Aptiv Leading The Way In Advanced Safety, But There Are Some Road Hazards

Being a pioneer tends to have a pretty binary outcome – they either name schools after you, or you end up feeding the scavengers in the middle of nowhere. I don’t think Aptiv (APTV) is really looking at such a stark set of outcomes, but I do see this company as a pioneer in active safety for passenger vehicles with a rich multiple to match.

I think we’re going to see a cool-down of expectations around autonomous driving in 2020, and with that I think Aptiv’s rich multiple could be at risk. I do like the underlying business, not only for its leverage to active safety, but also its leverage to connectivity/infotainment and vehicle electrical systems. A pullback (more than the 10% already seen) could create an attractive long-term buying opportunity for a company that I think can generate above-average long-term growth, including double-digit FCF growth.

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Aptiv Leading The Way In Advanced Safety, But There Are Some Road Hazards