Few auto supplier stocks have outperformed this year, but Aptiv (APTV) has at least managed to generate a positive double-digit year-to-date return while the sector is down nearly 10%. With the shares down a bit since my last update, and auto OEMs pushing forward even harder on electric vehicles, the valuation argument is getting a little more interesting to me.
I really like Aptiv’s leverage to high-voltage wiring, cabling, and connectors in battery electric vehicles (or BEVs), as this will be an almost-impossible e-powertrain component to in-source, but one that should be more profitable than average as well. I also believe the opportunity in Smart Vehicle Architecture (or SVA), a new way to approach electronic control for vehicles, is both significant and underappreciated relative to the hype around autonomous driving technology.
I can’t say that Aptiv is any kind of value stock, and there are several quality auto component suppliers that look undervalued today, but relative to a bull-case outcome for BEV-driven high-voltage electrical components, SVA platform wins, and advanced driver assistance systems (or ADAS), including autonomous driving, I’m warming up to this as a not-so-unreasonably-priced growth stock idea.
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Sentiment Has Cooled On Aptiv, But High-Voltage And SVA Remain Hot Opportunities
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