Ford, GM Among The Top UBS Value Plays For 2018

Value stocks are favored in this market rotation and some auto names are riding the trend.

Amid great disparity between growth and value, a UBS analyst expressed a preference for the likes of General Motors Company GM and Ford Motor Company F.

The Ratings

Analyst Colin Langan reiterated Buy ratings on Adient PLC ADNT ($95 price target), BorgWarner Inc. BWA ($61 price target), Tenneco Inc TEN ($70 price target), Ford ($15 price target) and General Motors ($50 price target).

He reiterated Holds and adjusted price targets on:

  • Dana Inc DAN: PT raised from $30 to $33;
  • Delphi Technologies PLC DLPH: PT maintained at $58;
  • Aptiv PLC APTV: PT maintained at $89;
  • Lear Corporation LEA: PT raised from $184 to $186;
  • Magna International Inc. (USA) MGA: PT raised from $52 to $57;
  • Meritor Inc MTOR: PT maintained at $26;
  • Visteon Corp VC: PT raised from $125 to $129.

The Thesis

“It’s hard to ignore the performance gap between growth and value,” Langen said. “The secular growers are up 29 percent year-to-date, almost twice the gains of ‘value’ suppliers (up 14 percent). However, the average five-year CAGR of growth names was only 30 basis points higher than value, with many ‘value’ suppliers outperforming most growth names.” (See Langen's track record here.) 

Langen anticipates buyback-driven swells in General Motors and improved international sales and fewer recalls for Ford.

A weakening dollar and double-digit increases in heavy truck and off-highway vehicles could boost exposed suppliers Meritor, Dana, BorgWarner, Delphi and Tenneco in 2018, he said. The former three are considered the best positioned on market mix, according to UBS. 

Auto players may also catch a tailwind off government activity. Suppliers could benefit from a 2- to 4-percent tax cut as Ford and General Motors enjoy an 11-percent slice, while a breakup of NAFTA could drive cost increases between 0.7 percent and 5.4 percent, Langen said. 

Price Action

At the time of publication, First Trust Exchange-Traded Fund II CARZ tracking car manufacturers was trading up 1.1 percent at $42.02.

Related Link:

Truck, Van Demand Drive November Auto Sales

Analyst Sees Possible 'Big Bang' Of Upside For General Motors 

Posted In: Colin LanganUBSAnalyst ColorPrice TargetReiterationAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.