We haven’t seen a lot of auto parts or other auto industry-related companies in the Digests lately, but the recovery in the sector is still continuing under most investors’ radars, as Stephen Quickel writes below. This quiet moment could be a good time for patient investors to take positions in undervalued, high-quality auto-industry companies — like today’s recommendation.
“Tenneco, Inc. (TEN) did well for us in 2010, doubling from 22 to 45, and soared briefly from 30 to 40 for us in January before stalling. Yet, while trading at 36, down from its 2011 high of 45, we believe upon further analysis that TEN is ready to rebound.
“Amid the current recovery in auto sales, TEN is a major supplier of exhaust and ride control systems, both to the original equipment and aftermarket sectors. With revenues headed for $9 billion in 2012, from less than $5 billion in recession-plagued 2009, its earnings continue on a roll at a 28%-per-year growth clip. Its year-ahead P/E is a mere 8.8, its forward PEG an astounding 0.30. Out of 11 analyst ratings, eight are Strong Buys and two are Buys. Est. Target Price: 48.”
- Stephen W. Quickel, US Investment Report, April 18, 2012