The corporate earnings season is about to kick off, but investors have something else on their minds: Donald Trump’s tariffs. Since the beginning of his term, Trump has wreaked havoc on the markets with repeated tariffs, resulting in the S&P index being down nearly 8% for the year.
We have observed that some of the most aggressive tariff policies are soon revoked or relaxed, resulting in a rally that brings back the stock prices to reasonable levels. We saw this recently when Donald Trump hinted that Big Tech companies may not bear the brunt of the tariffs as badly as previously thought. As a result, investors poured their money into these companies, thinking they may be critical for the US infrastructure.
A similar development is forming in the auto sector, with Trump likely to offer some relaxation when it comes to importing auto parts or manufacturing vehicles outside the US. Since auto parts companies are critical to the supply chain of this industry, we decided to take a look at the auto parts stocks that could surge following any news of relaxation in tariffs.
To come up with our list of Top 10 Auto Parts Stocks that could surge following Trump’s auto tariff reprieve, we looked at companies in the auto parts industry with a minimum market cap of $300 million that were outperforming their peers.
10. Autoliv, Inc. (NYSE:ALV)
Autoliv, Inc. is a developer, manufacturer, and supplier of passive safety systems for the automotive industry. It provides side-impact airbag protection systems, steering wheels, battery cut-off switches, seatbelts, modules, and components for frontal-impact airbag protection systems, and other products. After falling over 11% this year, the stock has finally regained an upward momentum.
According to 26 different analyst ratings, the company has a highest target price of $140, which means in the best-case scenario, the stock could have an upside of 69% from the current levels. Though the stock has already taken an upward trajectory, it is still trading 1.5% below the lowest Wall Street price target of $84.
As per the guidance announced at the recent quarterly earnings, the company anticipates approximately 2% organic sales growth, supported by sales outperformance relative to light vehicle production (LVP). Operating margin is projected to improve throughout the year. Adjusted operating margin is expected to be in a range of 10% to 10.5%.
The company predicted cost pressure from suppliers and labor inflation to ease in 2025, but things have changed this month due to fresh tariffs. If Donald Trump eases on the tariffs, the bull thesis will be back on track.
9. Hesai Group (NASDAQ:HSAI)
Hesai Group is the manufacturer, developer, and seller of three-dimensional light detection and ranging solutions (LiDAR). It develops and designs engineering products and provides validation services, solution services, gas detection products, and other services. The stock has been struggling since the start of this year.
The company’s stock hit an all-time high last month after announcing a significant partnership with BYD and a strong earnings report. In Q4 2024, the company recorded an impressive revenue growth of 28.3%.
On the back of strong earnings, the firm guided for a promising 2025. The company anticipates approximately a 44% to 69% YoY increase in net revenues for the full year. For Q1 2025, the expected net revenue growth is approximately 45% to 50% YoY.
Based on 16 different analyst ratings, Hesai has a highest target price of $35, which means the price could more than double from the current levels. The analyst optimism and a strong earnings profile set up the company well to weather any tariff storm ahead.
8. Dana Incorporated (NYSE:DAN)
Dana Incorporated is a power-conveyance solutions provider for machinery and vehicles. It operates in Off-Highway Drive and Motion Systems, Light Vehicle Drive Systems, Power Technologies, and Commercial Vehicle Drive and Motion Systems segments. The stock has now started recovering its losses as it is following an upward trend from the past few days, surging over 3% in the last five trading sessions.
Recently, Deutsche Bank highlighted the company and backed it to stand out regardless of macroeconomic tariff-related volatility and instability. The bank believes that investors will benefit from the company’s plan to sell its Off-Highway business to reduce leverage. With the help of its planned cost reduction actions and divestiture, the company anticipates saving up to $300 million by 2026.
7. Douglas Dynamics, Inc. (NYSE:PLOW)
Douglas Dynamics, Inc. is an upfitter and manufacturer of equipment and commercial work truck attachments. The company operates in the Work Truck Solutions and Work Truck Attachments segments. It supplies its products under different brands, including SNOWEX, SWEEPEX, BRINEXTREME, FISHER, and others.
In the most recent quarter’s earnings, the firm reported mixed results. It managed to beat the consensus estimates of Non-GAAP EPS but missed revenue expectations. Despite this miss, revenue growth came in at 6.9% YoY. Significant improvement was seen in the free cash flow for 2024 as compared to 2023.
According to the guidance, the company expects net sales to be in the range of $610 million and $650 million. Adjusted EPS is anticipated to be between $1.30 to $2.10.
The company is covered by 2 Wall Street analysts with price targets of $30 and $39. At current levels, the stock is undervalued, and to lock in future gains, investors should not let go of this compelling investment opportunity.
6. Genuine Parts Company (NYSE:GPC)
Genuine Parts Company operates as an industrial and automotive replacement parts distributor. The company operates through Industrial Parts Group and Automotive Parts Group segments. It supplies accessories, automotive parts, replacement parts and solutions for SUVs, motorcycles, hybrid & electric vehicles, buses, and other vehicles.
The company recently reported its Q4 2024 results, demonstrating a 3.3% YoY increase in top-line sales. Gross profit increased by 1.8% YoY, reaching $2.1 billion. The firm had a slightly higher debt due to insufficient operating cash flow to fund investing activities. A part of operating cash flow was used for share buybacks and dividend payments, a move questioned by many in the context of increasing debt.
CFO Bert Nappier highlighted the company’s focus on cost control by mentioning:
“Our global restructuring efforts announced last year have progressed ahead of plan, delivering cost savings at the high end of expectations.”
