8 Most Undervalued Growth Stocks to Buy for the Next 10 Years

6. Dana Inc. (NYSE:DAN)

Forward P/E: 11.17

On July 7, Deutsche Bank lowered its price target on Dana Inc. (NYSE:DAN) to $39 from $40 and maintained a Buy rating on the stock. Based on the revised price target, there is a 53% upside from current levels. This upside is lower than the median Wall Street analysts’ upside of 61% based on 10 analysts’ estimates.

In our previous coverage of the stock, we mentioned the company’s acquisition of Eaton’s Mobility Group. This acquisition was believed to enhance Dana’s long-term business profile through higher margins, increased aftermarket exposure, and greater scale. On June 10, both companies entered into definitive agreements for a Reverse Morris Trust transaction. As part of the transaction, Eaton will transfer its Vehicle and eMobility business into the newly created SpinCo before it merges with Dana. A Separation and Distribution Agreement will govern this transfer. Additionally, a Dana subsidiary will also acquire Royal Precision Holding Corp. from Eaton, adding further assets to the combined company.

Dana and SpinCo secured a $2.6 billion short-term bridge loan commitment from Goldman Sachs to help fund the transaction. The financing will be used to support an approximately $1.1 billion cash payment to Eaton and to refinance certain existing Dana debt. However, the transaction is still subject to several conditions, including DAN shareholder approval and multiple regulatory clearances.

Dana Inc. (NYSE:DAN), together with its subsidiaries, provides power-conveyance and energy-management solutions for on-highway vehicles. The company also provides sealing solutions such as gaskets, seals, cam covers, and oil pan modules. It was founded in 1904 and is headquartered in Maumee, Ohio.

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