The automotive sector suffered a major setback amid the COVID-19 pandemic as the global production of vehicles plunged. In fact, new car production enabled with the latest technologies continues to be impacted by the global semiconductor chip shortage. This has led to an increase in demand for auto parts because consumers are extending the use of their old cars or buying used cars, in lieu of purchasing brand new vehicles…
Most people are still wary of using mass transportation services due to public health concerns. This is driving the demand for personal cars. And because old cars are meeting the demand for private transportation, the auto-parts industry is benefiting. According to Grand View Research, the global automotive aftermarket is expected to reach $529.25 billion by 2028, growing at a 3.8% CAGR of 3.8%.
Consequently, we think it is wise to now buy the shares of auto parts companies Bridgestone Corporation (BRDCY – Get Rating), LKQ Corporation (LKQ – Get Rating), Gates Industrial Corporation plc (GTES – Get Rating), and Standard Motor Products, Inc. (SMP – Get Rating). They are well-positioned to take advantage of industry tailwinds based on their solid financials.
Bridgestone Corporation (BRDCY – Get Rating)
Headquartered in Tokyo, BRDCY is one of the world’s top manufacturers of tire and other rubber products, such as industrial materials and sporting goods. The company operates through two segments: tires and diversified products. Its diversified products segment provides chemical products, such as automobile related parts, urethane foam and related goods.
BRDCY’s 756.89 billion Yen ($6.91 billion) in revenue for the first quarter, ended March 31, 2021, represents a 7.2% year-over-year rise. The company’s net profit has increased 1,208.7% year-over-year to 287.65 billion Yen ($2.63 billion). Also, its EPS increased 1,365% year-over-year to 404.48 Yen ($3.69). Analysts expect BRDCY’s annual revenue to increase 344.9% year-over-year to $29.05 billion.
On April 26, 2021, BRDCY announced that its Bridgestone Mining Solutions Australia Pty. Ltd., had agreed to acquire Otraco International Pty Ltd from Downer EDI Limited. The acquisition is expected to help accelerate the company’s expansion in key markets, including Australia, Chile and South Africa. The stock has gained 41.8% over the past nine months to close yesterday’s trading session at $22.51.
It’s no surprise that BRDCY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Momentum, Growth, Stability. Click here to see BRDCY’s rating for Value and Sentiment also.
BRDCY is ranked #7 of 66 stocks in the B-rated Auto Parts industry.
LKQ Corporation (LKQ – Get Rating)
LKQ distributes replacement parts, components, and systems used to repair and maintain vehicles. The company’s offerings include bumper covers, automotive body panels, lights, and automotive glass products, such as windshields. It operates through three segments: North America; Europe; and Specialty.
For the first quarter, ended March 31, 2021, LKQ’s revenue came in at $3.17 billion, representing a 5.7% year-over year rise. The company’s operating income increased 53.6% year-over-year to $371.45 million and its net income for the quarter was $265.91 million, up 83.2% year-over-year. Its adjusted EPS came in at $0.94, which represents a 64.9% increase from the prior-year quarter.
For the current quarter, ending June 30, 2021, analysts expect LKQ’s EPS and revenue to increase 37.7% and 28.2%, respectively, year-over-year to $0.73 and $3.08 billion. It surpassed the…
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