10 Cheap and High-Quality Stocks Picked by Former SAC Capital Analyst

3. Allison Transmission Holdings, Inc. (NYSE:ALSN)

Number of Hedge Fund Holders: 31    

Prevatt Capital’s Stake: $25,159,600  

Allison Transmission Holdings, Inc. (NYSE:ALSN) makes and sells automatic transmissions for commercial and military vehicles. It comes in at third place on our list of top stock picks of Prevatt Capital. The bullish thesis around Allison Transmission Holdings, Inc. (NYSE:ALSN) centers on the leadership of the firm in the market of commercial vehicle transmission, a strategic focus on electrification, strong financial performance, and growth opportunities in international markets. Regulatory tailwinds can also provide a major boost to the firm in the coming years as more countries adopt EV-friendly policies.

The balance sheet of the company remains as strong as ever in a competitive market. Allison Transmission Holdings, Inc. (NYSE:ALSN) generates strong cash flows, in excess of $600 million per year, which in turn help the firm support reliable dividend payouts and share buybacks. The high operating margins of the firm, in excess of 30%, highlight the strong profitability of the stock. These margins also help paint the leadership of the company in a good light, shining on efficiencies that would otherwise be ignored. The dividend history of Allison Transmission Holdings, Inc. (NYSE:ALSN) is great reading for income-focused investors.