1) PHINIA Inc. (NYSE:PHIN)
Market Cap as of 9 October: $1.96 billion
Number of Hedge Fund Holders: 35
PHINIA Inc. (NYSE:PHIN) is engaged in the development, design, and manufacture of integrated components and systems optimizing performance, increasing efficiency, and reducing emissions in combustion and hybrid propulsion for commercial and light vehicles, and industrial applications.
With expectations for battery electric vehicles (BEVs) undergoing recalibration, the company’s focus on ICE efficiency improvements places it well in the market. PHINIA Inc. (NYSE:PHIN)’s strategy goes beyond its current stronghold in the light vehicle (LV) market. The company focuses on diversifying its revenue streams by increasing its exposure to commercial vehicles (CV) and aftermarket (AM) segments.
PHINIA Inc. (NYSE:PHIN) aims to achieve a mix in which LV makes up ~30% of revenue by 2030. Wall Street believes that this diversification strategy should drive long-term growth as CV and AM segments typically provide increased margins and offer significant resilience in the challenging environment. Expected drivers for PHINIA Inc. (NYSE:PHIN)’s stock consist of potential original equipment manufacturer (OEM) announcements, together with additional cash return announcements.
Despite challenging commercial and light vehicle markets, the company’s aftermarket business and new product pipeline, consisting of alternative fuel products, should enable strong growth. PHINIA Inc. (NYSE:PHIN) expects to leverage its brand, capabilities, and scale in a bid to navigate through market softness and deliver strong shareholder value.
Analysts at UBS Group initiated coverage on the shares of PHINIA Inc. (NYSE:PHIN) on 4th September. They gave a “Buy” rating and a $55.00 price target. Ariel Investments, an investment management company, released its first-quarter 2024 investor letter. Here is what the fund said:
“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.”
While we acknowledge the potential of PHIN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PHIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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