The product offerings are quite different, but Gentex (GNTX) reminds me of Autoliv (ALV) (which I recently wrote on) in some respects – a well-established auto supplier in its core market where the risk of obsolescence from advanced technologies isn’t so high, and where current results are being pressured by external factors. Where Gentex differs, though, is in its exceptionally strong margin structure and its exceptional free cash flow generation history.
Although some bears think that autonomous driving and advanced camera technology threaten Gentex’s future, I don’t really agree. Mirrors are a very cost-effective solution and will likely offer redundant coverage of camera-based systems, and that’s to say nothing of Gentex’s ability to participate in future camera-based vision technologies.
I can’t say that Gentex stands out as being “can’t miss” cheap now, but a prospective return in the high single-digits isn’t bad, and this may be an option for investors who want auto sector exposure with less risk of picking winners and losers in the move toward electrification.
Follow this link to the full article:
Gentex's Near-Term Prospects Dimmed By Macro Challenges, But The Future Is Brighter
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