We recently published a list of the 15 NASDAQ Stocks with the Lowest P/E Ratios. In this article, we are going to take a look at where Garrett Motion Inc. (NASDAQ:GTX) stands against the other best NASDAQ stocks.
A Revised U.S. Economic Outlook
At the start of the year, strategists and economists projected the U.S. economy to perform better in 2025 with the U.S. stock market positioned for another year of above-trend growth. Now, economic growth projections are moving slightly to the lower end of the previous forecasts.
Economic forecasting teams from Morgan Stanley, Goldman Sachs, and others revised their 2025 GDP projections lower. Morgan Stanley now projects a 1.5% growth in 2025, and Goldman expects a 1.7% growth.
The year-end targets for the S&P 500 might be too optimistic. If things go the way they are being projected, the S&P 500 will potentially underperform compared to growth in 2024, impacting the NASDAQ 100 index as well. So far in 2025, the S&P 500 has plunged over 3.30% while the NASDAQ 100 index has dropped over 5.50%, as of March 18. The first quarter is about to end and markets are volatile now with the new U.S. administration implementing its tariff policy.
The head of US equity strategy at RBC Capital Markets, Lori Calvasina, pointed out that the U.S. equity market can hold the drop if things go south.
“We have seen the U.S. equity market on a rocky path higher through year-end, and have believed that our 6,600 can absorb a 5-10% drawdown,” Calvasina wrote in a note to clients on March 9. She further added, “risks of a drawdown of more than 10% have admittedly grown, however. If that occurs, we see a ‘growth scare’ of a 14-20% decline from the peak as most likely, which could shift us into our bear case.”
President Donald Trump addressed Congress with potential disturbance to the economy from his tariff policies. In an interview with Fox Business on March 9, President Trump said:
“There is a period of transition because what we’re doing is very big … We’re bringing wealth back to America. That’s a big thing … it takes a little time, but I think it should be great for us.”
A financial adviser looking over a portfolio of securities and stocks.
Our Methodology
To compile our list of NASDAQ stocks with the lowest P/E ratios, we first compiled a list of 40 NASDAQ listed firms with a forward P/E ratio lower than 10 and a market capitalization greater than $150 million. Then, we shortlisted the 15 stocks with the lowest P/E ratios and ranked them based on the number of hedge fund holders, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Garrett Motion Inc. (NASDAQ:GTX)
Forward P/E ratio: 6.91
No. of Hedge Fund Holders: 32
Garrett Motion Inc. (NASDAQ:GTX) is a Switzerland-based automotive technology company. It specializes in turbocharging and electric boosting technology for vehicles. Garrett designs and manufactures turbochargers, which increase engine power output by forcing more air into the combustion chamber. The company’s turbochargers for engines are powered by gasoline, diesel, natural gas, and even hybrid systems. The company also offers services and products for the connected vehicle market, including automotive cybersecurity and integrated vehicle health management (IVHM).
On February 12, BWS Financial analyst Hamed Khorsand kept a Buy rating on GTX shares with a price target of $12 per share. The analyst remains bullish on GTX and emphasizes the firm’s financial health and future potential. Garrett Motion Inc. (NASDAQ:GTX) showed a strong ability to generate FCF, despite the challenges during the second half of 2024. During Q4 2024, the company achieved an adjusted EBITDA of $153 million, with a margin of 18.1%. The company now expects its adjusted EBITDA around $575 million and adjusted FCF of almost $345 million in 2025, providing financial leverage to exercise share repurchases and pay dividends.
McIntyre Partnerships stated the following regarding Garrett Motion Inc. (NASDAQ:GTX) in its Q4 2024 investor letter:
“Garrett Motion Inc. (NASDAQ:GTX) is a leading manufacturer in the moat-rich turbocharger (TB) market, with a global end-market and industry-leading margins. As TBs are not used in battery electric vehicles (BEVs), the market has concerns about GTX’s terminal value, which is suppressing its valuation. GTX trades ~5x my 2025 levered FCF with leverage at 2x EBITDA. Beyond its core business in TBs, GTX has a separate BEV growth story that is currently pre-revenue with high upfront costs, depressing GTX’s reported run-rate FCF. As a result, I believe GTX is even cheaper on owners’ earnings than the headline numbers suggest. Beyond its BEV investments, GTX has been using its FCF to buy back significant amounts of stock. Since 2022, GTX has retired almost one-third of its shares outstanding. If either BEV penetration is less bad than feared or GTX has success in its BEV investments, I believe GTX shares are significantly undervalued.”
Overall GTX ranks 4th on our list of the NASDAQ stocks with the lowest P/E ratios. While we acknowledge the potential of GTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
