How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Allison Transmission (ALSN) ten years ago? It may not have been easy to hold on to ALSN for all that time, but if you did, how much would your investment be worth today?

Allison Transmission's Business In-Depth

With that in mind, let's take a look at Allison Transmission's main business drivers.

Headquartered in Indianapolis, IN, Allison Transmission Holdings, Inc. is a manufacturer of fully-automatic transmissions for medium and heavy-duty commercial and heavy-tactical U.S. defense vehicles. In fact, the company is the largest producer of fully-automatic transmissions, holding the leading position in several niche markets. The firm also offers electric hybrid and fully electric propulsion systems. 

The company segregates revenues by end markets. In North America, it serves On-Highway (contributed 50.4% in 2023) and Off-Highway (2%) end markets. Likewise, Outside North America, it serves On-Highway (15.7%) and Off-Highway (3.4%) end markets. Besides on and off-highway, it also serves Defense (5.5%), and Service Parts, Support Equipment and Other (23%) end markets.

Within the On-Highway market, it serves fully-automatic transmissions in North America, majorly catering to Class 4-5, Class 6-7 and Class 8 straight trucks, conventional transit, shuttle and coach buses, school buses and motorhomes. Outside North America, Europe, the Middle East, Africa (EMEA) is the company’s largest market.  

In the Off-highway market, the company offers products used in vehicles and equipment that serve energy, mining and construction applications in North America and overseas. Outside North America, Asia-Pacific and EMEA constitute the firm’s key markets.

Allison’s Defense end market helps in providing a hedge against economic cycles and disruptions. It supplies transmissions for medium- and heavy-tactical-wheeled vehicle platforms, including the Joint Light Tactical Vehicle, Light Armored Vehicle, Stryker Armored Vehicle, Mine Resistant Ambush Protected Vehicle, Heavy Dump Truck, Heavy Equipment Transporters, et al.

The company’s Service Parts, Support Equipment and Other end market comprises Allison-branded service parts and transmission fluids, aluminium die cast components, extended transmission coverage, royalties, saleable engineering and support equipment.

Bottom Line

Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Allison Transmission, if you bought shares a decade ago, you're likely feeling really good about your investment today.

A $1000 investment made in January 2015 would be worth $3,732.67, or a 273.27% gain, as of January 16, 2025, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

The S&P 500 rose 198.59% and the price of gold increased 110.97% over the same time frame in comparison.

Analysts are anticipating more upside for ALSN.

Allison is experiencing robust demand in the North America On-Highway market, driven by strong Class 8 vocational vehicle sales, which fueled revenue growth in 2023. The company anticipates further growth in 2024 and is targeting an additional $100 million in revenues from rising global defense budgets. Allison’s emphasis on advanced technology and innovative product development strengthens its competitive edge. International prospects remain promising, supported by strategic market expansions and partnerships. Notably, Allison entered Brazil's ag sprayer market in first-quarter 2024, capitalizing on South America's largest agricultural economy and bolstering its Off-Highway business. The firm’s investor-friendly moves also instill confidence. Thus, we are bullish on the stock for the time being.

Shares have gained 8.85% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research