8. Aptiv PLC (NYSE:APTV)
Forward PE as of June 24: 12
Number of Hedge Fund Holders: 38
Aptiv PLC (NYSE:APTV) is an Ireland-based designer, manufacturer, and seller of vehicle components and runs through Signal and Power Solutions, and Advanced Safety and User Experience segments. The stock was held by 38 hedge funds in the first quarter and the stakes amounted to $1.24 billion. Impax Asset Management is the top shareholder of the company and has a position worth $554.419 million as of Q1.
During Aptiv PLC’s (NYSE:APTV) Q1 2024 earnings call, Kevin Clark, the company’s Chairman and CEO, mentioned that the management is focused on improving the company’s capabilities within the software stack. Moreover, they are determined to expand revenue streams within industrial markets. The company sees significant acquisition activity throughout 2024, 2025, and the subsequent years.
With a forward price-to-earnings ratio of 12x, Aptiv is one of the cheapest stocks among its peer group. This sentiment is shared by Argus. On June 10, the firm reiterated a Buy rating on the company stock with a $123 price target, which shows an over 80% upside to Aptiv’s current price on June 24. The firm said that the recent dip in the stock’s price presents a buying opportunity. It further added that even though Aptiv has lowered its long-term growth projections to 6%-8% from the previous 8%-10% due to slower adoption of electric vehicles by customers, Argus believes that the company still has substantial potential to achieve above-average earnings growth in the coming years.
Aptiv management’s commitment to returning capital to the shareholders boosts confidence in the profitability of the stock, making it one of our most undervalued stocks. Clark discussed the company’s share repurchase program as he said:
“Lastly, we continue to believe that our stock is undervalued and presents an attractive opportunity to return capital to shareholders. As such, we’re doubling our share repurchase target from $750 million to $1.5 billion during 2024. In summary, our conviction regarding the strength of our competitive position and the long-term value of our business is as high as ever, and we remain committed to delivering value to our shareholders.”
Ariel Investments stated the following regarding Aptiv PLC (NYSE:APTV) in its first quarter 2024 investor letter:
“We added Aptiv PLC (NYSE:APTV)) which designs and manufactures vehicle components and provides electrical/electronic and active safety technology solutions to the global automotive and commercial vehicle markets. We believe the secular trend of electrification and digitization within the automobile industry, coupled with the expansion of Chinese original equipment manufacturers (OEMs), will accelerate demand and drive long-term growth. Additionally, we anticipate APTV will grow earnings per share over the near term through its divestiture of the autonomous driving joint venture, Motional. In our view, the name is currently trading at a significant discount relative to our estimate of intrinsic value.”
