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In a vehicle parts/components sector that has seen many stocks rocket up over the past year, Allison Transmission (ALSN) doesn't look so appealing with its stock "only" up about 25% over the past year. That comes in spite of Allison owning exceedingly rare market share in its end markets and still having significant global under-penetration to fuel future revenue growth.

While it is true that Allison's cash flow is complicated by net operating losses carried forward and intangible asset amortization, the base operating margin and cash flow generation are still quite good for the sector. Although Allison is not a huge value today, and the EV/EBTIDA looks expensive without adjustments, upside from energy and on-highway markets could...

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