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JimVanMeerten (63.06)

6 auto suppliers to consider

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April 29, 2010 – Comments (1) | RELATED TICKERS: WMCO.DL , CTB , LKQ

Lately I've been watching all the ads on TV and other places in the mass media where Ed Whitacre the GM CEO struts across the scene and brags about how proud he is that GM paid back their TARP loans ahead of time and with interest to boot. Nowhere did I hear a "Thank you". As a taxpayer, I loaned him the money, my taxes funded the tax credit for clunker programs and we the American consumer bought his cars.

It was not his brilliance or the hard work of his management team that turned GM around it was the benevolence of the American taxpayers and consumers, plus a little luck from the problems experienced by Toyota that made all his new sales possible.

Mister Whitacre, my mom always told me that whenever someone does you a favor it would be very rude not to say "Thank you". Since you forgot to say "Thank you", I bet your mom is embarrassed.

I started thinking that if the auto industry is turning around maybe there might be some auto suppliers that might have recent price appreciation and glowing recommendations from Wall Street so I did a little screening and came up with a few that might make sense to consider for your portfolios.

When I look at an industry to mine for gems I usually use 3 yard sticks to get a feel of the likelihood that a stock will increase. The yard sticks are:
1 -- Technical Price Momentum -- Barchart

2 --  Wall Street Recommendations -- Yahoo Finance

3 -- Investor Sentiment -- Motley Fool

It's not a perfect system but if you find stocks that are having positive price momentum and then verify that Wall Street looks for increased sales and earnings and the general public has an interest in the stock, then you are not flying totally blind.

Dorman Products ( DORM ) is a leading supplier of OE Dealer `Exclusive` automotive replacement parts, automotive hardware, brake products, and household hardware to the Automotive Aftermarket and Mass Merchandise markets. Dorman automotive parts and hardware are marketed under the OE Solutions, HELP, AutoGrade, First Stop, Conduct-Tite, Pik-A-Nut and Scan-Tech brand names.

Price Momentum - 13 of Barchart's technical indicators signal buy for a 100% technical buy rating. The stock appreciated 30.54% in the last 30 days and hit new highs in 8 of the last 20 trading sessions.

Wall Street Recommendations - Only BB&T follows the stock and rates it a buy. They look for a 9.60% increase in sales this year and a 6.20% next year. Earnings are estimated to increase 12.20% this year and 14.50% next year.

Investor Sentiment -- Motley Fool CAPS members vote 120 to 5 that the stock will beat the market with the more experienced All Stars voting 40 to 0.

Commercial Vehicle Group ( CVGI ) supplies interior systems, vision safety solutions and other cab-related products for the global commercial vehicle market, including the heavy-duty (Class 8) truck market, the construction market and other specialized transportation markets. The company's products include suspension seat systems, interior trim systems, such as instrument and door panels, headliners, cabinetry and floor systems, mirrors, wiper systems, controls and switches specifically designed for applications in commercial vehicle cabs.

Price Momentum -- 12 of the 13 Barchart technical indicators signal buy for a 96% buy rating. The stock appreciated 31.01% in the last 30 days and hit new highs in 9 of the last 20 trading sessions.

Wall Street Recommendations -- 2 analysts have buy recommendations released with sales predicted to increase 11.90% this year and 36.90% next year. Earnings are estimated to increase 88.50% this year, 193.00% next year and continue on a 5 year compounded growth rate of 10% per year.

Investor Sentiment -- Motley Fool CAPS members think the stock will out perform the market by a vote of 57 to 32 with the All Stars voting 29 to 10.

WILLIAMS CONTROLS, INC. (WMCO ) is diversified manufacturer and distributor through its wholly operated subsidiaries, Williams Controls Industries, Inc.; Kenco Williams, Inc.; NESC Williams, Inc.; Williams Technologies, Inc. and Williams World Trade, Inc. Co.'s operations are divided into four industry segments. Heavy Vehicle Components: Co.'s heavy vehicle component product lines include electronic throttles, exhaust brakes and pneumatic and hydraulic controls. These products are used in applications which include heavy vehicles, utility and off- highway equipment, transit buses and mining machines.

Price Momentum -- 12 of 13 of Barchart's technical indicators signal a 96% buy rating. The stock has appreciated 14.91% in the last 30 days and hit 10 new highs in the last 20 trading sessions.

Wall Street Recommendations -- Just 1 buy with sales expected to increase by 12.10% this year and 40.20% next. The big news is a prediction that earning per share will increase 100.00% this year.

Investor Sentiment -- Motley Fool Caps members are high on this stock with a vote of 55 to 1 that the stock will beat the market with the All Stars voting 7 to 0.

Modine ( MOD ) operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. This includes heat exchangers for cooling all types of engines, transmissions, auxiliary hydraulic equipment, air conditioning components used in cars, trucks, farm and construction machinery and equipment, and heating and cooling equipment for residential and commercial building HVAC (heating, ventilating, air conditioning and refrigeration equipment).

Price Momentum -- 12 of 13 of Barchart's technical indicators say buy. The stock appreciated 22.72% in the last 30 days and hit 11 new highs in the last 20 sessions.

Wall Street Recommendations -- There are 2 buy recommendations based on a predicted turn around. Sales are expected to contract this year but increase by 10.10% next year. They feel an earnings improvement is the story with an EPS increase of 89.30% this year, 180.00% next year and continue for a 5 year annual compounded EPS growth rate of 12.00% per year.

Investor Sentiment -- CAPS members think the stock will beat the market with a 53 to 15 vote and the All Stars vote 25 to 5.

Cooper Tire & Rubber Company ( CTB ) specializes in the manufacture and marketing of automotive products. Products for Cooper's Tire Group include automotive, motorcycle and truck tires, inner tubes, tread rubber and equipment. In the Automotive Group, Cooper is an original equipment supplier of sealing, trim, NVH control systems and fluid handling systems for the automotive industry in North America, Europe and South America.

Price Momentum -- 96% Barchart technical buy with buy signals from 12 of the 13 technical indicators. The stock has appreciated 9.68% in the last 30 days and hit 6 new highs in the last 20 trading sessions.

Wall Street Recommendations - 4 buys and 2 holds with sales expected to increase by 15.80% this year and 5.70% next year. A turnaround in earnings is forecated from a loss this year to increases of 4.80% next year and continuing for 5 years at a rate of 11.00% per year.

Investor Sentiment -- Fool CAPS members vote that the stock will beat the market by a vote of 159 to 53 and the All Stars agree 60 to 10.

LKQ Corp ( LKQX ) is the largest nationwide provider of recycled OEM automotive replacement parts and related services, with sales and processing facilities and redistribution centers that reach most major markets in the United States.

Price Momentum - 12 of 13 of Barchart's indicators signal buy for a 96% buy rating. A 30 day price appreciation of 7.19% includes 10 new highs in the last 20 trading sessions.

Wall Street Recommendation -- Analysts are high on this stock with 8 buy and 5 holds released. Sales are predicted to increase 12.30% this year and 8.90% next year. Earnings are expected to be a solid increase of 19.30% this year, 17.10% next year and keep up a 5 year compounded growth rate of 17.59% per year.

I hope you've found this snapshot view of these 6 companies as useful to you. If you like this approach let's hear from you and we'll do it again.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: I do not hold positions in any of the stocks mentioned at the time of publication

1 Comments – Post Your Own

#1) On June 28, 2010 at 6:30 AM, BrandonPaulChevy (< 20) wrote:

good insights. auto suppliers should be mindful of their products. I once bought shock absorbers which are defective and almost cost me my life. Hope they would have high quality control on their products before they sell it.

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