Monday, April 18, 2011

BorgWarner Inc. ($70.89, BWA)

(May 16, 2011 update: All future stock posts will appear on my new subscription-only website at Please visit!)

BorgWarner Inc. (BWA)
is a global supplier of engineered automotive systems and components, primarily for powertrain applications.

"The company is focused on developing advanced powertrain technologies that help improve fuel economy and reduce emissions, allowing auto manufacturers to comply with increasingly stringent emissions standards around the globe." -- Standard & Poor's research, April 16, 2011

"We believe the top-line growth and margin power from unique secular growth opportunities should allow BWA to double earnings and revenues in the next 3-4 years. BWA remains our top-pick in the supplier group and an MS Best Idea." Morgan Stanley research, February 10, 2011

Projected consensus EPS growth is 37%, 25% and 17% for fiscal years 2011 through 2013. The PE is 17, which is low for such a high-growth company.

During the last decade, BorgWarner stock rose steadily until the financial meltdown of 2008. The stock later broke past the previous high in September 2010, and has been climbing in a two-steps-forward-one-step-back pattern. Today's price reflects the one-step-back, and represents a good purchase price. The stock reached the low 80's several times in February and April 2011. A retracement of those recent highs would net an easy 10+% for a short-term trader.

S&P and Citigroup each maintain a $79 price target on BWA (based on April 2011 research reports).

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The Right Huff is Crista Huff's blog for politics and items of sociological or financial interest. Crista Huff also managesGoodfellow LLC, a subscription-only stock market website. We strive to identify financially healthy companies in which traders and investors can buy shares and earn dividends and capital gains. Seedisclaimer for the risks associated with investing in the stock market. See your tax advisor for the tax consequences of investing. See your estate planning attorney to clarify beneficiary and inheritance issues associated with your assets.

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