If you bought Federal-Mogul (FDML)
shares in March or April of this year, then you certainly deserve to
bask in the success of taking a major gamble that paid off handsomely.
Shares of this heavily indebted auto parts company have nearly tripled
from the April lows as a recovery in the auto parts business, the
ongoing support of Carl Icahn, and a successful rights offering have all
provided a little extra breathing room.
As crazy as its sounds,
there could still be room for this stock to run. Both sides of the
business are growing ahead of vehicle production rates, and a shift
towards more emerging market sales and a focus on
efficiency-improving/emissions-reducing products fits with what vehicle
makers want these days. In addition, the company is already in the midst
of transitioning production to lower cost regions, while further debt
reduction should reduce both the company's interest burden and its cost
of capital. Even with the huge move in the stock, a continuation into
the high teens or even low $20s is not out of the realm of possibility,
suggesting 20% to 40% potential even from here.
Read more here:
Federal Mogul Could Still Have More Under The Hood
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