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We came across a bullish thesis on Motorcar Parts of America, Inc. (MPAA) on Enterprising Investor’s Substack by Tyler Moody. In this article, we will summarize the bulls’ thesis on MPAA. Motorcar Parts of America, Inc. (MPAA)'s share was trading at $7.64 as of Dec 18th. MPAA’s forward P/E was 9.29 according to Yahoo Finance.
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Motorcar Parts of America (MPAA) is currently valued at $264 million, with a book value per share of $13.50, reflecting a slight decrease from the previous quarter. The company has demonstrated consistent revenue growth and strong gross margins, although operating and financing costs have exerted pressure on profitability. Current assets increased by $8.2 million, while long-term assets remained stable. Liabilities rose, with current liabilities up by $2.6 million and long-term liabilities increasing by $9 million, but the overall financial position remains manageable. MPAA’s valuation appears conservative at roughly 1x book value, especially considering its growth potential. One of the key challenges for MPAA has been its significant interest costs, though these are expected to decrease in the near future, potentially improving profitability. Additionally, the company has announced upcoming price improvements from parts retailers, which are expected to impact margins positively. Despite these challenges, MPAA’s outlook is improving, and the stock has seen a notable rally since early November, rising from $5.25 to over $8 per share. This rally suggests growing investor confidence as the company’s pricing and interest costs stabilize. With a solid foundation of revenue and margins, MPAA’s stock offers an attractive investment opportunity. The market has yet to fully price in the value of the company’s assets, particularly its growth potential, making it an appealing investment at its current valuation.
Motorcar Parts of America, Inc. (MPAA) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 11 hedge fund portfolios held MPAA at the end of the third quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of MPAA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MPAA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.