For 2025, the company expects 2% to 4% total sales growth aided by recovery in European and industrial markets in the latter half of the year. With the help of restructuring efforts, the firm anticipates producing additional savings valued between $100 million and $125 million in 2025.
5. Garrett Motion Inc. (NASDAQ:GTX)
Garrett Motion Inc. is a manufacturer, designer, and seller of air and fluid compression, turbocharging, and high-speed electric motor technologies. The company serves original equipment manufacturers and distributors. It provides cutting-edge technology for industrial space and mobility.
The firm recently reported its Q4 2024 earnings, indicating an improved EBITDA margin of 18.1%, fueled by cost management and operational performance. The company also increased share repurchase activity by spending $70 million during the quarter.
Garrett reduced its total debt to $1.5 billion, aided by strong liquidity. For the full year, the company recorded enhanced adjusted EBITDA margin of 17.2%. As per the company’s provided outlook, it expects net sales of $3.4 billion in 2025. Adjusted free cash flow is anticipated to be $345 million with the adjusted EBITDA of $575 million.
The firm plans to assign more than half of its research and development expenditures to zero-emission technologies. This will increase its total research and development expenditures to 4.6% of sales. Management highlighted challenges from foreign exchange impacts, but pricing strategies and operational productivity are expected to minimize these challenges.
4. The Goodyear Tire & Rubber Company (NASDAQ:GT)
The Goodyear Tire & Rubber Company is a manufacturer, developer, distributor, and seller of tires and related products and services. The company provides different lines of rubber tires for trucks, motorcycles, farm implements, aircraft, automobiles, buses, and others. It also sells installation products and services online.
As per the company’s recently announced Q4 results, sales went down by 3% YoY. The reason behind the decline in sales was lower volumes. Due to the impact of growth in low-end imports in major markets, unit volume declined by 4% YoY. The firm’s Forward initiatives added $195 million in savings.
On the back of the strong earnings, the company provided a positive future outlook. With the combined contribution of volume growth and price mix in the second half of the year, management anticipates achieving $750 million in gains from its Goodyear Forward initiative in 2025. Due to the increasing raw material costs, global unit volumes are expected to decrease by 2%-3% in Q1 2025.
The company holds a strong manufacturing presence in the U.S., which is seen as a protective factor against tariff concerns. Two weeks ago, Deutsche Bank showed optimism in the stock’s prospects by upgrading it to a Buy with an increased price target of $13. The bank believes that the company is well-positioned to achieve its planned margin improvements and cost savings worth $1.5 billion by 2026.
3. LKQ Corporation (NASDAQ:LKQ)
LKQ Corporation operates as a distributor of components, replacement parts, and systems used in the maintenance and repair of specialty vehicle aftermarket products and vehicles. It operates in Europe, Self-Service, Wholesale-North America, and Specialty segments. Despite the fact that stock surged over 14% this year, it is still trading 13% below the lowest Wall Street price target of $48.
Q4 2024 proved to be a weak quarter for the company as the revenue declined by 4.1% YoY, missing analyst estimates. However, share repurchases worth $80 million and a free cash flow of $149 million for the quarter meant there wasn’t much for shareholders to worry about.
In 2025, the company expects free cash flow to come in between $750 million and $900 million on an EPS of $3.4 to $3.7. Revenue from North America is expected to stay flat while Europe could show minimal growth. LKQ continues to be a shareholder-friendly company after executing healthy dividends and share repurchases in 2024 and divesting five low-margin businesses in Europe, bringing in $153 million.
2. AutoZone, Inc. (NYSE:AZO)
AutoZone, Inc. is a retailer and distributor of automotive replacement parts and accessories. It offers different products for sport utility vehicles, light trucks, vans, and cars. The company also provides batteries and accessories, engines, belts and hoses, CV axles, radiators, A/C compressors, and other products.
The company recently released its Q2 FY 2025 earnings, reporting a revenue of $4 billion. Commercial sales grew from 3.2% to 7.3%, with the domestic same-store sales growth accelerating to 1.9% from 0.3% in Q1. Free cash flow also improved from $179 million to $291 million. Driven by the investments in IT and inventory placement, operating expenses increased by 6.4%.
In 2025, the firm plans to increase international store openings. It maintained its goal to grow through new locations by opening 100 new international locations during 2025. Moreover, the company anticipates improvement in both DIY and commercial sales trends in the upcoming quarter. This is projected to be aided by continued execution of growth initiatives and easier comparisons.
1. O’Reilly Automotive, Inc. (NASDAQ:ORLY)
O’Reilly Automotive, Inc. is a supplier and retailer of automotive aftermarket parts, equipment, tools, accessories, and supplies. It offers remanufactured and new automotive hard parts and maintenance items. The company also provides automotive tools, professional service provider service equipment, and auto body paint and related materials. The stock continues to gain upward momentum, surging over 19% this year.
As per the company’s recently reported Q4 2024 earnings, revenue improved by $264 million. This was due to the 4.4% increase in the comp store sales along with the $66M increase in non-comp sales from newer stores. For FY 2024, the recorded EPS growth was 5.7%, despite the challenge from the self-insurance liability charge. Gross margin came in line with the estimates.
Despite macroeconomic uncertainties, ORLY anticipates comparable store sales growth of 2% to 4%. The firm also expects EPS to grow by 5.4%.
While we acknowledge the potential of ORLY 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ORLY but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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