Valuation and Market Position - Magna International is trading at a forward P/E ratio of 8.84, while Autoliv has a trailing P/E of approximately 12.5, indicating both stocks are significantly undervalued compared to technology-focused peers [1][2] - The valuation gap between these suppliers and the broader electric vehicle (EV) sector is notable, as pure-play EV stocks often trade at high multiples based on future growth promises [2][3] Operational Performance - Magna and Autoliv are thriving amidst market turbulence, demonstrating operational discipline by cutting costs and optimizing capital spending to enhance free cash flow and shareholder value [3][6] - Magna reduced its projected capital expenditure to approximately $1.5 billion for Q3 2025, resulting in a nearly $400 million year-over-year increase in free cash flow [8] - Autoliv is targeting an operating cash flow of roughly $1.2 billion for the full year, reflecting a focus on efficiency over expansion [8] Strategic Advantages - Magna is uniquely positioned as the only supplier capable of assembling complete vehicles for other companies, recently securing a contract with XPENG to assemble electric vehicles [12][13] - Autoliv holds over 40% market share in automotive safety, ensuring growth potential regardless of the type of vehicle [14] - Autoliv's sales to domestic Chinese automakers surged by 23%, indicating resilience in the face of declining sales volumes for many global brands [15] Supply Chain Resilience - Both companies are actively securing their supply chains against disruptions, with Autoliv establishing a new airbag cushion plant in Vietnam to diversify manufacturing [17] - Magna and Autoliv have shown the ability to pass on tariff-related costs to customers, with Autoliv recovering approximately 75% of these costs in Q3 [18] Investment Outlook - The automotive industry is experiencing volatility, but Magna and Autoliv provide foundational value and operational discipline, making them attractive for investors seeking stability [20][21] - With raised full-year guidance and strong dividend yields, both companies represent a stable entry point into the future of mobility, contrasting with the high-risk nature of OEMs and EV stocks [21]