1. Garrett Motion Inc. (NASDAQ:GTX)
% Return on a YTD Basis: ~32.4%
Number of Hedge Fund Holders: 33
Garrett Motion Inc. (NASDAQ:GTX) is one of the Best Performing EV Stocks So Far in 2025. BNP Paribas Exane initiated coverage on the company’s stock with an “Outperform” rating and a price objective of $14.00. The firm pointed to Garrett Motion Inc. (NASDAQ:GTX)’s robust profitability, FCF conversion, and a clear commitment to capital returns. The company’s net sales for Q1 2025 came in at $878 million, with net income reaching $62 million. The company continued to return capital to shareholders via $30 million of common share repurchases and its first quarterly dividend amounting to $12 million.
Garrett Motion Inc. (NASDAQ:GTX) strengthened its global leadership in turbocharging and won new business with established and new automakers, primarily in plug-in hybrid and range-extended electric platforms. Garrett Motion Inc. (NASDAQ:GTX) also joined the Russell 2000® Index after the market closed on June 27. The company has reached a milestone in the development of its E-Powertrain high-speed technologies and secured the first series production award from Hyundai, a leading axle supplier, to integrate Garrett’s high-speed E-motor and inverter technology into their axle and transmission platforms for the heavy-duty commercial vehicles, with production aimed for 2027.
Garrett Motion Inc. (NASDAQ:GTX)’s growing suite of zero-emission products revolutionizes sustainable mobility by providing advanced, efficient, and high-performing solutions for EV propulsion and thermal management.
McIntyre Partnerships, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Garrett Motion Inc. (NASDAQ:GTX) is a leading manufacturer in the moat-rich turbocharger (TB) market, with a global end-market and industry-leading margins. As TBs are not used in battery electric vehicles (BEVs), the market has concerns about GTX’s terminal value, which is suppressing its valuation. GTX trades ~5x my 2025 levered FCF with leverage at 2x EBITDA. Beyond its core business in TBs, GTX has a separate BEV growth story that is currently pre-revenue with high upfront costs, depressing GTX’s reported run-rate FCF. As a result, I believe GTX is even cheaper on owners’ earnings than the headline numbers suggest. Beyond its BEV investments, GTX has been using its FCF to buy back significant amounts of stock. Since 2022, GTX has retired almost one-third of its shares outstanding. If either BEV penetration is less bad than feared or GTX has success in its BEV investments, I believe GTX shares are significantly undervalued.
Before I dig into numbers, I want to revisit GTX’s TB business, which I believe has a deep moat and is highly predictable. TBs are a high-tech, mission-critical component of a car’s engine. The TB market is a duopoly between BWA and GTX. While there are also smaller Asian competitors, GTX and BWA enjoy significant engineering and R&D advantages over their peers, which creates a moat and allows GTX to earn among the highest margins and lowest annual price downs of any publicly traded auto supplier. TBs are essentially mini-jet engines that take the exhaust fumes and push that air back into the engine, increasing power and fuel efficiency. TBs are highly sophisticated devices – the TB’s turbine spins at up to 150,000 RPMs, yet the distance between the spinning turbine and the wall of the TB can be as small as a seventh the width of a human hair. GTX’s years of R&D allow them to deliver products that competitors cannot match. As a testament to this, Bosch and Mahle, two of the largest auto suppliers in the world, launched a TB joint venture in the late 2000s with the explicit blessing and support of GTX’s customers, the auto OEMs. A scaled competitor teaming up with your customers to break your duopoly is a business nightmare, yet after a decade, Bosch-Mahle gave up and exited the space. They could not match GTX’s products. Finally, the TB is a critical component of an engine, which is, in turn, the most important component of a car. Engines are designed years in advance, and once a product is designed into an engine, it is virtually impossible to design out. Once Mercedes designs a Garrett TB into an AMG engine, GTX has an almost guaranteed 100% renewal product with a multi-year life cycle. GTX’s backlog is exceptionally sticky and 90% booked 3+ years out. While BEV is a wild card, GTX has visibility on its core operations for years…” (Click here to read the full text)
While we acknowledge the potential of GTX to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GTX and that has 100x upside potential, check out our report about this cheapest AI stock.
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