Lear Corp. (LEA): A Top Stock in a Top-Rated Industry

Before we begin, I want you all to know that I did my best to include a King Lear pun (at least one that wasn't totally forced) in this edition of the newsletter, but I failed. If any come to mind, please feel free to write us.

Today, we’ll be taking a look at Lear Corp (NYSE: LEA), a hidden gem from the Auto Part industry.

A note from our sponsors...

The company has quite a long history, having been founded way back in 1917. At present, Lear is an electrical distribution system and seating manufacturer.

So — let’s get right down to business. What makes this stock watchlist-worthy?

First, the industry in which the business operates is highly cyclical — and LEA has been on a steady downward trajectory ever since COVID. That doesn’t sound particularly good, you’ll come to see why it’s a favorable backdrop.

There’s a turnaround afoot. The company has notched 6 consecutive earnings beats. Wall Street seems to have gotten the memo — Lear shares are currently trading at around $100, while the average price target, currently pegged at $117.88, implies a 17.36% upside.

The Street-high price forecast is even more impressive — at $136, it implies a very hefty 35.4% upside, and comes from Citigroup’s Michael Ward (a top 6% rated analyst), who opined that automotive suppliers stand to gain the most from current market trends.

Lear also has an ace up its sleeve — a rather impressive $1.3 billion backlog that covers 2026.

LEA has rallied by 25.42% in the past 6 months — and there’s reason to believe that the rally could continue.

For one, the stock has a Zen Rating of A — which means that a thorough review of 115 proprietary factors tied to outsized gains puts the stock in the top 5% of the more than 4,600 equities that we track. Better yet, LEA actually ranks in the top 3% — and is currently rated 134th overall on our list.

Why is this important? Stocks with a Zen Rating of A have provided an average annual return of 32.52% since the early 2000s. 

Each Zen Rating is made up of 7 Component Grade ratings, which cover and illustrate a stock’s specific strengths or weaknesses.

So, for example, LEA’s earnings are forecast to grow at a pretty high rate of 28.05% per year — a fair way ahead of the market average of 19.78%. This, together with 21 other datapoints, forms the basis of our Growth Component Grade rating — and in this category, Lear ranks in the 84th percentile — equivalent to or better than 84% of the stocks that we track — in other words, in the top 16%.

Our Safety rating measures factors like stock price stability, revenue inflow stability, and the predictability of earnings. In this regard, the stock ranks in the top 15%.

Valuation is another point in Lear’s favor — the stock is currently trading at a meager price-to-earnings (P/E) ratio of 11.64x, far below the market average of 36.99x, and an even more impressive price-to-earnings growth (PEG) ratio of 0.46x. In terms of Value, today’s pick ranks in the top 6%.

Last, but certainly not least, we have our Artificial Intelligence rating. To cut a long story short, we employ a neural network trained on two decades of market data to evaluate stocks and try to find future outperformers — in this category, LEA ranks in the top 7%.

And since we’re on the topic of AI, we should also mention that the company recently announced a five-year partnership with Palantir — one focused on both automation and counteracting tariff risks.

It should also be mentioned that this is the 10th highest-rated stock in the Auto Part industry, which has an Industry Rating of A, and is currently the 14th highest rated industry out of a total of 145.

Earnings beat streak, large backlog, a truly great valuation relative to its high growth prospects — there’s really a lot to like about Lear.

So — with all that out of the way, do you want to know the best part? We might have an upside catalyst on our hands soon. This undervalued business will hold its next earnings call in ten days, on October 31 — so investors should consider getting in ahead of the curve.

—> Click here to research LEAR. If you’re interested in wherefore art additional highly-rated value stocks, they are in our Best Value Stock Screener.

What to Do Next?

• 77 Best Stocks NOW! >
• See All “A” Rated Stocks with +32.52% Average Annual Return >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.