Garrett Motion Inc. (GTX): A Bull Case Theory

We came across a bullish thesis on Garrett Motion Inc. (GTX) on Substack by Maksim. In this article, we will summarize the bulls’ thesis on GTX. Garrett Motion Inc. (GTX)’s share was trading at $11.26 as of May 6^th. GTX’s trailing and forward P/E were 8.80 and 8.97 respectively according to Yahoo Finance.

Photo by Danny Sleeuwenhoek on Unsplash

Garrett Motion (GTX) delivered a strong Q4 performance, reinforcing confidence in its fundamentals and long-term positioning despite macro uncertainty. While net sales were roughly flat year-over-year, the company posted an 8% increase in EBIT and a 170 basis point improvement in EBIT margins, driven by $31 million in operational improvements through pricing and structural changes. Notably, Garrett successfully passed through 100% of newly implemented tariffs during the quarter—$4 million in total—and expects to continue doing so throughout the year. Management projects approximately $60 million in annual tariff pass-through, assuming no significant external changes. However, while GTX may absorb tariff costs directly, macro uncertainty around tariff-driven impacts on auto sales poses a risk to turbocharger demand. Still, Garrett remains well-positioned, winning new business across turbocharger, plug-in hybrid (PHEV), and range-extended electric vehicle (REEV) markets, where industry trends are shifting back from pure EVs toward hybrid solutions that rely heavily on turbos. This is especially visible in North America and China, where OEMs like BYD, Chery, and Seres are innovating aggressively in hybrid and REEV segments. Garrett’s relationships with these “winners” further cement its strategic relevance. Additionally, GTX made a breakthrough in zero-emission technologies, winning its first series production award for its high-speed electric motor and inverter platform, set to launch in 2027 in partnership with HanDe for heavy-duty commercial vehicles. On the capital structure side, Garrett refinanced its Term Loan B, pushing out major debt maturities to 2032, providing a long runway of financial flexibility. The company remains well-equipped to navigate tariff uncertainties, capture growth in hybrid powertrains, and expand into electric drivetrains, with further upside possible if positive developments accelerate.

Garrett Motion Inc. (GTX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held GTX at the end of the fourth quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of GTX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.