If success in a business was always linked to size, Continental AG (OTCPK:CTTAY) would be an easy pick in the auto parts/components space, as this is the third-largest supplier in the world and the second largest in Europe. The auto sector is seeing a lot of change, though, as OEMs have to produce more efficient, less polluting cars to stay in compliance with evolving regulations and the adoption of more electrical and hybrid technologies is likely to lead to disruption across the market.
I believe Continental is well placed to benefit from this transition
and to maintain its strong position in the market. It also doesn't hurt
the story that the company's tire business is quite profitable and a
market share gainer. I think Continental's size does limit its future
growth prospects somewhat and the valuation isn't quite as compelling as
I'd like to see.
Continental AG Revving Up For The Next Wave In Autos