Stock price when the opinion was issued
They are in the exhaust and ride control, manufacturing business. Most of their business comes from the OEMs. There are about 16.5 million new vehicles produced every year in North America. He thinks this can grow to 18-18.5 million before the cycle is done. There is a strong catalyst in that the exhaust systems’ requirements become tighter and tighter in terms of emission controls. Trading at about 10X earnings. Great free cash flow yield.
Exposed primarily to exhaust systems. One of the benefits is that there is legislation and pending legislation on emissions and the controls that are needed, and this is the major producer in this area. He thinks auto growth will probably get to 18 million units on an annual basis in the US fairly soon. Europe and emerging markets are at different stages, but they also represent good value. This is very well positioned and should do well in the long term.
A derivative of the auto play. It manufactures exhausts and ride control systems. Some of the auto companies have had issues, but we are still seeing record levels of units. The run rate is still about 18 million units in North America, and about 60 million globally. What he likes is that it has a catalyst. Emission standards have been tightened, and will continue to do so.
He likes his motors. They make exhaust systems and ride control systems. There are government lead initiatives to reduce carbon emissions. That means this company will supply new product. 10.5 times next year’s earnings.