In this article, we will take a look at the 5 best auto parts stocks to buy now.

The auto industry is facing unprecedented challenges and changes, such as rising demand for electric vehicles, supply chain disruptions, and global chip shortages. Nevertheless, the auto parts segment is expected to thrive, driven by the growing need for replacement parts, maintenance, and repair services.

The auto parts industry is a vital component of the global automotive sector. It encompasses the manufacturing, distribution, and sale of various components and parts used in the production and repair of vehicles. Auto parts include everything from engines, transmissions, brakes, and steering systems to electronics, tires, and batteries.

The industry has experienced significant growth in recent years due to the increase in vehicle ownership and the rise of emerging markets, particularly in Asia. The industry is also benefiting from the increasing popularity of electric vehicles and the development of advanced technologies such as autonomous driving and connected cars.

Global Auto Parts Industry Expected To Reach $2.7 Trillion By 2028

According to an industry analysis report by Expert Market Research, the global auto parts manufacturing industry was valued at $2.2 trillion in 2022. The market is expected to grow at a compound annual growth rate of 3.2% from 2023 through 2028 and attain a value of $2.7 trillion by the end of the forecasted period.

Car Prices Rise and Sales Tumble

According to Bloomberg, car payments for both new and used cars are up significantly from pre-pandemic levels. In March 2023, the average payment for a new car was roughly $730, up 27% from the pre-Covid period. For used cars, the average payment surged to $541 in March, up 34% from before Covid-19.

Car prices are surging and auto sales are plateauing. Keeping December 2019 as a reference point, the trailing twelve-month revenue generated by new car sales was up 18.2% in February 2022. This figure grew slightly, by 1.5% year-over-year, and reached 19.7% in February 2023. Revenue from used car sales fell from 36.3% in February 2022 to 31.7% in February 2023. However, within the broader auto industry, the auto parts segment is exhibiting consistent revenue growth. The auto parts segment grew its TTM revenue from 18.6% in February 2022, to 30% in February 2023.

With rising auto prices and flattening auto sales, courtesy of higher interest rates, consumers seem inclined towards maintenance of their cars instead of purchasing a new one. As the demand for replacement parts and services grows, investors may want to consider adding auto parts stocks to their portfolio. We have compiled a list of the best auto parts stocks to buy now, which include LKQ Corporation (NASDAQ:LKQ), Autoliv Inc. (NYSE:ALV), and Aptiv PLC (NYSE:APTV). Let’s now discuss these stocks, among others, in detail below.

Our Methodology

To determine the best auto parts stocks to buy now, we used Yahoo Finance’s stock screener and screened for companies that are operating in the auto parts industry. We then sourced each company’s hedge fund sentiment from Insider Monkey’s database of over 900 elite money managers. We narrowed down our selection to stocks that were the most widely held by hedge funds. We have ranked these stocks in ascending order of the number of hedge funds that have stakes in them.

Best Auto Parts Stocks to Buy Now

10. The Goodyear Tire & Rubber Company (NASDAQ:GT)

Number of Hedge Fund Holders: 25

The Goodyear Tire & Rubber Company (NASDAQ:GT) is a leading global manufacturer and distributor of tires and related products. On February 10, Deutsche Bank analyst Emmanuel Rosner revised her price target on The Goodyear Tire & Rubber Company (NASDAQ:GT) to $9 from $11 and maintained a Hold rating on the shares.

The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the best auto parts stocks to buy now and is currently trading at a compelling valuation. As of April 25, the stock is trading at a PE multiple of 14x.

At the end of Q4 2022, 25 hedge funds were long The Goodyear Tire & Rubber Company (NASDAQ:GT) and disclosed stakes worth $178.6 million in the company. Of those, AQR Capital Management was the leading investor in the company and disclosed a position worth $37.9 million.

In addition to The Goodyear Tire & Rubber Company (NASDAQ:GT), other auto parts stocks that are popular among elite hedge funds include LKQ Corporation (NASDAQ:LKQ), Autoliv Inc. (NYSE:ALV), and Aptiv PLC (NYSE:APTV).

9. Visteon Corporation (NYSE:VC) 

Number of Hedge Fund Holders: 25

Visteon Corporation (NYSE:VC) is a leading global automotive technology company that designs and manufactures automotive electronics and offers connected car solutions to auto manufacturers. Shares of Visteon Corporation (NYSE:VC) have surged 16.88% over the past 6 months. The stock is one of the best auto parts stocks to buy now.

This March, Citi raised its price target on Visteon Corporation (NYSE:VC) to $165 from $145 and maintained a Neutral rating on the shares.

At the close of the fourth quarter of 2022, 25 hedge funds were bullish on Visteon Corporation (NYSE:VC)  and disclosed positions worth $260.3 million in the company. Of those, Driehaus Capital was the top shareholder in the company and held a stake worth $61.7 million.

8. Gentex Corporation (NASDAQ:GNTX) 

Number of Hedge Fund Holders: 26

Gentex Corporation (NASDAQ:GNTX) offers digital vision, connected car, dimmable glass, and fire protection products for the global automotive industry. As of April 25, the stock is offering a forward dividend yield of 1.79% and has gained 5.84% over the past 6 months.

