7 Cheap Hot Stocks To Invest In Now

5. Phinia Inc. (NYSE:PHIN)

Year-to-Date Performance as of October 11: 47.90%

Forward Price-to-Earnings Ratio: 9.52

Number of Hedge Fund Holders: 35

Phinia Inc. (NYSE:PHIN) is a leading provider of advanced components and systems for combustion and hybrid propulsion, providing solutions that optimize performance, increase efficiency, and reduce emissions in commercial, light, and industrial vehicles. It offers fuel injection systems and aftermarket products, serving customers like original equipment manufacturers and various industries.

In the second quarter of 2024, the company generated $868 million in revenue, slightly below market expectations, due to increased standalone company costs, foreign exchange losses, and lower sales. Still, the aftermarket business remained resilient, particularly in Europe. The Fuel Systems segment faced challenges due to weaker-than-expected commercial vehicle sales in Europe and lower light vehicle sales in China. Margins remained strong in both Aftermarket and Fuel Systems, at 15.1% and 10.1%, respectively.

On  September 12, it introduced a new electronically controlled common rail injection system for small off-highway diesel engines. This innovative technology helps reduce emissions and improve fuel efficiency, supporting customers in meeting regulatory standards. The system is designed for use with Kohler Engines and is compatible with various off-highway applications.

The global commercial and light vehicle markets are experiencing a slight downturn, partially offset by slower growth in EVs. Despite this softening, internal combustion engines remain crucial for achieving carbon neutrality. Phinia Inc. (NYSE:PHIN) is proactively investing in alternative fuel solutions such as ethanol, biofuels, e-fuels, and hydrogen. The strategic focus on improving internal combustion engine efficiency, coupled with its diversification into commercial vehicles and aftermarket segments, positions the company well for long-term growth.

Ariel Focus Fund stated the following regarding PHINIA Inc. (NYSE:PHIN) in its first quarter 2024 investor letter:

“Manufacturer of premium fuel and electrical systems, Phinia Inc. (PHIN) also traded up in the period on solid earnings results and a positive full year 2024 outlook. Healthy consumer pricing, new business wins across all end markets, ongoing weakness in electric vehicles, growth in light vehicle original equipment and strong cost controls, more than offset disappointing commercial vehicle sales in China. Meanwhile, management continues to prioritize capital returns to shareholders via buybacks and dividends. Looking ahead, we expect PHIN to deliver sustainable, profitable growth and significant cash generation as it captures operational efficiencies, exits agreements with its former parent company BorgWarner Inc. and also expands its industrial and aftermarket customer base.”