Jason Benowitz of The Roosevelt Investment Group presented his in-depth investment thesis on Aptiv (US: APTV) at Best Ideas 2019.

Thesis summary:

Aptiv is the leading Tier I automotive supplier in electrification and autonomous technology. This is supporting strong win rates and pipeline growth above the industry, which Jason expects will translate into future market share gains, outsized growth in content per vehicle, and profit margin expansion.

Last year’s spinoff of the powertrain business has unlocked value by creating a pure-play, focused leader in attractive vehicle technologies, to which investors could ultimately assign a premium multiple. Aptiv management has guided conservatively, setting the company up to exceed expectations in the medium term.

Jason’s valuation analysis implies substantial upside in his base case scenario, while also suggesting that downside is limited, even under a fairly draconian bear case. Investors may have priced in too much concern about the automotive cycle and the U.S.-China trade dispute, while overlooking the company’s leadership in markets with strong secular growth.

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About the instructor:

Jason Benowitz, CFA, joined Roosevelt Investments in 2009 as a Securities Analyst, was promoted to Portfolio Manager in 2011, and to Senior Portfolio Manager in 2013. Prior to Roosevelt, Mr. Benowitz was a principal at Druker Capital, a long/short hedge fund manager, and a Vice President in the U.S. Equity Research Group at Morgan Stanley Investment Management. He was also an investment banking analyst at Merrill Lynch. Mr. Benowitz earned a BA in Computer Science from Harvard College and an MBA in Finance and Accounting from The Wharton School at the University of Pennsylvania, where he was a Palmer Scholar. Mr. Benowitz holds the Chartered Financial Analyst® designation.