On April 6, Baird reiterated its Outperform rating and a $35 price target on Gentex Corporation (NASDAQ:GNTX). The stock is ranked eighth on our list of the best auto parts stocks to buy now, according to hedge funds.

At the close of Q4 2022, Gentex Corporation (NASDAQ:GNTX)  was spotted on 26 hedge funds’ portfolios that held positions worth $510.7 million in the company. As of December 31, Ariel Investments is the dominant stockholder in the company and has a stake worth $241.3 million.

7. Lear Corporation (NYSE:LEA)

Number of Hedge Fund Holders: 28

Lear Corporation (NYSE:LEA) is an American manufacturer of automotive seating and electrical systems for OEM manufacturers in North America, Europe, Africa, Asia, and South America. This February, Barclays analyst Dan Levy took coverage of Lear Corporation (NYSE:LEA) with an Equal Weight rating and a $155 price target.

As of April 25, Lear Corporation (NYSE:LEA) has returned 4.85% to investors on a year-to-date basis and is offering a forward dividend yield of 2.30%. The stock is one of the best auto parts stocks to buy now.

At the end of Q4 2022, 28 hedge funds were eager on Lear Corporation (NYSE:LEA) and disclosed stakes worth $1.35 billion in the company. As of December 31, Pzena Investment Management is the largest investor in the company and has a position worth $851.4 million.

Some of the most widely held auto parts stocks among institutional investors include LKQ Corporation (NASDAQ:LKQ), Autoliv Inc. (NYSE:ALV), and Aptiv PLC (NYSE:APTV).

6. Mobileye Global Inc. (NASDAQ:MBLY)

Number of Hedge Fund Holders: 29

Mobileye Global Inc. (NASDAQ:MBLY) is involved in the design and development of advanced driver assistance systems (ADAS) and autonomous driving technologies. The company has operations worldwide. Mobileye Global Inc. (NASDAQ:MBLY) was held by 29 hedge funds at the end of Q4 2022. These funds held positions worth $334.2 million in the company.

This April, Daiwa analyst Louis Miscioscia started coverage of Mobileye Global Inc. (NASDAQ:MBLY) with a Buy rating and a $50 price target.

Mobileye Global Inc. (NASDAQ:MBLY) is placed sixth on our list of the best auto parts stocks to buy now according to hedge funds. The stock has gained 35.55% year to date, as of April 25.

Baron Funds made the following comment about Mobileye Global Inc. (NASDAQ:MBLY) in its 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 with over 125 million vehicles across 800 models that have incorporated its products to date across 50-plus vehicle manufacturers (OEMs) including 13 of the top 15 global OEMs. The company was founded in 1999 and effectively pioneered the ADAS market introducing its first EyeQ system-on-chip (SoC) in 2007, enabling the vehicle to gain ADAS capabilities (such as real-time detection of vehicles, pedestrians, and lane markings) for a price of around $50. While the company remains a leader in ADAS today (with an approximate 70% market share), we believe the bigger opportunity is in leading the autonomous driving revolution. This would, in our view, significantly improve safety; meaningfully increase the vehicle utilization rate, which today is only around 4%; and dramatically grow the company’s content per vehicle. Mobileye’s SuperVision, a fully operational point-to-point assisted driving navigation solution, is the next step in the company’s progress towards autonomous driving, and it has a price tag of over 20 times that of its basic ADAS SoC. At the last Consumer Electronics Conference, the company announced a $3.5 billion backlog for its SuperVision solution across six OEMs and nine vehicle models. In addition, the company announced a $1.5 billion design win for its consumer AV program and a $3.5 billion backlog for its Mobility-as-a-Service or robotaxi solution. CEO and Founder, Amnon Shashua discussed his long-term vision in the company’s shareholder letter:

 “More than two decades ago, I founded Mobileye on the belief that computer vision technology could help prevent automobile crashes and save lives. From that simple idea, a global industry was born… By 2030, we expect Mobileye driver-assistance systems to be deployed in another 270 million vehicles globally… We believe that we will be positioned to deliver an autonomous driving solution that can enable the mass adoption of AVs [Autonomous Vehicles] including both Mobileye-powered robotaxis and consumer-owned autonomous driving vehicles. And Mobileye will be well on the way to delivering the future I first envisioned more than two decades ago.””

5. Adient plc (NYSE:ADNT)

Number of Hedge Fund Holders: 29

Adient plc (NYSE:ADNT) is involved in the manufacturing of automotive seating for passenger cars, commercial vehicles, and light trucks. The company has operations worldwide. As of April 25, the stock has gained 6.67% over the past 12 months.

On April 17, Barclays analyst Dan Levy updated his price target on Adient plc (NYSE:ADNT) to $54 from $57 and maintained an Overweight rating on the shares. The stock is one of the best auto parts stocks to buy now.

