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What Makes American Axle (AXL) an Attractive Bet at the Moment?

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American Axle & Manufacturing Holdings (AXL - Free Report) has been witnessing an amazing run on the bourse, of late.

Its shares have appreciated 46.8% quarter to date compared with the broader industry’s growth of 31.1%. Also, American Axle currently flaunts a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

 


 

The company has been witnessing northbound earnings estimate revisions, of late. The Zacks Consensus Estimate for fourth-quarter earnings witnessed an upward revision of a whopping 1,300% over the past 60 days. Moreover, the consensus mark moved 400% north for 2021.

The Detroit-based global automotive parts supplier has an impressive earnings surprise history as well, having topped estimates in all four trailing quarters, the average surprise being 471.43%.

The time is ripe for investors to gift themselves this stock for the New Year ahead. Let us delve deeper into thepositive drivers for this stock.

American Axle is a leading supplier of driveline and drivetrain systems, modules, and components for the light-vehicle market. The company supplies driveline systems and other components to auto giants like General Motors, Fiat Chrysler, Jaguar Land Rover, Ford, Harley-Davidson, Volkswagen, Nissan, Honda and Mercedes-Benz. In addition, the company is gaining new businesses with its latest innovative driveline solution. It expects that this will support customer demand for advanced technologies, thus, leading to greater business diversification and solid growth.

Moreover, American Axle’s acquisition of Metaldyne Performance Group (“MPG”) enables the company to enhance shareholders’ value by creating a company with greater size, scale and diversified business that offers efficient and enhanced solutions for customers. Further, this transformational acquisition allows American Axle to take advantage of MPG’s expertise in complex, highly-engineered powertrain components, thus, boosting the company’s offerings.

In fact, the divestment of American Axle’s U.S iron casting operations streamlined the company’s portfolio and improved margin profile. The company is focused on building an optimized and highly-engineered product portfolio by tapping on profitable growth opportunities, including electrification.

In the wake of the coronavirus pandemic, American Axle initiated a series of cost savings throughout the enterprise, including substantial staffing adjustments and reducing production levels to help mitigate business disruptions. The focus on cost discipline is likely to offer some respite to the company amid the coronavirus-induced uncertainties.
 
American Axle achieved stellar third-quarter 2020 financial results, owing to rebounding global production volumes and its cost-cutting measures. Moreover, amid the improving scenario, the company reissued the previously suspended 2020 guidance and expects full-year sales of $4.6 billion, with adjusted EBITDA of $665-$680 million.

American Axle is set to make significant progress across the electric drive space.  The company’s electric drive technology is designed, engineered and manufactured to provide automakers with a product mix of hybrid and electric driveline systems that range from low-cost, value-oriented offerings to high-performance solutions. American Axle has two electric drive system launches and multiple electric powertrain component launches scheduled for the next year.

Some other top-ranked stocks in the same industry are BRP Inc. (DOOO - Free Report) , LCI Industries (LCII - Free Report) and Magna International (MGA - Free Report) , all of which sport a Zacks Rank of 1 at present.

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