12 Undervalued Cyclical Stocks to Buy Right Now

4. Aptiv PLC (NYSE:APTV)

Forward P/E Ratio: 10.38

Earnings Growth: 17.65%

Number of Hedge Fund Holders: 52

Aptiv PLC (NYSE:APTV) is an innovative technology company that leverages artificial intelligence and machine learning capabilities to enhance automotive safety and security. The company designs systems that allow vehicles to communicate with each other and their environment. Its technology not only enables the electrification of vehicles but also develops technologies that automate driving and advance user interface.

The fiscal third quarter of 2024 highlighted both strengths and challenges for the company. The total revenue for Aptiv PLC (NYSE:APTV) decreased 6% year-over-year due to less vehicle production in the US and Europe. On the other hand, despite a decrease in revenue, the company achieved a record operating income of $593 million. This is because of management’s strategies to improve profitability, including prioritizing investments in flexible product solutions, diversifying customer exposure, and optimizing its manufacturing footprint. Moreover, the company also secured $3.6 billion in new business awards during the quarter, bringing the year-to-date total to nearly $21 billion.

On January 27, Baird upgraded the stock from Neutral to Outperform and lifted the price target for APTV from $75 to $82. It is one of the 12 undervalued cyclical stocks to buy right now.

ClearBridge Large Cap Growth Strategy stated the following regarding Aptiv PLC (NYSE:APTV) in its Q3 2024 investor letter:

“Lastly, we sold our position in tier 1 automotive parts supplier Aptiv PLC (NYSE:APTV). Part of our original investment thesis for Aptiv was that the company should garner a premium multiple versus competitors as its product portfolio was well-positioned to take share as auto production shifted toward electric vehicles. However, weak global auto demand and slowing mix shift toward EVs has pressured Aptiv’s business and the company is capturing share at a slower rate than we anticipated. While Aptiv has executed well on profitability and trades at a cheap valuation, we do not foresee the same level of multiple expansion as the company’s growth relative to the market remains weak.”