At the close of Q4 2022, Adient plc (NYSE:ADNT) was spotted on 29 investors’ portfolios. These funds held positions worth $364.3 million in the company. As of December 31, Lyrical Asset Management is the leading shareholder in the company and has a stake worth $70.5 million.

4. BorgWarner Inc. (NYSE:BWA) 

Number of Hedge Fund Holders: 31

31 hedge funds disclosed having stakes in BorgWarner Inc. (NYSE:BWA) at the close of Q4 2022. The total value of these stakes amounted to $254.9 million. As of December 31, Harris Associates is the largest shareholder in the company and has a stake worth $466.7 million.

On February 14, Barclays analyst Dan Levy started coverage of BorgWarner Inc. (NYSE:BWA) with an Overweight rating and a $62 price target.

Shares of BorgWarner Inc. (NYSE:BWA) have gone up by 33.02% over the past 6 months, as of April 25, and the stock is trading at a PE multiple of 12x. BorgWarner Inc. (NYSE:BWA)  is placed fourth among the best auto parts stocks to buy now.

Ariel Investments made the following comment about BorgWarner Inc. (NYSE:BWA) in its Q4 2022 investor letter:

“Shares of leading supplier of solutions for combustion, hybrid and electric vehicles BorgWarner Inc. (NYSE:BWA) also increased on a solid earnings beat, with revenue and margins exceeding expectations. The company continues to successfully execute on its Charging Forward Initiative and remains on track to deliver $4 billion in electric vehicle sales by 2025. At the same time, however, management noted mounting Fx pressure and revised its full year outlook downward. Also in the quarter, BWA announced a new award to supply electric motors for eaxles starting in 2023, as well as a production increase on existing business with a premium European original equipment manufacturer beginning in 2024. In our view, BWA’s electric motor and driveline technology offerings position the company to grow intrinsic value throughout the evolution in hybrid and electric vehicles market.”

3. LKQ Corporation (NASDAQ:LKQ)

Number of Hedge Fund Holders: 31

LKQ Corporation (NASDAQ:LKQ) is trading at bargain levels. As of April 25, the stock is trading at a TTM PE ratio of 13x and has gained 13.29% over the past 12 months. LKQ Corporation (NASDAQ:LKQ) is one of the best auto parts stocks to buy now.

This January, Raymond James analyst Sam Darkatsh raised his price target on LKQ Corporation (NASDAQ:LKQ) $65 from $60 and reiterated an Outperform rating on the shares.

At the end of Q4 2022, 31 hedge funds were long LKQ Corporation (NASDAQ:LKQ) and held stakes worth $692.5 million in the company. Of those, ValueAct Capital was the leading investor in the company and disclosed a position worth $323.7 million.

2. Autoliv Inc. (NYSE:ALV)

Number of Hedge Fund Holders: 35

On April 21, Autoliv Inc. (NYSE:ALV) announced earnings for the fiscal first quarter of 2023. The company reported a Non-GAAP EPS of $0.90 and outperformed EPS estimates by $0.02. The company’s revenue for the quarter amounted to $2.49 billion, up 17% year over year and ahead of Wall Street consensus by $170 million. Shares of Autoliv Inc. (NYSE:ALV) have surged 10.20% since the beginning of 2023, as of April 25, and the stock is one of the best auto parts stocks to buy now.

This April, Deutsche Bank updated its price target on Autoliv Inc. (NYSE:ALV) to $110 from $113 and maintained a Buy rating on the shares.

At the end of the fourth quarter of 2022, 35 hedge funds were bullish on Autoliv Inc. (NYSE:ALV) and disclosed positions worth $1 billion in the company. As of December 31, Cevian Capital is the dominant shareholder in the company and has a stake worth $428.3 million.

1. Aptiv PLC (NYSE:APTV) 

Number of Hedge Fund Holders: 41

Aptiv PLC (NYSE:APTV) was held by 41 hedge funds at the end of Q4 2022. These funds disclosed positions worth $1.45 billion in the company. As of December 31, Impax Asset Management is the top shareholder in the company and has disclosed a position worth $477.9 million.

Aptiv PLC (NYSE:APTV) is the best auto parts stock to buy according to hedge funds. The stock has returned 13.05% to investors over the past 6 months, as of April 25.

On April 17, Barclays analyst Dan Levy revised his price target on Aptiv PLC (NYSE:APTV) to $142 from $150 and reiterated an Overweight rating on the shares.

TimesSquare Capital Management made the following comment about Aptiv PLC (NYSE:APTV) in its Q4 2022 investor letter:

“Aptiv PLC (NYSE:APTV), a designer and manufacturer of vehicle components for original equipment manufacturers, rose 19%. Results from the latest quarter were above expectations and management maintained the outlook for revenue growth on bookings strength. Management acknowledged that 2023 could be difficult to forecast due to macroeconomic headwinds.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at 10 Cheap Canadian Stocks to Buy and 11 Best Diversified Stocks to Buy Now.

 

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Disclosure: None. 10 Best Auto Parts Stocks to Buy Now is originally published on Insider Monkey.