The automotive industry is one of the largest global industries. You know the major brands and vehicle types, but do you know the auto suppliers?
Not all automotive suppliers are publicly traded, but some are, and you can add some of these companies to your stock portfolio. When you think about the various parts of your car, which companies come to mind? What brand name is on your tires? What company made the battery under the hood? When you need parts, what brand name do you buy? These are all companies that could be great when you’re looking for solid investment opportunities; let’s explore a few.
LKQ Corporation (LKQ)
Where are your replacement parts coming from? What company makes the parts that some auto mechanics use? One of the answers is LKQ Corporation. This company and the market it’s in are relatively stable, which means you could invest your money in LKQ and let it grow for many years. While already strong in North America and Europe, LKQ works toward gaining market share by having more car parts available than its competitors.
O’Reilly Automotive (ORLY)
O’Reilly Automotive is considered to be in a recession-proof area of the automotive market, which makes it one of the top auto supplier stocks for your investment. Everyone must drive, and more miles driven means more car parts are necessary. If you’re not fond of O’Reilly, AutoZone (AZO) and Advanced Auto Parts (AAP) are both great options in this same industry. O’Reilly is the best of the three due to its exposure to the high-growth Do-It-For-Me market. The increased complexity of vehicles allows O’Reilly service centers to handle the vehicle repairs most drivers won’t be callable of in the future.
Axalta Coating Systems (AXTA)
Axalta Coating Systems is one of the leading painting and coating companies in the automotive industry. This is another great way to participate in the auto industry with your investment rather than reaching to the OEM market. Axalta does more than just vehicles, but the auto market makes up nearly three-quarters of its sales, with the refinishing market being its highest-margin area. This means your investment can benefit from both OEM initial painting processes and the aftermarket arena of repainting vehicles.
Autoliv (ALV)
Modern vehicles have advanced safety systems using an incredible level of computerization. If you want to invest in a company with some long-term growth, this could be one of the best auto supplier stocks for you. Autoliv is responsible for more than 40% of the global market for passive safety. One of the greatest growth areas in the automotive market is safety, which requires more tech and information, putting Autoliv right at the top of the list.
Gentex (GNTX)
Gentex occupies a small corner of the market. That said, every vehicle needs mirrors, and the use of dimmable mirrors and digital vision is growing rapidly. Currently, automatic-dimming rearview mirrors are a premium option on higher trim levels, which is where Gentex excels. This company is also developing full display mirrors and camera systems that are increasingly in demand as an advanced technology in the auto industry. Its possible, as we move toward mirrorless vehicles, that Gentex will be the supplier of side-view and rearview cameras.
BorgWarner (BWA)
You might be familiar with BorgWarner as a drivetrain and powertrain supplier for internal combustion engines, but that focus is shifting. As the auto industry shifts toward hybrids and EVs, so is BorgWarner. This could be a great company to diversify your portfolio and add an auto supplier stock to the mix. Recently, this company bought Delphi Technologies to add this tech company to the mix. Traditional vehicles won’t disappear overnight, which makes BorgWarner’s position a strong one for the future. When you’re looking for a great investment, consider this company and let its position help your investment grow over time.
Aptiv (APTV)
Aptiv is one of the largest and most successful OEM parts suppliers in the world. Its customers include 23 of the largest 25 automakers, which means it has longstanding relationships with nearly all car companies. This should also provide you with the confidence to invest in this company and know your money should grow. Aptiv is committed to aiding automakers in building driverless cars, which is an ongoing process that adds more safety features and alert systems to the cars we see on the road.
Snap-On (SNA)
Mostly, you know Snap-On for the tool supply trucks that drive around town selling tools to various mechanics. This company is an important name in the auto market as a global supplier of tools, diagnostic equipment, and information systems for dealerships and auto repair shops. The demand for Snap-On tools is driven by the number of vehicles serviced and the new integration of modern technology. If you’re looking for one of the leading auto supplier stocks for your investment, Snap-On can easily be the right company for you.
Goodyear (GT)
Goodyear is mostly known for making tires that we use every time we head out for a drive. The tires on your vehicle are one of the most consumable items of your vehicle. These four rubberized wheels are the only part of your vehicle you want touching the road. Goodyear makes most of its money from the replacement market, which makes perfect sense. This should be considered another recession-proof part of the auto industry because you’ll always need tires when the previous models have worn out.
Which supplier and industry is right for your investment?
These are only nine companies involved in the supply of parts to OEMs and in the aftermarket segment of the automotive world. Will you invest in only one of these auto supplier stocks or choose a few different names to diversify your portfolio across several areas of the market?
As you can see from these names, it’s not necessary for you to stick to the brand names you know for your investment in the auto industry. There are thousands of companies involved in making the cars we see on the road every day.
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