Looking for auto part stocks to add to your portfolio in 2024? The automotive sector has been experiencing several challenges these past years due to the boom of electric vehicles. This, coupled with last year’s disruptions in the supply chain, makes the sector operate with increased difficulty. Indeed, the surge in demand has trickled down to other parts of the automotive sector, specifically auto part manufacturers. This rise in demand for electric vehicles increases auto part companies’ growth.

The need to supply parts for production and post-sale repairs will also grow as the industry matures. The U.S. government has also pushed consumers to transition to EVs to combat climate change.

The Biden administration has set several federal policies to transition to electric vehicles at least by 2027. We expect this transition to continue and see that the auto parts sector can grow with this, too. Let’s look at three auto part stocks we think are great buys.

Standard Motor Products (SMP)

Standard Motor Products (NYSE:SMP) is a premium parts distributor and manufacturer for the automotive aftermarket. It specializes in vehicle control and thermal management and custom-engineered solutions.

Standard Motors’ operations can be categorized into three primary segments:

• Temperature Control for its thermal products and air conditioning products;
• Vehicle Control for its ignition, fuel delivery, emissions, electrical, and safety products; and
• Engineered Solutions for its custom-engineered solutions.

The company has been continuously expanding its product offerings coverage, and its latest addition is its oil filter housing kits, which will fit additional cars like the 2018-12 Chevrolet Sonic, 2015-11 Chevrolet Cruz, and many more.

Even with the slow start in its Temperature Control segment due to a cool spring and having its vehicle control sales affected by the bankruptcy of one of its customers, the company managed to report an increase in its net sales.

Looking into its segments’ performance, the company reported an 8.4% increase in its Engineered Solutions from a strong surge in demand and new business wins. The company’s inflation and cost containment measures have also helped improve its non-GAAP operating margins, which improved by 9.1% and increased its adjusted EBITDA by 9.5%. And a result, SMP’s continued resiliency and improving margins despite the economic conditions make it one of our top choices for Auto part stocks to buy.

O’Reilly Automotive (ORLY)

O’Reilly Automotive (NASDAQ:ORLY) is a specialty retailer of aftermarket parts for the automotive market. It offers supplies, tools, equipment, and accessories for professional service customers and do-it-yourself (DIY) clients. The company has many products, including batteries, alternators, driveline parts, engine additives, filters, fluids, and engine parts.

O’Reilly also offers various programs and services, such as battery diagnostic testing, used oil, oil filters, and battery recycling. Further, ORLY seems to be in constant expansion mode, with its latest distribution center recently opened in Guadalajara, Mexico. 

The company reported an 8.7% store sales growth in its third-quarter financials and a 17% diluted EPS YoY growth. The company also beat analyst earnings estimates by 3.47%. Its continued stellar performance and growth momentum have made the company raise its guidance for 2023.

Looking forward, O’Reilly plans to open 180 to 190 net new stores by the end of this year, and aims for an additional 190 to 200 new ones by 2024. This demonstrates the company’s vision for its growth and future. Shareholders will appreciate ORLY’s ongoing repurchase program with a remaining $712 million authorized as of October 25, 2023. This proves the company’s confidence in its valuation and makes it one of our top auto part stocks to buy.

Modine Manufacturing Company (MOD)

Modine Manufacturing Company (NYSE:MOD) specializes in thermal management systems and components that service the automotive and industrial sectors. It provides different kinds of engineered heating & cooling components and engineering systems for various applications. These include products that help with heat transfer, ventilation, air conditioning, refrigeration, and liquid-cooled technology for vehicular, stationary power, and industrial applications.

While the company may not be solely focusing on the automotive industry, it has a strong portfolio of products and services in that sector. The company’s most recent showcase of thermal products reported some of its products being used in the growing EV market. 

Modine Manufacturing reported strong 2nd quarter of 2024 financials with a 7% increase in net sales and a 79% increase in its operating income. The company also reported an adjusted EBITDA growth of 59% YoY and beat earnings by 39.06%.

Further, MOD has been laser-focused on diversifying its sales in data centers and performance technology segments. This has resulted in two consecutive quarters of excellent sales growth (data center sales), in addition to gross margin and adjusted EBITDA margin increases.

For FY2024, the company projects a 6% to 11% in net sales and $285 million to $300 million EBITDA. Its rising revenues and transformational strategies make MOD one of the top auto parts stocks on our list. 

On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.