Standard Motor Products, Inc. (NYSE:SMP)

p

low peg

It has very good valuation and growth.

mgmt has done complete turnaround in past 18 months, payoff is it to come. going to 16.50/17.00 next few months. earnings come ahead of forecasts than january will jump again.

good product mix, auto sector recovering & production should move toward US after japan earthquake, good cost control

I worked in this business and liked it - but, as long as the OEMs take an interest in selling after market parts there will be nothing but heartache for the players like SMP. It is impossible to compete with Bosch, for instance, if they simply discount a lower levels which their economies of scale support. The Japanese OEMs are a really hard after market nut to crack because they are not as rapacious as US car makers - and their parts last a long time.

The Chinese have learned how to make car parts so SMP has to resort to becoming even more the middle man. India is untapped as a competitor.

The customers (NAPA, Advance Auto, et al, are banding together, they will kill the high cost manufacturers.

They also beat down the SMP's with warranty practices. The retailers literally take anything back over the counter and expect SMP to pay for it - millions of dollars of fraud and they have to bend over and take it.

Finally, I lack faith in the board and mgmt - though they are willing to make hard decisions which are needed, they are truly hopeless on the technical side.

Improving Professional Opinion

owned it before it was recommended

Low PEG ratio, cost cutting for car owners.

interesting stock
but ps is low
no data for return on equity

worked for this company, expect it to double very soon

This met a high level screen to indicate a buy and strong outperform against its peers (other tickers in its industry). My 1st version of this spreadsheet devles deep into the company's balnace sheet and recent income statements, combined with other relevant price data for the company including insider/institutional holdings, short interest, debt levels, etc.
Testing capabilities of this 1st version of my automated, valuation spreadhseet matched with my personal criteria and see how it holds up.

SMP deals in replacement parts for pro mechanics and do it yourselfers. People will be and have been holding on to cars longer, more talk of 100k and 150k cars in a household. Initial fear of electronics and computers is gone. Older cars being kept longer, newer cars not going to dealerships for repair.

Stock pursuit

Standard Motor Products (SMP) sells engine replacement parts. Maybe they should look into making gas cap locks to offset their temperature control parts that is being hurt by Chinese competition. First quarter revenue was up 4%. The stock trades for 8 times EPS and is up 45% since May.

Value play decided on by a bottoming screen I like to run using book value and price movements. Pick trades at less than 1 price/book and earnings growth is improving.

car part mfg, after market...with the economy the way it is, people will be fixing their cars, not so much buying new. This company has no employee's in China, and had a much higher high in the previous 52 weeks. I look for the upward trend to continue.

Recent bad earnings hammered this stock. 2008 will realize the benefits of their Global Sourcing initiatives including moving their Long Island, NY and Puerto Rico manufacturing initiatives to Mexico where labor costs are about 75-85% less.

this stock is trashed. huge volume down on bad quarter numbers. further downside risk minimized. This auto parts company should benefit from diminished new auto sales as folk have to keep their old clunkers running. okay, its a hunch...

Good value opportunity here. Production shifting to low cost areas (Mexico, Poland) will help company long-term, as China will be less of a competitive threat as their currency slowly appreciates vs. dollar and peso, and long term shipping costs from China continue to increase.

By providing replacement auto parts, SMP should outperform in a recession - look at the price chart for 2000-2003. Debt is high, but doesn't appear to be a bankruptcy threat. On that note, bankruptcy of other auto OEM's (Delphi, etc) should provide a new growth market for SMP.

People will always buy cars (and have to fix them), so a steady revenue stream is likely. And since IMHO SMP is making the right cost cutting moves (and the current price is near historical trendline lows), there could be excellent upside potential here.