Let’s delve into the nuances of two stocks that highlight the auto parts sector: Aptiv PLC (APTV) and Genuine Parts Company (GPC).
Aptiv PLC (APTV)
APTV is a mobility and tech business that primarily serves the auto sector. APTV designs and makes vehicle components, safety tech, electrical components, and electronics. Each of these items will be in high demand as people return to the roads following a year of social distancing in the home. APTV is also hard at work on autonomous driving tech to boot.
APTV has a C POWR Rating grade, meaning it is a Hold. The stock has B grades in the Sentiment, Momentum, and Growth components of the POWR Ratings. You can find out how APTV fares in the remainder of the POWR Ratings components such as Quality, Stability, and Value by clicking here.
Of the 67 publicly traded companies in the Auto Parts sector, APTV is ranked 47th. Investors who are interested in learning more about the Auto Parts segment can do so by clicking here.
APTV has a forward P/E ratio of 40.47, a figure that is somewhat high considering most of its value offering is not tech-related. However, APTV is making inroads in autonomous vehicle technology. The stock’s beta is also a bit high at 2.12.
Genuine Parts Company (GPC)
GPC, an automotive parts distributor based in Atlanta, GA, employs nearly 60,000 people. GPC’s genuine parts segment accounted for two-thirds of net sales this past year.
GPC has an A POWR Rating grade, meaning it is a Strong Buy. The stock has Bs in the Quality, Momentum, and Sentiment components. You can find out how GPC ranks in the rest of the POWR Rating components such as Value, Stability, and Growth by clicking here.
Of the 67 stocks in the Auto Parts segment, GPC is ranked in the top 10, slotting in at number eight. You can learn more about the stocks in the Auto Parts segment by clicking here. As a whole, this segment has a B POWR Ratings grade.
GPC has a forward P/E ratio of 21.67 so it is not egregiously overpriced even though it is trading about $4 below the 52-week high of $135.93. GPC has a fairly low beta of 1.12, meaning it will not prove excessively volatile should the market undulate.
It is interesting to note of the dozen analysts who have issued GPC recommendations, 10 view the stock as a Hold, one view it as a Buy, and another view it as a Strong Buy. No analysts view GPC as a Sell or Strong Sell.
The computer chip shortage bodes well for GPC as that many more people will hold onto their used cars or buy used cars, some of whom will perform repairs on their own. In fact, GPC owns NAPA Auto Parts retail stores. Investors who have been waiting on the sidelines will also be comforted to know GPC has enjoyed sales growth in 87 of the past 93 years. The stock could move significantly higher in the year ahead as demand for auto parts continues to increase.
The Better Buy
GPC is the superior of these two auto parts stocks. GPC has a better POWR Rating grade of A. GPC is also ranked in the top 10 of its segment while APTV cannot even crack the top 40 stocks in its segment. If you want to capitalize on the return to the road in the year ahead, GPC is a solid play.
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GPC shares were trading at $132.13 per share on Wednesday afternoon, up $0.04 (+0.03%). Year-to-date, GPC has gained 32.54%, versus a 12.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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