Encash Holdings In Automotive Suppliers (ARM, ALV, TEN, JCI, WBC)
January 11, 2010 1:47 PM
Analysts at Robert W. Baird & Company recommend investors in automotive suppliers to take profits in the near term. The recent rally in automotive supplier stocks has been deemed as unsustainable.
The supplier group trades at 13x 2011 EPS even though the industry is still not out of the woods yet. End customer spending is expected to be lackluster while the labor market remains under duress. Current economic conditions have also pushed customers towards a savings mindset thus further dampening demand for the industry. Companies with large exposure to BRIC markets may command a premium over peers. Thus, ArvinMeritor (NYSE: ARM), Autoliv (NYSE: ALV), Tenneco (NYSE: TEN), Johnson Controls (NYSE: JCI) and WABCO Holdings (NYSE: WBC) could emerge as winners.
