Automotive companies are attracting considerable investor interest as the industry shifts toward Electric Vehicles (EVs), autonomous driving, and connected car technologies. Companies leading these innovations are projected to generate significant returns.

Thus, investors could consider adding fundamentally sound automotive stocks LKQ Corporation (LKQ), Magna International Inc. (MGA), and Garrett Motion Inc. (GTX), gaining speed in a changing industry.

The global auto parts and accessories market is forecast to grow at a CAGR of 3.3% from 2024 to 2030. Factors like investments in EVs and the rapid growth driven by new innovations are fueling the expansion of the Auto Parts and Accessories manufacturing industry.

Moreover, governments around the world have introduced strict vehicle emission regulations, pushing manufacturers to create environmentally friendly and highly efficient automotive products for both local and global markets. This regulatory framework is anticipated to boost demand in the market.

Given this landscape, let’s delve deeper into the fundamentals of the above-mentioned stocks from the Auto Parts industry, starting with number 3:

Stock #3: LKQ Corporation (LKQ)

LKQ distributes replacement parts, components, and systems used in the repair and maintenance of vehicles and specialty vehicle aftermarket products and accessories. It operates through four segments: Wholesale-North America; Europe; Specialty; and Self Service.

In terms of forward non-GAAP P/E, LKQ’s 11.39x is 34.7% lower than the 17.45x industry average. Its 9.03x forward EV/EBITDA is 14.6% lower than the 10.57x industry average. Likewise, its 11.80x forward EV/EBIT is 23.9% lower than the 15.50x industry average.

During the third quarter, which ended on September 30, 2024, LKQ’s revenue increased marginally year-over-year to $3.58 billion. Similarly, its gross margin grew slightly compared to the year-ago value, reaching $1.39 billion. Additionally, the company’s net income attributable to LKQ stockholders amounted to $191 million, or $0.73 per share.

Street expects LKQ’s EPS for the quarter ending March 31, 2025, to increase 4.5% year-over-year to $0.86. Its revenue for the quarter ending June 30, 2025, is expected to rise marginally year-over-year to $3.72 billion. Over the past month, the stock has gained 4.8% to close the last trading session at $38.64.

LKQ’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

LKQ has a B grade for Value and Quality. It is ranked #21 out of 60 stocks in the A-rated Auto Parts industry. Beyond what we have stated above, we also have given LKQ grades for Growth, Momentum, Stability, and Sentiment. Get all the LKQ’s ratings here.

Stock #2: Magna International Inc. (MGA)

MGA designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. It operates through four segments: Body Exteriors & Structures; Power & Vision; Seating Systems; and Complete Vehicles.

In terms of forward non-GAAP P/E, MGA’s 7.59x is 56.5% lower than the 17.45x industry average. Its 4.68x forward EV/EBITDA is 55.7% lower than the 10.57x industry average. Likewise, its 8.01x forward EV/EBIT is 48.3% lower than the 15.50x industry average.

For the third quarter that ended September 30, 2024, MGA’s sales were reported at $10.28 billion, and its adjusted EBIT came in at $594 million. Net income attributable to MGA increased 22.8% year-over-year to $484 million, and its adjusted EPS came in at $1.28.

Street expects MGA’s revenue for the fourth quarter (ended December 2024) to be $10.34 billion, and its EPS is expected to grow 14.5% year-over-year to $1.52 for the same quarter.

MGA’s stock has surged marginally intraday to close the last trading session at $40.20.

MGA’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.

The stock has an A grade Value and a B for Growth and Stability. MGA is ranked #12 in the Auto Parts industry.

Click here to access the additional MGA ratings (Sentiment, Momentum, and Stability).

Stock #1: Garrett Motion Inc. (GTX)

GTX designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers and distributors worldwide. The company offers cutting-edge mobility and industrial space technology, including light vehicles, commercial vehicles, and industrial applications.

In terms of forward non-GAAP P/E, GTX’s 8.80x is 55% lower than the 19.55x industry average. Its 5.88x forward EV/EBITDA is 44.4% lower than the 10.57x industry average. Likewise, its 7.36x forward EV/EBIT is 52.5% lower than the 15.50x industry average.

In the fiscal third quarter that ended on September 30, 2024, GTX’s net sales amounted to $826 million. The company’s EPS came in at $$0.24, up 4.3% year-over-year. As of September 30, 2024, GTX’s total current assets reached $1.14 billion, with total assets amounting to $2.16 billion as of September 30, 2024.

The consensus revenue estimate of $3.49 billion for the fiscal year 2025 (ending December 2025) represents a 3.2% increase year-over-year. The consensus EPS estimate of $1.30 for the same period indicates a 21.2% improvement year-over-year.

GTX’s stock gained 6.1% over the past month to close the last trading session at $9.55.

GTX’s POWR Ratings reflect bright prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Quality and a B for Value and Stability. GTX is ranked #5 in the same industry.

In addition to the POWR Ratings highlighted above, one can access GTX’s ratings (Momentum, Growth, and Sentiment) here.

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LKQ shares were trading at $38.23 per share on Friday afternoon, down $0.41 (-1.06%). Year-to-date, LKQ has gained 4.03%, versus a 3.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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