Borg Warner (BWA)

Has come down with all the auto stocks. BWA has outperformed the industry by a lot in the last quarter. Sales growth of 3% vs. -3%. They're making good advances in hybrids and e-cars. Pays 8x 2019 earnings and has a growing market share while the auto market will recover. (1.7% yield, $49.91 price target)

(A Top Pick Jan 24’16, Up 41%) They hit on all cylinders. A third of their business comes from non-combustible engines. An investor day in November announced 7% growth in revenues for years to come. There is potentially a strong probability of a bump in the multiple.

(A Top Pick Jan 24/17, Up 29%) It had come out of a disappointing quarter so the stock had sold off a bit. They are in the Auto business in Propulsion. There were concerns about being left behind as combustion engines were phased out. But hybrids are the fastest growing sector of this company. He thinks it is still quite cheap here. 12 times earnings.

Auto parts manufacturer. This has lagged in the last couple of years, but has started to pick up recently. They are in the propulsion end of things. With thoughts of electric and hybrid cars, analysts and investors took a pass on them for the last little while. They are still participating in those areas, and in fact their parts are growing in that market. Trading at about 11.5X this year’s earnings and 10.5X next year’s, still well below its historic multiple up 14.5X. They will participate, whether it be hybrid or electric or regular combustion engines. Dividend yield of 1.4%. (Analysts’ price target is $41.12.)

(A Top Pick Nov 22/16. Up 15.23%.) Thinks the markets are just trying to figure this one out. A lot of the auto parts got hurt on speculation that there was a peak auto, so he just took advantage of that.

An auto part manufacturer with a global footprint, which gives it diversity with currency. They are strong in combustion engines, but also strong in electric vehicles. The stock has been down over the last year by about 15%, but his results have shown that it has actually gotten better. (Analysts’ price target is $37.43.)

Outside of energy, financials and technology, industrials are about the best group in the market. He has positioned himself to be in industrials that benefit from just slightly improving economic growth. This company gets about 25% of its sales from the US, and he is focused on companies that get more exposure than that. This is one that you can own. It has good exposure to auto. It is seeing acceleration in revenues.

They have the largest exposure to Europe in terms of Europe but thinks they have already seen the worst. Their products are very needed.

(A Top Pick Sept 26/11. Up 10.94%.)