Johnson Controls, Inc. (NYSE:JCI)

Climate change is going to have an exponential effect on everything over the next five years. More efficient and cost effective batteries are going to be increasingly important in our attempts to reduce CO2 emissions. I think JCI will benefit from that

I've liked JCI for a long time, but I have to admit longer-term (since highs of 2007 and 2011), the stock is down from its highs. JCI though, until recently, was lagging behind the S&P for every time period except the 10-year meter stick.
Their EPS, over time, has been inconsistent but I had the unfortunate luck to rate them as they were rebounding off their lows in July/Aug 2012. Since their fate is intimately linked to the Auto industry, I see them doing well as the economy revs up but it has a Building controls division and therefore, is not a auto pure-play, therefore there are other stocks that are better yardsticks for that. The 2% dividend is in line with the S&P.

bought this at $26, already am, target price is $45

auto parts HVAC Batteries 2 types Going to have a good year.

fstg experiment

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S&P STARS Ranking: = 5 stars (5 is the highest rank out of 5)
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S&P Fair Value Ranking: = 5 (5 = undervalued, 1 = overvalued)

Well-covered in three key recovery areas, and is moving aggressively in overseas markets with its less visiable strengths in power and building.

100

I discarded this one from my Stock Advisor watchlist, today. I don't think it's a market-beater, though in some respects it's an impressive company. Here are some notes coming from Brendan Mathews on my Stock Advisor team:

Johnson Controls (JCI)
$26/share
$17.9 billion market cap

==Past 1-2 years View==
Johnson Controls could benefit from the recovering economy as car sales increase and cap-ex budgets loosen to include more spending on efficient heating and cooling systems. Over the long-term, demand for Efficient Building should grow as energy becomes more expensive and people become more environmentally aware. The company is already large, so it’s unlikely to double, but it is fairly like to grow 50% over the next five years.

==Key Recent Developments==
Lower European auto production has largely offset recovery in the North American auto markets. Johnson Controls has been forced to restructure its European operations, closing plants and laying-off workers. In the most recent quarter, the company took a large charge to cover the cost of restructuring, which were mostly cash severance payments to European workers.
Weak global market for Building Efficiency, including a 10% down turn in the U.S. institutional market.
A $447 million charge for to bring its pension and healthcare liabilities into compliance with accounting rules.
Management’s said that “softening end markets” and a weak Euro will limit the company’s ability to grow sales and earnings in 2013

==Outlook==
The situation is basically the same – the company still has leadership in its three key markets (auto experience, building efficiency, and batteries). Unfortunately, however, those are all competitive, cyclical markets. If we’ve learned anything over the past year, it’s that building efficiency, which the company hoped would lessen its economic sensitivity, is also highly dependent on the general economy.

==Probability of Beating the Market==
40%. Coming off the bottom of 2009, Johnson Controls grew revenue near 20% in 2010 and 2011 as the economy rebounded. For Johnson Controls to continue growing there will need to be a strong upswing in the economy, which is certainly possible, but doesn’t seem imminent. The company’s scale in multiple markets provides some cushion against economic downturns, but ultimately, this company is heavily-levered to the global economy and GDP growth.

==Our Motley Fool 5-and-3==
5 Potential Green Flags
1. Further interest in “Green Buildings,” spurred by government regulation or increased energy costs
2. Continued growth in the start-stop battery market – expected to grow 5x between 2011 and 2015
3. Resurgence in the global auto market
4. Continued growth in the building efficiency backlog – maintaining a book to bill ratio greater than 1
5. Additional, smart acquisitions in the efficiency and power solutions businesses

3 Potential Red Flags
1. Further weakening in the global auto market or residential and commercial real estate markets
2. Additional contributions to the company’s under-funded pension
3. Increase in the company’s debt level

One of the stocks picked for MF's Stocks 2012. It has a very low valuation (trailing P/E of 10.3). I calculated its Graham number at $31.03, so it is a value pick for me. It may take some patience to see results on this stock since a large segment of its revenue comes from auto industry (batteries) and until people start purchasing new cars again, this stock may stagnate. It should be noted that two of its competitors have filed bankruptcy so their competition has declined.

Good all round financials, debt under control, strong building segments (HVAC) that will dampen any cyclical effects from the auto industry thus limiting the downside. Leaving the upside to be reaped if economy does pick up in 12 months.

Reason to opt in: Wanted exposure to recovery in the auto industry but not in full measure.

Unprecedented sell off, huge pop coming

Undervalued

Stcoks 2012 recommendation. Analyst nor the Fool own any shares. Must perform solid DD, looking like a VALUE play.

start/stop battery technology, control systems

http://www.fool.com/investing/value/2012/03/09/5-value-stocks-most-with-dividends-that-are-still-.aspx

With the pent up demand in the auto industry set to take full steam in the next few years, expect JCI to reap the benefits. JCI could be trading in the mid 40's by next year.

Set it and forget it pick here. Grabbing the dividend for CAPS as it comes with a Forward PE of 9.5 and a 5 year PEG of around .65. Roaming slowly back up to its pre-recession price and has a strong future with estimates of $60 billion in revenue possibly within 5 years.

baklog