The stock has already gained 35.55% year-to-date as of April 25th, demonstrating significant market momentum.
Baron Funds highlighted Mobileye’s potential in their Q4 2022 investor letter:
“During the fourth quarter, we participated in Mobileye Global Inc. (NASDAQ:MBLY)’s IPO. Mobileye is a leading ADAS and autonomous driving technologies and solutions provider… we believe the bigger opportunity is in leading the autonomous driving revolution… Mobileye’s SuperVision… is the next step in the company’s progress towards autonomous driving… At the last Consumer Electronics Conference, the company announced a $3.5 billion backlog for its SuperVision solution…”
Mobileye’s leadership in ADAS and autonomous driving technology positions it as a high-growth automotive stock within the car part stocks market.
Continue to read about the top 5 auto parts stocks here.
Conclusion:
This list of top auto parts stocks provides a starting point for investors looking to capitalize on the automotive industry’s consistent demand and technological evolution. These companies, favored by leading hedge funds, represent a blend of established market leaders and innovative players in the car part stocks sector. While this analysis is based on hedge fund sentiment and available financial data, investors should conduct their own thorough research and consider their individual investment goals and risk tolerance before making any decisions. The automotive industry and the auto parts stocks within it offer diverse opportunities for growth and long-term investment.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making investment decisions.
Sources:
- Insider Monkey Hedge Fund Data
- Yahoo Finance Stock Screener
- Analyst Ratings from Deutsche Bank, Citi, and Barclays
- Baron Funds Q4 2022 Investor Letter
This article is originally published on Insider Monkey.
