US auto sales are forecasted to rise next year according to Edmunds.com. New sales of cars and trucks are expected to reach 15 million in 2013, making double digit sales growth for cars and trucks a reality.
Auto suppliers have had a rough time in recent years between gas prices and bankruptcies, but changes from cutting costs (mostly labor) to refinancing debt have helped make the best of the macro-environment. And with sunny outlooks ahead, it’s time to take a look at the companies poised to benefit.
Investing Ideas
When an industry expands many people tend to look at the names at the forefront, in this case names like Ford (F) and General Motors (GM). But in reality, it’s the smaller suppliers that typically see the greatest appreciation in stock price. These names are often midcap stocks that, thanks to unexpected bursts in demand, can see sales double in a small time frame. Here are a few to keep an eye on:
Seats
Lear (LEA) provides seating and electrical systems and components that include the tracks, frames, cushioning and covers. EPMS (electrical power management systems) sales are growing while adjusted margins are improving to 7-8%.
Internal
American Axle & Manufacturing Holdings, Inc. (AAM) is a major supplier for General Motors. It does everything from designing to engineering driveline systems (the ones that get the wheels turning). It just announced it would be making transfer cases (that ‘transfer’ power from the transmission) for Jaguar Land Rovers in Europe.
Tires
Goldman Sachs put a buy rating on Goodyear (GT) in addition to initiating research on Cooper Tire & Rubber Company (CTB). GT is turning around with high tire replacement volumes and lower raw material costs. Cooper has posted strong earnings throughout the year.
Replacement parts
Standard Motor Products (SMP) focuses on manufacturing ignition and emission parts as well as air conditioning and heating components. It’s offered consistent dividends and posted increased sales this year.
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More on the names mentioned above. Click the icons and links to access more information about these companies.
1. General Motors Company (GM, Earnings, Analysts, Financials): Operates as a global automaker. Market cap at $36.63B, most recent closing price at $23.39.
2. Ford Motor Co. (F, Earnings, Analysts, Financials): Develops, manufactures, distributes, and services vehicles and parts worldwide. Market cap at $38.18B, most recent closing price at $10.01.
3. Standard Motor Products Inc. (SMP, Earnings, Analysts, Financials): Distributes replacement parts for motor vehicles in the automotive aftermarket industry primarily in the United States, Canada, and Latin America. Market cap at $415.72M, most recent closing price at $18.33.
4. Lear Corp. (LEA, Earnings, Analysts, Financials): Engages in the design and manufacture of automotive seat systems and related components for automobiles and light trucks. Market cap at $3.67B, most recent closing price at $37.43.
5. Delphi Automotive PLC (DLPH, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and provides electrical and electronic, powertrain, safety, and thermal technology solutions to the global automotive and commercial vehicle markets worldwide. Market cap at $10.12B, most recent closing price at $31.34.
6. Goodyear Tire & Rubber Co. (GT, Earnings, Analysts, Financials): Engages in the development, manufacture, distribution, and sale of tires, and related products and services to consumer and commercial customers worldwide. Market cap at $2.93B, most recent closing price at $11.99.
7. Cooper Tire & Rubber Co. (CTB, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and markets replacement tires in North America and internationally. Market cap at $1.22B, most recent closing price at $19.54.
Written by Freda Ding
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Dig Deeper: Access Company Snapshots, Charts, Filings
- General Motors Company (GM, Chart, Download SEC Filings)
- Ford Motor Co. (F, Chart, Download SEC Filings)
- Standard Motor Products Inc. (SMP, Chart, Download SEC Filings)
- Lear Corp. (LEA, Chart, Download SEC Filings)
- Delphi Automotive PLC (DLPH, Chart, Download SEC Filings)
- Goodyear Tire & Rubber Co. (GT, Chart, Download SEC Filings)
- Cooper Tire & Rubber Co. (CTB, Chart, Download SEC Filings)
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