Monday, December 28, 2009
It still has room to go. Look for another double. After all, how many companies are getting into axle and drivetrain business?
You got a WSJ tip on the auto suppliers:
Auto-parts suppliers are making a surprising turnaround, defying fears earlier in the year that many would collapse amid the car industry's downturn and the bankruptcy filings of General Motors Co. and Chrysler Group LLC.
"The recession forced all parts suppliers to make their cost structures very lean and now they are potentially positioned for explosive earnings growth as vehicle production gets back to normal," said Morningstar Inc. auto analyst Dave Whiston...
American Axle & Manufacturing Holdings Inc. has renegotiated its credit payments, booked new business and says it can now turn a profit even if 2010 U.S. auto sales only reach 11 million cars and trucks, which would still be a depressed level by historical standards...
And here's some grist from Credit Suisse who has a $12 target on this number.
If it goes to 12, why won't it go to 17 and double from here?
American Axle & Manufacturing
Posted by Palmoni at 8:57 AM
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why would not it go to 21 from here? i donot know...
The point was--we are in the stage of multiple expansion for this market.
If AXL earns $1.34 for 2011 why isn't that worth 13X earnings?
Its easy to get to 17, because if they have enough earning power to get to 12, PE expansion will do the rest
what kind of option plays do you have going for the January 7% meltup?
High risk / high reward type stock.
Problem is I remember Federal Mogul.
Very similar situation, big revenue, high leverage and a turnaraound story.
Heck, even Carl Ichan took a big position.
Except Fed Mogul went bust.
Or Collins Aikman. Ditto there. Big auto supplier, high rev, high debt and heavily owned by investing genius and ex presidential advisor David Stockman.
Yep, you guessed it. Bust.
Don't get too giddy. These kind look strong on the charts and then the bottom falls out in a month or so.
they just did a stock offerig to raise $ to lighten up their debt
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