The corporate earnings season is about to kick off, but investors have something else on their minds: Donald Trump’s tariffs. Since the beginning of his term, Trump has wreaked havoc on the markets with repeated tariffs, resulting in the S&P index being down nearly 8% for the year.
We have observed that some of the most aggressive tariff policies are soon revoked or relaxed, resulting in a rally that brings back the stock prices to reasonable levels. We saw this recently when Donald Trump hinted that Big Tech companies may not bear the brunt of the tariffs as badly as previously thought. As a result, investors poured their money into these companies, thinking they may be critical for the US infrastructure.
A similar development is forming in the auto sector, with Trump likely to offer some relaxation when it comes to importing auto parts or manufacturing vehicles outside the US. Since auto parts companies are critical to the supply chain of this industry, we decided to take a look at the auto parts stocks that could surge following any news of relaxation in tariffs.
To come up with our list of Top 10 Auto Parts Stocks that could surge following Trump’s auto tariff reprieve, we looked at companies in the auto parts industry with a minimum market cap of $300 million that were outperforming their peers.
10. Autoliv, Inc. (NYSE:ALV)
Autoliv, Inc. is a developer, manufacturer, and supplier of passive safety systems for the automotive industry. It provides side-impact airbag protection systems, steering wheels, battery cut-off switches, seatbelts, modules, and components for frontal-impact airbag protection systems, and other products. After falling over 11% this year, the stock has finally regained an upward momentum.
According to 26 different analyst ratings, the company has a highest target price of $140, which means in the best-case scenario, the stock could have an upside of 69% from the current levels. Though the stock has already taken an upward trajectory, it is still trading 1.5% below the lowest Wall Street price target of $84.
As per the guidance announced at the recent quarterly earnings, the company anticipates approximately 2% organic sales growth, supported by sales outperformance relative to light vehicle production (LVP). Operating margin is projected to improve throughout the year. Adjusted operating margin is expected to be in a range of 10% to 10.5%.
The company predicted cost pressure from suppliers and labor inflation to ease in 2025, but things have changed this month due to fresh tariffs. If Donald Trump eases on the tariffs, the bull thesis will be back on track.
9. Hesai Group (NASDAQ:HSAI)
Hesai Group is the manufacturer, developer, and seller of three-dimensional light detection and ranging solutions (LiDAR). It develops and designs engineering products and provides validation services, solution services, gas detection products, and other services. The stock has been struggling since the start of this year.
The company’s stock hit an all-time high last month after announcing a significant partnership with BYD and a strong earnings report. In Q4 2024, the company recorded an impressive revenue growth of 28.3%.
On the back of strong earnings, the firm guided for a promising 2025. The company anticipates approximately a 44% to 69% YoY increase in net revenues for the full year. For Q1 2025, the expected net revenue growth is approximately 45% to 50% YoY.
Based on 16 different analyst ratings, Hesai has a highest target price of $35, which means the price could more than double from the current levels. The analyst optimism and a strong earnings profile set up the company well to weather any tariff storm ahead.