Barclays on U.S. Autos and Auto Parts: Looking Under The 'June' Hood - What The Marco 'Knocks' Are Telling Us
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Rating Summary:
5 Buy, 8 Hold, 0 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
5 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. Autos and Auto Parts: Looking Under The 'June' Hood - What The Marco 'Knocks' Are Telling Us
Analyst, Brian A. Johnson, said, "Given macro has been the most widely discussed topic over the last month, we analyzed the performance of auto stocks in bull and bear stretches of the broader market since 2010 and arrived at the following conclusions: 1. The auto space tends to post stronger outperformance when the broader market is rallying vs. underperformance when the market is trading down; 2. Meritor (Nasdaq: MTOR), Tenneco (NYSE: TEN), Dana (NYSE: DAN), American Axle (NYSE: AXL), and Harman (NYSE: HAR_ are the most highly leveraged auto stocks to macro swings, likely due to their small market caps; 3. Ford (NYSE: F), General Motor (NYSE: GM), Johnson Controls (NYSE: JCI), Magna (NYSE: MGA), Visteon (NYSE: VC), and Lear Corp (NYSE: LEA) are the auto stocks least leveraged to macro swings; 4. BorgWarner (NYSE: BWA) offers the best risk/reward with regard to macro swings, and we believe that Delphi (Nasdaq: DLPH) can follow in its steps."
Overall, Johnson remains confortable with 2012 U.S. SAAR of 14.4 million and North American production of 14.6 million. However, given the dip in May (which equals 13.8 million SAAR), the likelihood of 14 million is slim. Production in Europe could be on the decline, depending the Greek elections and ECB support.
All in, Johnson is bullish on GM and Ford, but favors GM...he also likes DAN and TEN, and as a pair trade, go long BWA / short DLPH.
Analyst, Brian A. Johnson, said, "Given macro has been the most widely discussed topic over the last month, we analyzed the performance of auto stocks in bull and bear stretches of the broader market since 2010 and arrived at the following conclusions: 1. The auto space tends to post stronger outperformance when the broader market is rallying vs. underperformance when the market is trading down; 2. Meritor (Nasdaq: MTOR), Tenneco (NYSE: TEN), Dana (NYSE: DAN), American Axle (NYSE: AXL), and Harman (NYSE: HAR_ are the most highly leveraged auto stocks to macro swings, likely due to their small market caps; 3. Ford (NYSE: F), General Motor (NYSE: GM), Johnson Controls (NYSE: JCI), Magna (NYSE: MGA), Visteon (NYSE: VC), and Lear Corp (NYSE: LEA) are the auto stocks least leveraged to macro swings; 4. BorgWarner (NYSE: BWA) offers the best risk/reward with regard to macro swings, and we believe that Delphi (Nasdaq: DLPH) can follow in its steps."
Overall, Johnson remains confortable with 2012 U.S. SAAR of 14.4 million and North American production of 14.6 million. However, given the dip in May (which equals 13.8 million SAAR), the likelihood of 14 million is slim. Production in Europe could be on the decline, depending the Greek elections and ECB support.
All in, Johnson is bullish on GM and Ford, but favors GM...he also likes DAN and TEN, and as a pair trade, go long BWA / short DLPH.
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